Lok Sabha Question No. 1244 (UNSTARRED), answered on 2018-02-09
Subject: Price of Gwar
Ministry: FINANCE
Asked by: SHARAD TRIPATHI

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA

## UNSTARRED QUESTION NO. 1244

## ANSWERED ON 9 th  FEBRUARY, 2018/MAGHA 20, 1939(SAKA)

## PRICE OF GWAR

## 1244. SHRI SHARAD TRIPATHI:

Will the Minister of FINANCE be pleased to state:

- (a) whether there has been an unprecedented increase in the price of Gwar during the last year;
- (b) if so, the details thereof and the reasons therefor;
- (c) whether Commodity Trade Centres has taken a decision to investigate the unprecedented increase in the prices of Gwar seeds and its gum;
- (d) if  so,  the  details  thereof  and  the  time  by  which  the  said  investigation  is  likely  to  be completed; and
- (e) whether the Forward Markets Commission has decided to put a ban on the trading of all types of seed in view of this price rise and if so, the details thereof?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI P. RADHAKRISHNAN)

(a)  &  (b):  Yes.  As  reported  by  Commodity  Derivatives  Exchanges  to  Securities  and  Exchange Board of India (SEBI), which is the regulator of commodity derivatives market, Guar seed prices have increased by 40-41% in spot as well as futures market in February 2018 over February 2017, while  Guar  gum  prices  have  rose  by  around  60%  during  the  same  period.  However,  this  price increase  is  not  unprecedented  given  the  fact  that  prices  of  both  commodities  have  fallen  in  two years before.

The major factors that have contributed to this increase in price trend in Guar are as under:

- Guar production has declined by  around 13% during 2017-18 due to weather vagaries in major growing states i.e., Rajasthan, Haryana and Gujarat.
- Further, guar prices have also increased owing to higher demand for exports of Guar gum, which  has  surged  by  42%  in  April-November  2017.  India  is  a  major  producer  of  Guar, accounting  for  80%  of  global  production  and  country's  guar  products,  particularly  Guar gum, is exported.
- Rising  crude  oil  prices  have  fuelled  greater  oil  exploration  activity  globally,  thereby increasing  the  demand  of  Guar  gum,  which  is  used  as  a  fracking  agent  in  oil  and  gas exploration.

(c) & (d):   SEBI on a continuous basis monitors and examines the price movement and trading in all the commodities traded on various Exchange platforms. The price movement in Guar seed and Guar gum has also been examined and it has been observed that the prices of the futures contracts have  reflected  the  prevailing  prices  in  the  underlying  physical  markets  and  are  based  on  the fundamental factors and hence no investigation is pending with Commodity Derivatives Exchanges or Securities and Exchange Board of India (SEBI).

(e) SEBI regulates the commodities derivatives markets in India since September 28, 2015. At present, futures trading is allowed in four types of seeds viz. Castor seed, Mustard seed, Isabgul seed and Guar seed, on various exchange platforms. There is no ban on the trading of these four seeds.

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