India has suspended futures trading in seven commodities with immediate effect in its latest move to rein in soaring inflation.
Representative image: Reuters
The Finance Ministry has suspended trading in futures contracts of some agricultural commodities for one year to reign in inflation.
Trading in seven commodities - paddy (non-basmati), wheat, chana, mustard seeds and its derivatives, soya bean and its derivatives, crude palm oil and moong - has been suspended with immediate effect, according to a Finance Ministry notification.
Government is facing pressure from opposition due to increasing prices of essential commodities.
Consumer price inflation for November increased to a three-month high of 4.91% with food prices rising too. This was despite cuts in excise duty by the government and states which did not provide much relief in tempering inflation. Analysts say that weakening domestic currency may also add to the price pressure at the retail level.
Wholesale inflation for November accelerated 14.23% from 12.54% a month ago. This was the eight consecutive month in which it stayed at a double digit level.
“ No new contract shall be launched till further orders. In respect of running contracts, no new position will be allowed to be taken. Only squaring up of position will be allowed. These directions will be implemented with immediate effect. The above-mentioned directions are applicable, for a period of one year,” SEBI said in a notification.
Excessive and unseasonal rains in parts of the country during the past couple of months led to the destruction of standing crops of tomatoes and onions among others. In some areas, the rains came just as these crops were nearly ready to be harvested.
That led to supply shocks, which then created conditions for both wholesale and retail prices to climb. Prices of both vegetables have softened in the past few days as supply improved. Prices of tomatoes are usually more volatile than onions and potatoes, largely due to their shorter shelf life.
Rains had also affected several other crops. For instance, cauliflower prices stayed elevated all through November. The price index for cauliflower was about 16 percent higher than a year ago, CPI data show. Likewise for radish.Government bans futures trading in seven commodities - Moneycontrol.com
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