Rice, wheat futures ban may go before polls: FMC

The commodities’ market regulator, Forward Markets Commission (FMC), today expressed hope the government would lift the ban on futures trading in rice and wheat before the general elections.

“There is no problem in lifting the ban on all four commodities — rice, wheat tur and urad — before the Lok Sabha elections. However, I am hopeful that the suspension of futures trading in rice and wheat may at least get repealed before the elections subject to the Election Commission’s approval,” FMC Chairman B C Khatua said.

FMC has already submitted a detailed report to the Consumer Affairs Ministry, explaining the reasons for lifting the nearly two-year ban on rice, wheat, tur and urad, he said. The five-phase polling for the 15th Lok Sabha commences on April 16 and would be over by May 13. Since the model code of conduct is in force, any policy decision, including lifting the ban on agri-futures, has to be approved by the Election Commission.

Khatua said, “The ban on rice and wheat futures may go first because the production and price scenario of these two crops, at present, are favourable.”

Currently, there is no inflationary pressure and prices of rice and wheat are ruling low. Besides, production of these two crops are estimated to be higher, he said.

On tur and urad futures, Khatua said, “There is a supply crunch of these two commodities in the country.”

The regulator had in early 2007 banned futures trading in rice, wheat, tur and urad, under the instruction of the Ministry of Consumer Affairs, to contain food prices.

According to official estimates, rice production is estimated to be 98.89 million tonnes in 2008-09 compared with 96.69 million tonnes in the year-ago period. Wheat production is projected to be close to last year’s level of 78.57 million tonnes.

Meanwhile, the country’s inflation is ruling below one per cent in March this year as compared to the double digit in June 2008.