Lok Sabha Question No. 2119 (UNSTARRED), answered on 2016-07-29
Subject: Trading in Commodities
Ministry: FINANCE
Asked by: JANARDAN SINGH SIGRIWAL

## GOVERNMENT OF INDIA

## MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA UNSTARRED QUESTION NO.2119

TO BE ANSWERED ON JULY, 2016 29th

## 'TRADING IN COMMODITIES'

## 2119. SHRI JANARDAN SINGH SIGRIWAL:

## Will the Minister of FINANCE be plcascd to statc:

- (a) whether the Government has any proposal to control online trading in commodities, if $0, the details thereof;
- (6) the details of the commodity exchanges in operation in the country along with the manner in which control the future trading; they
- (c) whether essential commodities are also included/proposed to be included in online trading; if So, the details thereof and the reasons therefor; and
- (d) the steps taken by the Government to check the adverse impact of online trading on availability and price of essential commodities? being

## ANSWER

## Ministcr of State in the Ministry of Finance

## SHRI ARJUN RAM MEGHWAL

- (a) Pursuant to the provision of section 131 of the Finance Act; 2015, W.e.f. 29.09.2015, Securilies and Exchange Board of India (SEBI) has been regulating commodity derivatives  markets under the provision of the Securities Contracts (Regulation) Act; 1956.

As for the online   agriculture   market;  Government  launched National Agriculture Market Scheme (e-NAM), with a budget of Rs. 200 crore, on 14.04.2016 under which; a pan-India electronic trading portal is being deployed in selected regulated wholesale markets in States across the country. Under the scheme, the Government is providing software free of cost to the States and grant up to Rs.30 lakh per mandi for related infrastructurelequipments including for assaying:

- (6) Commodity Futures  trading in India takes place on the platform of commodity derivative exchanges. Currently, there are three operational national   exchanges   having   trading of derivatives which are (Multi   Commodity  Exchange,  Mumbai; National   Commodity and Derivatives Exchange, Mumbai and National Multi Commodity Exchange; Ahmedabad) and 3 operational   commodity exchanges   (Indian   Pepper and   Spice Trade Association (IPSTA) Kochi; Rajkot Commodity Exchange, Rajkot and Chamber of Commerce, Hapur) specific

Before launching contracts in any new commodity all these Exchanges have to take approval of SEBI  Exchanges have implemented various  regulatory measures like position limits, risk management and margining framework etc. in line with the normns prescribed by prior

- (c) There is no ban 0n the onlinc trading of cssential commodities under the provision of the Essential Commodities Act; 1955.

Futures trading is permitted in various commoditics, including agricultural commodities and some essential  commodities. Total 123 commodities/categories of commodities have been approved for Futures trading:

Besides, 23 mandis of 8 States namely, Gujarat; Rajasthan; Haryana, Uttar Pradesh; Madhya Pradesh; Jharkhand, Himachal Pradesh and 'Telangana have been integrated with e-NAM, The list of mandis alongwith commodities traded on e-NAM is at Annexure-A\_ being portal

- (d) Futures market only provides & platform for discovery of prices and hedging risk. It has no role to play in the price inflation Scveral studies have pointed out that future trading per sc does not lead to any rise. For instance, Abhijit Sen Committce set up by the Government n0 causal   relationship between futures trading  and inflation: Similar view has been echoed in the RBI' Annual Report of 2009-10 also. Besides, an independent study in 2012 by Dr: Ashok Gulati concluded that during 1995-96 to December; 2012, fiscal deficit; global food inflation and domestic wages were instead the primary reasons for food inflation in India. price price

Fifteenth Report(2011) of the Parliamentary Standing Committee on Food, Consumer Affairs and Public Distribution states that futures trading does not impact the prices of agricultural commodities and that the Committee do agree with the views of various  cooperatives and farmers   organisations that   commodity   futures market  is uselul to the real   economy and small/marginal farmers.

There is & strict regulatory mechanism in place. SEBI vigil o the movement of futures prices and takes measure for addressing exccssive speculation and manipulation in the commodity future market: keeps price

There is no on the adverse impact of online trading on the availability of essential commodities. study

' .

| Sr.No.   | State            | APMC               | District        | Commodity proposed          |
|----------|------------------|--------------------|-----------------|-----------------------------|
|          | Gujarat          | Patan              | Patan           | Castor Seed                 |
| 2        | Gujarat          | Botad              | Bhavnagar       | Chana (Black Gram)          |
| 3        | Gujarat          | Himmatnagar        | Sabarkantha     | Wheat                       |
|          | Telangana        | Tirumalgiri        | Nalgonda        | Paddy, Arhar, Moong whole   |
|          | Telangana        | Nizamabad          | Nizamabad       | Turmeric,Jowar, Wheat       |
| ;        | Telangana        | Badepally          | Mahboobnagar    | Maize,groundnut;paddy       |
|          | Telangana        | Hyderabad          | Hyderabad       | Onion,Red chillies          |
| 8        | Telangana        | Warangal           | Warangal        | Maize                       |
| 9        | Rajasthan        | Ramganj Mandi      | Kota            | Chana (Black Gram)          |
| 10       | Madhya Pradesh   | Karond, Bhopal     | Bhopal          | Chana (Black Gram)          |
| 11       | Uttar Pradesh    | Sultanpur          | Sultanpur       | Wheat                       |
| 12       | Uttar Pradesh    | Lakhimpur          | Lakhimpur Kheri | Wheat                       |
| 13       | Uttar Pradesh    | Lalitpur           | Lalitpur        | Wheat                       |
| 14       | Uttar Pradesh    | Bahraich           | Bahraich        | Wheat                       |
| 15       | Uttar Pradesh    | Saharanpur         | Saharanpur      | Wheat                       |
| 16       | Uttar Pradesh    | Mathura            | Mathura         | Wheat                       |
| 17       | Haryana          | Ellanabad          | Sirsa           | Mustard,Guar seed           |
| 18       | Haryana          | Karnal             | Karnal          | Wheat                       |
| 19       | Jharkhand        | Pandra, Ranchi     | Ranchi          | Mahua Flower; Tamarind      |
| 20       | Himachal Pradesh | Fruit Mandi; Solan | Solan           | Shelling Peas, Tomato       |
| 21       | Himachal Pradesh | Dhalli; Shimla     | Shimla          | Shelling Peas;Tomato, Apple |
| 22       | Haryana          | Ambala             | Ambala          | Sunflower Seed,Guar seed    |
|          | Haryana          | Shahbad            | Shahbad         | Sunflower Seed              |

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