The prices of all the commodities are rising very fast in Delhi. There are various contributory factors for the price rise but the single major factor remains the increase in the prices of petrol and diesel seven times during last two yeas. However the sky rising prices of cereals and pulses can be attributed only to the Forward Trading allowed in these items. It is because of the Forward Trading that the prices of cereals and pulses have gone up by more than hundred per cent.
It is for the first time in the history of our country that the Central Government has allowed, during the middle of the year 2004, to put the cereals and the pulses in the list of forward trading. In the forward trading the traders have to invest only 8 per cent in the form of security as compared to the real traders who have to invest 100 per cent.
The margin of profit to the real traders is hardly 1 per cent to 1.5 per cent of the trade while the forward traders earn much more profit. With this great allurement most of the real traders of cereals and pulses in the market have adopted to the forward trading. The result was that there were very few actual deliveries of the goods. Hence the market collapsed and the prices of cereals and pulses started rising at an exorbitant rate, which has made the life of a common man miserable.
It is because of the forward trading that there are fluctuations of Rs. 150 to Rs. 200 per quintal in one day in the market price of the pulses and the cereals. The big companies like M/s. Atul Adani, Cargil, Reliance and ITC, who are managing the forward trading in the country, are taking full advantage of the artificially created fluctuations in the market prices.
It is amazing to know that, because of the extensive use of forward trading one item of cereals or pulses is sold and purchased worth rupees thousand of crores in one day, whereas the actual value of production of the item in the country, in whole of the year is less than that. The forward trade in the cereals and pulses can be compared with that of single digit lottery. Every person who plays single digit lottery is ultimately destroyed and the lottery companies are the only gainer in the end. Similarly the organisers of forward trading in the country M/s. Atul Adani, Cargil, Reliance and ITC are minting money out of heavy forward trading in the cereals and pulses because these companies are bound to get commission of Rs. 6 for every sale and purchase of Rs. 1000. These companies are earning thousands of the crores whereas the ordinary traders of cereals and the pulses have become empty handed after becoming the victims of the system. The traders today are crossing through a great mental stress. Many of the traders have become insolvent and many others are thinking of committing suicide.
The UPA Government, while putting the cereals and pulses in the list of forward trading had announced that this shall facilitate to provide fair prices to the farmers for their produce. But the fact remains that the companies organising forward trade have never purchased even 1000 bags of any cereal from the farmers to provide them fair price for their produce. Contrary to this, these companies have been announcing forward rates only to benefit them. It is the farmer who is ultimately loser and he does not get proper price for his produce because of these companies alone. Only 5 days back NAFED purchased 15 thousand tons of URAD from Burma @ 651$ (Rs.31,000/-) per ton from Mumbai delivery at the end of August. Whereas local crop of URAD reaches in the market in the first week of September and the price of URAD at the time shall be Rs. 2000-2100 only and the farmers shall have no choice but to sell its produce at this rate. Whereas NAFED has paid very high price. It is apparent that the claim of the UPA Government that forward trading in cereals and pulses shall fetch better price to the farmers for their produce, is totally false. Recently UPA Government has put POTATO in the list of forward trade, which has resulted heavy increase in its price in the market. The multinational companies now have an eye on the vegetable and the fruit markets of India. If fruits are also brought under the list of forward trading then the economy of the country shall be doomed. It is high time for the Central Government to review its policy and take out cereals, pulses and potato from the list of Forward Trade.
(The author is Leader of Opposition in Delhi Assembly and former Finance Minister in Government of Delhi)