New Delhi: The government has no immediate plans to ban futures trading in any commodity, the consumer affairs secretary said on Thursday, after concerns the government could curb futures in essential food items to tame high inflation.
India’s food inflation has remained in double digits for most of the past year and has been the key contributor to its headline inflation WPI, which in December rose to 8.43% from 7.48% in November.
“The general understanding in the government was that there is no immediate plan to ban futures,” Rajiv Aggarwal said.
Traders have been worried that the government might ban trading in food items like sugar, oilseeds and soyoil from futures platform to put a check on price rises.
In the past, market regulator the Forward Markets Commission (FMC) has banned sugar, pulses and grains futures as part of the government’s strategy to clamp down on speculation and volatility in prices which has been seen as stoking inflation.
“FMC is the authority to decide these things,” Aggarwal added. The FMC is currently accountable to Aggarwal’s ministry.
India’s food inflation remained sticky in mid-January on higher onion and fruit prices while fuel inflation eased, but it is unlikely to affect expectations of further rates increases by the Reserve Bank of India (RBI) in coming months.
The market regulator banned sugar futures in 2009, but allowed futures last year when the supply scenario improved in the world’s top producer of the sweetener after Brazil.