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Price manipulators 'hijack' commodity exchanges: ASSOCHAM
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SME Times News Bureau | 30 Mar, 2012
Manipulation in price and fraud by some traders at the National Commodity Exchange of India (NCDEX) is affecting thousands of genuine traders, hedgers, exporters and farmers, said industry body ASSOCHAM recently.
In a press statement ASSOCHAM urged the government to step into investigate such manipulations by some traders. “The situation is akin to the Harshad Mehta scam in securities whereby a few manipulators have hijacked the NCDEX,” said the chairman of investments committee at the industry body.
“These players – because of their inside knowledge and control over the – are able to manipulate prices substantially. In the process, poor agriculturalists, traders and exporters suffer huge losses,” added Jindal.
He pointed out that turmeric, which was trading at Rs 35 per kg in January 2009, was manipulated to increase beyond Rs 150 per kg within a year, but in a few months, the same was brought down to around Rs 40 per kg. Similarly, the price of black pepper was Rs 225 per kg in April 2011 was manipulated to rise beyond Rs 432 per kg in March 2012, marking an increase of 95 per cent.
In the case of gaur seed and gaur gum the price manipulation is unbelievable, said Jindal. "The normal price of normal guar bean in the season is Rs 10 per kg, while guar seed is traded at Rs 25 per kg and guar gum at Rs 50 per kg. Unfortunately, due to a fraud being played by a few rouge traders, the prices were increased to Rs 291 per kg for guar seed and Rs 959 per kg for guar gum on March 21," he pointed out. “It is unbelievable that the fodder for animal is priced at Rs 291 per kg – much more than the price of cereals and pulses being used for human consumption,” he said, adding that the prices for guar have gone up by 120 per cent in the past one month, 700 per cent in the past four months, 875 per cent in the past 12 months and 1,300 per cent in the past 18 months.
He said these developments show that the Forward Market Commission (FMC), which was set up to ensure smooth and transparent working of these exchanges, has not been able to ensure fair and transparent working of the NCDEX.
The ASSOCHAM chief, therefore urged the government to re-visit the provisions and bring stringent regulations to avoid such scams. He added that ASSOCHAM has written to prime minister Manmohan Singh as well.
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