بررسی تجربی در مورد مسائل تورم و کارآیی مواد غذایی در بازار آینده هند Empirical Investigation on Food Inflation and Efficiency Issues in Indian Agri-futures Market

Introduction The wholesale price index (WPI) inflation experienced a regular northward movement from mid2006 to the beginning of 2007.1 Where WPI breached a level of 6.69 percent, consumer price index (CPI) touched 9.8 percent mark. In early 2007, India’s parliamentary standing committee on food and public distribution held futures trading responsible for inflation in India and suggested to ban futures trading in essential agricultural commodities. Following the suggestions of the panel and an increasing pressure from political circles, the Government of India (GoI) banned futures trading on some essential agro-commodities such as wheat, rice, and two varieties of lentils. However, futures trading in commodities such as chana (chickpea), soy oil, rubber, and potato were temporarily suspended. A five-member expert committee headed by Professor Abhijit Sen was constituted to study the relationship between futures trading and agricultural commodities’ inflation in India. The committee did not find sufficient evidence of inflationary impact of futures trading in India. Too short period of commodity futures trading was reported as the main hurdle to differentiate the effect of futures trading and cyclical adjustment (Sen, 2008). However, the rising food product prices continued to catalyze the general increase in price level leading to an average inflation rate of 12.46 percent during March 2008 and November 2011. Thus, there is a scope to study the inflationary effect of agricultural futures trading for a longer period of 10 years post introduction of agricultural futures. Since the commencement of futures trading on online exchanges such as National Commodity & Derivatives Exchange Ltd. (NCDEX), Multi Commodity Exchange (MCX), and National Multi Commodity Exchange of India Limited (NMCE) in 2003, Indian commodity futures market has registered an unparalleled growth vis-à-vis other markets. The volume of trade has gone up to `181 trillion in FY 2012–2013 as compared to `27 trillion in 2006– 2007. Futures prices give necessary indicators to producers and consumers about the likely future ready (spot) price and demand and supply conditions. But, this is possible only when the commodity futures markets are efficient. In an efficient commodity futures market, futures price provides expected futures spot price and thus removes the chances of guaranteed profit. Thus, it is imperative to analyze the commodity futures market for efficiency in India. India is the largest consumer of chana (chickpea)—the third most important pulse crop produced in the world. Chana is the only comm-odity among the top three most weighted agro-commodities in MCX’s Comdex (4.14% out of 20% of agri-index) as well as NCDEX’s Dhaanya Index. Further, chana is among the commodities which faced temporarily suspension of futures trading in 2007. Thus, this study investigates the efficiency of agricultural futures market and inflationary effect of futures trading with special reference to chana market in India.