The government is considering the setting up of an advisory committee to provide an institutional consultative mechanism to bring down speculation and improve hedging, so as to better align the commodity futures market with spot markets.
The proposed advisory mechanism will bring all stakeholders together for consultation so as to better regulate commodity futures market, minister of consumer affairs, food and public distribution KV Thomas said at an industry seminar today.
The minister was speaking a at a seminar on `Indian Commodity Markets and FCRA Amendment Bill, 2010', organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) in New Delhi.
He said while there is understandable excitement regarding the significant growth of commodity markets in India, there are also apprehensions among some quarters whether the market is truly achieving its objective of price discovery and price risk management and helping farmers and hedgers.
''We need to take a balanced view and address the apprehensions as well as the challenges before us to enable the market to live up to the expectations of farmers and hedgers,'' he said.
''It is well known that hedgers transfer their risk in this market which is assumed by the speculators who bring in the liquidity and that greater participation and volumes lead to a more efficient price discovery, thereby reducing the possibility of price manipulation.''