Guar Banned?? – India’s Failed Futures
May 1st, 2007 by Stephen RomanThe backwards Indian Commerce Ministry doesn’t understand the futures market:
“There is a clear case for reviewing guar futures as it is largely controlled by handful of players. This is evident in the fact that there is very little delivery in guar futures,” said Jairam Ramesh, Minister of State for Commerce.
…
In the last few months, a number of guar traders and exporters have been demanding a ban on futures arguing that price movements in the commodity have turned volatile.
Demand for ban on the commodity has increased ever since the FMC banned futures trading in wheat, rice, tur and urad in the last few months. Online trading in these commodities were banned after prices of essential commodities moved up, leading inflation to cross the 6 digit figure.
Not that you can ever expect anything better from bureaucrats who caused the volatility and price increases in the first place. A good rule of thumb is that the rules that bureaucrats put in place generally have the opposite effect:
A temporary freeze on wheat and rice future trading to control rising prices of essential commodities has failed to serve the purpose, as trading has begun in other agricultural products such as zeera, red chilli and even black pepper whose market prices have registered a jump.
Posted: May 1st, 2007 under Asia, Emerging Markets, General, india.
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