ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Commodity Futures in India

The turnover of the commodity futures market has grown exponentially in a short span of time. With a skewed market participation that largely favours speculators, the futures market leaves a lot to be desired as an effective instrument of risk management and price discovery for the benefit of the growers, traders, processors, and other stakeholders in the physical trade. Policymakers have overlooked wider considerations involving the discipline of checks and balances. Owing to the massive size and non-zero-sum game character of these markets, they are likely to introduce a series of unsettling macroeconomic effects, such as a possible redistribution of incomes from the small players to the big speculative financial market entities. The article concludes with a reference to the factors that could have been behind the snags afflicting the present commodities futures policy, and suggests how the needs of the real economy can be satisfied by strengthening the forward trade that is firmly anchored in the physical trade of the farm commodities under reference.

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