Cabinet defers Forward Contract Bill due to TMC opposition

"The Forward Contract Regulation Act (Amendment) bill has been deferred," Food Minister K V Thomas said after the Cabinet meeting chaired by Prime Minister Manmohan Singh, without disclosing the reason for the decision.

The Bill, introduced in the Lok Sabha in December 2010 and referred to the Parliamentary Standing Committee, would be taken up by the Cabinet sometime later, he added.

Sources in the government said the Trinamool Congress had written to the Prime Minister at the last minute expressing reservations over the Bill that led to deferring of its consideration.

The Bill is essential for the development of commodities futures market as it aims to strengthen the regulator FMC by providing it financial autonomy, facilitate the entry of institutional investors and introduce new products for trading such as options and indices.

The Standing Committee on Food, Consumer Affairs and Public Distribution, headed by Vilas Muttemwar, had submitted its report on December 22, last year.

It recommended greater autonomy for FMC, which regulates both spot and futures commodity exchanges.

The panel had also suggested allowing financial institutions and banks, mutual funds, and insurance companies to participate in forward market so as to ensure better price discovery and lower volatility.

Thomas said the ministry has held consultations on the proposed amendment in the FCRA and most of the recommendations of the Parliamentary Standing Committee have been accepted.

Currently, there are five national and 16 regional commodity bourses in the country. Their annual turnover stood at Rs 181.26 lakh crore during the 2011-12 fiscal.