In the last 60 years, India had made sustained progress towards improvement in the quality of life of the people in general. However, it is disappointing to note that the progress on the social front continued to be slack inspite of increased government spending. Hence, there is a greater need to spearhead the policy reforms especially those that will have a greater impact on rural India and upliftment of farming community as they form more than 60 percent of the total workforce.
One of immediate challenges for the country include bringing reforming the agricultural sector to pull it out from the current stagnancy in production and productivity and bring it on to a high growth path and delivering its benefits to the consumers as well. While the input and input delivery side is being effectively reformed on public and public-private participation mode, states will have to speed up reforms of APMC act that would allow electronic spot markets to operate and bring in the much needed transparency and integration of today’s fragmented markets to bring in marketing efficiency. Forward Contracts Regulation Act (FCRA) bill should be passed at the earliest in Parliament to autonomy to the regulatory body (FMC), allow more products and participants on the platform thereby further strengthen the futures trading to effectively perform its twin functions of price discovery and providing a hedging platform. Allowing banks, FII’s and mutual funds is likely to bring-in the required institutional expertise in to the markets that would refine its price discovery process and spread its benefits among masses and simultaneously enable large corporate hedgers to hedge their risk with equally large counterparty with large financial muscle to bear the risk. Further, allowing FIIs to invest in commodity exchanges would help infusion of global best practices besides providing the required financial impetus to accomplish its social goals.
Immediate passing of the amendments to the Warehouse Development and Regulation Bill would more likely bring in sea change in how goods are stored, transacted and monetized in the near future much to the improvement in their marketing efficiency. In all, if the country were to grow further, and shift disguised unemployed, workforce to alternative rural employment opportunity then commodities market have the potential of providing a supply chain which can absorb large rural workforce in their neighborhood. it will also ensure that the benefits of growth shall be equitably delivered to the rural areas and those in the lower income groups, which is by empowering them and providing them with efficient choices in their lives i.e. in what they produce and in what they consume.
Published in The Financial Express 15 Aug, 2007
Published in The Financial Express 15 Aug, 2007
