New Delhi, Dec 13: In a significant move, expected to prevent distress sale of foodgrains and improve liquidity of farmers, Prime Minister Atal Bihari Vajpayee will today open futures trading in wheat and rice.
"Futures trading for wheat and rice to be conducted by National Multi-Commodity Exchange (NMCE) has been cleared. Prime Minister has given his consent to launch it,” said Food Minister Sharad Yadav.
He said the beginning of grains' futures will be a watershed in commodity trading as it will prevent distress sale by millions of farmers and shore up their incomes.
This is because the Central Warehousing Corporation (CWC) has an equity participation of 26 per cent in NMCE and its godowns across the country could be used for grains storage and obtaining warehouse receipts by farmers, he said.
Farmers would be eligible for bank loans upto 80 per cent of the value of warehouse receipts, thereby improving their liquidity during critical market situations, he added.
"It will be a win-win situation. On the one hand, CWC will generate business and on the other farmers will not be under compulsion to sell at low rates and can instead book contracts for a future date," Yadav pointed out.
NMCE is one of the exchanges set up after Vajpayee in his independence day address last year, announced plans to establish national multi-commodity exchanges.
Wheat and rice have till now been perceived as the most "difficult" commodities in futures trading in view of the various regulations including the minimum support price (MSP) regime and public procurement, Yadav said.