Ccea Decision On Commodity Futures Trading Put Off
The Kabra committee was set up by the previous government in 1994 to study and recommend liberalisation in the commodities market. The Committee had submitted its report in 1995 recommending a measured liberalisation to prevent speculation in prices of commodities.
The Kabra Committee recommendations were rejected by powerful trading organisations, especially the edible oil traders of Saurashtra who have been anxiously waiting for liberalisation in the Commodities Trading Act. Traders' associations have even built a most modern commodity trading complex in Mumbai, anticipating government permitting futures trading.
The committee was set up by the civil supplies ministry under the then minister A K Antony. The pro-liberalisation lobby argues on the lines of the recommendations of the commodities division of Unctad. The Unctad has its own model for futures market in commodities.
While rejecting the idea of complete liberalisation trading, the Kabra committee had unanimously recommended increasing the settlement period to 30 days.
from the present 11 days.
Government officials have generally expressed their reservations on the Kabra Committee recommendations saying it was against the spirit of liberalisation. Those asking for liberal futures trading argue that through hedging, futures trading would provide protection from price volatility in commodities.
The Committee however, has taken a different view. Arguing against the demand, the committee has observed that in India, price volatility was only in one direction - the prices only register increase, they seldom come down. Secondly, there are some seasonal variations in prices which are fully predictable. Apart from these two, any other ramme of the United Front.