Agricultural commodity markets in India: Policy issues for growth
نویسنده
چکیده
Strengthening institutions in spot and derivative markets for commodities is a necessary ingredient of the liberalisation process in agriculture, and can impact upon the lives of millions. In this paper, we describe the existing market design prevalent on both the spot and the futures markets. We show some evidence on the role played by the nascent futures markets in price discovery. We document the problems of both the spot and the futures markets. We offer three policy proposals: using reference rates for strengthening transparency, exploring a greater role for cash settlement, and treating warehouse receipts as securities. ∗Indira Gandhi Institute for Development Research, Goregaon(E), Bombay. I am grateful to the Centre for Monitoring Indian Economy (CMIE) for help on data. I have greatly benefited from conversations with Nitin Madkaikar of CMIE, D. S. Kolamkar of FMC, Ajay Shah of IGIDR as well as with market participants at both the Bombay Oils and Oilseeds Exchange, Bombay and the Vijai Beopar Commodity Exchange, Muzaffarnagar.
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