Mumbai, Feb. 20: The decision to allow futures trading in 54 more commodities, including rice, wheat, bullion and other metals will, however, take considerable time and effort to be put in place, experts say.
They blame the fragmented nature of the commodity exchanges in the country with very low volumes for the delay.
The government should first restructure the Forward Markets Commission, an archaic body that regulates the commodity exchanges, experts suggest.
“It would have a tremendous impact for the government finances,” said an official affiliated to a premier bourse here. “How long can the government continue with minimum support prices and other subsidies to farmers' The only way to rein in the mounting fiscal deficit would be to allow such instruments to enable farmers to hedge,” he added.
Bhargava Vaidya, a bullion analyst, said: “The futures exchanges can flourish only where spot markets are strong. Here we hardly have any depth in the spot markets. The commodity exchanges are more on regional lines. What we need is a national commodity bourse with screen based trading with a facility for international dealers.”
“In bullion, we are the largest market but the prices are dictated elsewhere. If the infrastructure is made available, the bullion prices could be derived here instead, ” he said.
The list includes silver, copper, zinc, lead, tin,cotton yarn and cloth, animal fodder and several coarse grains.