PRIME MINISTER INAUGURATES FUTURES TRADING OF THE NATIONAL MULTI-COMMODITY
EXCHANGE
The Prime Minister,
Shri Atal Bihari Vajpayee inaugurated the ‘Futures Trading of
the National Multi-Commodity Exchange of Ahmedabad’ at a ceremony
at 7, Race Course Road here this evening. Speaking on this occasion
he said that by inaugurating this exchange, we start a new journey
that will bring rewards to all the stakeholders in the commodity
markets – to the producer as well as the consumer, to the trader
as much as to the national exchequer. However, the Prime Minister
cautioned that it should be insured that this system actually
benefits the farmers, and not just traders.
The following is
the full text of the Prime Minister’s speech on this occasion:
"I am very pleased
to be with all of you today for the inauguration of an institution
that is truly futuristic. I believe that the futures trading of
the National Multi-Commodity Exchange in Ahmedabad will make an
important contribution to the future development of the Indian
economy, especially India’s agricultural economy.
The launch of futures
trading in wheat and rice is not an ordinary event. With the small
step we are taking today by inaugurating this exchange, we start
a new journey that will bring rewards to all the stakeholders
in the commodity markets –
to the producer as well as the consumer, to the trader as much
as to the national exchequer.
What is especially
heartening for me about this initiative is its promise of de-risking
Indian agriculture in terms of irrational and erratic price fluctuation.
Traditionally the Indian farmer has faced three kinds of risk:
the sultani risk, the asmaani risk and the risk
of the market. The sultani risk is long over.
The risk of depending
on the monsoon still exists although it has lessened to some extent
because of the expansion of irrigation facilities in many parts
of the country.
But what worries the
farmer often is the uncertainty of what price he’ll
get for his produce. Introduction of futures and derivatives contracts
in various commodities is an effective instrument to manage the
uncertainty in a free market regime and mitigate risks.
Now that Indian agriculture
has opened up to world markets, this instrument has become all
the more necessary.
In my Independence
Day address last year, I had announced that our Government would
soon set up an online commodity exchange in the country.
My compliments to
the Ministry of Consumer Affairs, Food and Public Distribution,
and the Central Warehousing Corporation, for implementing this
promise.
Friends, commodity
markets are not new to India. Over the centuries our traders had
developed great expertise in this field. However, after Independence
we did not pay adequate attention to the needs of our commodity
markets for achieving vibrant growth. We did not enable them to
respond to the challenges and opportunities in commodity trade
worldwide.
The result is the
strange paradox that we see today. We are one of the largest producers
as well as consumers of certain commodities. We also export and
import significant quantities of these commodities. However, the
price and trading of these commodities are largely influenced
by exchanges in developed countries.
The other paradox
is this. Some of the smartest traders in the commodity markets
abroad are Indians.
But this will change,
just as many things in India are now changing for the better.
We want to make India a major trading nation in the world
for both farm and non-farm commodities. I am told that, by building
a commodity trading exchange of global standards, India has an
opportunity to chase a US $ 600 billion market opportunity.
For achieving this
goal, we have to equip ourselves with the appropriate market instruments
and institutions. We have to use the tools of information technology
at all levels –
from the village mandi to the urban markets. We have to remove
restrictions and controls on the internal movement of commodities.
We have to bring
in legislative changes to enable innovations such as warehouse
receipt-based settlement mechanisms. Above all, we have to improve
the physical infrastructure and logistics -- from rural roads,
to highways, to railways, to port development.
As you are aware,
we have launched major initiatives to attend to many of these
critical needs. We shall do much more in the time to come.
On this occasion,
I would urge all concerned to keep in mind one guiding principle.
You should ensure that this system actually benefits the farmers,
and not just traders. For this Central and State Government agencies
have to take necessary steps, including rapid expansion of rural
warehousing facilities.
I would like the
regulatory system for commodity exchanges to be strengthened so
as to create confidence among all the stakeholders. At the same
time, all the recognized and partly recognized exchanges should
also put in place their own self-regulatory mechanisms.
Ladies and Gentlemen,
with this revolutionary initiative on futures trading in Wheat
and Rice, following Gold and Silver a couple of months ago, we
can say with confidence that Indian agriculture is equipped with
yet another modern tool to face global competition.
I congratulate all
the public and private sector partners in this initiative and
wish it every success."
