The Indian Merchants Chamber, Federation of Associations of Maharashtra (FAM) and Poona Merchants Chamber have demanded the delisting of wheat from the MCX and NCDEX.
After tur dal and urad dal, the traders want wheat off the list. Kanhaiyalal Gidwani, president of the Maharashtra Pradesh Congress Committee’s consumer protection, market, industry & commerce department has sent a memorandum to the Prime Minister, finance minister and agriculture minister Sharad Pawar demanding a delisting of wheat.
Gidwani said, “Delisting of wheat would bring down prices by a minimum of 15-20%.” FAM president Mohan Gurnani said, “Trading of essential commodities will be successful only if there was a maturity level amongst the transacting parties else it will led to price fluctuations.”
BS in an editorial explains why it would be a bad idea to restrict futures trading - here:
The deeper reason why futures trading is extremely important lies in a strategic sense of Indian agriculture. Where is India going on the terrible distortions of the agricultural sector? Is India ever going to move away from the knee-jerk responses of hurting milk farmers one day by banning milk export, and then trying to set up a minimum support price for milk because milk farmers are unhappy? If India is going to make progress towards a well-functioning agricultural sector, then there is no question that futures trading belongs in it. Futures trading is as much a part of modern agriculture as fertilisers, drip irrigation and bio-technology.
Mr Hooda is not alone in his views. The political and bureaucratic establishment that deals with agriculture is deeply steeped in the mindset of a government that prevents agricultural markets from functioning. For this reason—if not for any other—the regulation of commodity futures trading needs to be moved to the ministry of finance, merging it with all organised financial trading, as is the case with all other mature market economies.
And have a look at this earlier editorial as well - here
If the government is concerned about inflation, meanwhile, it should consider how to strengthen the forces of competition in the system—an objective that could also spur growth. The country’s import basket suggests one course of action—the overwhelming bulk of India’s imports consist of intermediate products, which go into final products. The biggest items of import are petroleum and products, engineering items, minerals and metals. Finished products figure very little, except when it comes to electronic goods and technology-intensive items for which India still has a weak manufacturing base. If the imports of more finished consumer goods were to be encouraged, it would add a new element of competition in the Indian marketplace—and discourage producers from jacking up prices when margins are already comfortable. This suggests sharp tariff cuts as the required course of action. The government has already moved in this direction recently, but more can and should be done—judging by companies’ profits to sales margins.
The other reason for encouraging more imports is that capital can be expected to flow into the country in even greater quantities, following the economy being bumped up to investment grade by Standard & Poor’s (Moody’s did it two years ago). Sterilising the dollar inflow will be a challenge to the Reserve Bank of India, which is already grappling with the issue of monetary growth of 20 per cent. The natural balance is when the surplus on the capital account is matched by a deficit on the current (trade) account. This latter figure is now between 1.5 per cent and 2 per cent of GDP. Given the scale of capital inflow, and the cushion provided by foreign exchange reserves, the case can be made for targeting a higher current account deficit. That means encouraging more imports.
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