NCDEX to set up weather stations in all climatic zones

The National Commodity and Derivatives Exchange Limited (NCDEX) will be setting up nearly 450 weather stations covering all agro-climatic regions of the country over the next 18 months. The cost of the project is estimated at Rs 20 crore.

NCDEX managing director and chief executive officer, P H Ravikumar, said the exchange had already set up 180 weather stations whose data was being currently shared by ICICI Lombard, IFFCO Tokyo and Agricultural Insurance Corporation of India.

Speaking on the sidelines of a panel discussion on "Evolving Nature of World Stock Exchanges: What does the future hold?" at the Indian School of Business here on Tuesday, Ravikumar said NCDEX was expecting that the Bill seeking amendment to the Forward Contract Regulation Act, 1952, would be introduced in the budget session of the Parliament. Once the Act was amended, NCDEX would encourage rainfall indices trading.

He said NCDEX was building rainfall indices for each agro-climatic zone by taking the average rainfall in the area for the past 50 years. The rainfall data was being collected from the Indian Meteorological Department.

According to Ravikumar, the data provided by the weather stations would help insurance companies cut down their costs. The additional reliable data available would also pave the way for launching new insurance products in the agricultural sector.

Following the emergence of commodity exchanges, he said that India had become a single commodity market.

The participants at the panel discussion felt that regulatory issues would come in the way of merger of stock exchanges in future.