Dr.  T N Seema, the appealing CPM leader from Kerala, is known for her outstanding oratory skills.   Issues concerning the proletariat are always precious to this youthful, soft-spoken Member of Parliament (Rajyasabha).   As a member of the Parliamentary Standing Committee for Consumer Affairs she always fought for issues like price rise, the ever burning issue of common man.  Dr Seema firmly believes futures trading contribute to the often rapid price hike of food articles and other consumable commodities.  In a candid interview to APN News she elucidates the exigency to control the futures trading system in the country to overpower market manipulations. Excerpts:

There are allegations that commodity futures trading is being used for market manipulation.  But  some argue that it is helping price discovery of commodities.  As a member of the parliamentary standing committee for consumer affairs what is your view?

Dr Seema. : I am against futures trading, because  there are enough evidences to prove that commodity futures trading is  largely responsible for  escalation of prices of commodities in general and that of the essential commodities in particular.  The futures trading platform is increasingly being used as a tool for market manipulations in a big way by the hoarders and black marketers.  Our standing committee, during our sittings, has discussed this grave issue of shooting up of commodity prices and with evidence we could conclude that the present system of futures trading is vulnerable to manipulations and this has to be banned.  It has to be replaced with a flawless structure so that the market is protected from manipulations and the consumers are safeguarded from price volatility.

Do you believe that the futures trading are just a tool for market manipulation?

Dr Seema: It is a fact; futures trading are widely used as a tool for market manipulation.  At present there is no potent system to protect the market from manipulation. In short what I intend to remind you is futures trading in its present form is harmful to the society.  This will only help the speculators, manipulators, and hoarders who want to make fast buck.  We have enough evidences to prove the point. The entire system has to be rewritten to make the commodity markets reliable. In the current scenario   Commodity futures trading help only the manipulators and they are making millions. This has to stop.

But it is being widely publicised, futures trading help the growers and the farming community to find better price for their produce.

Dr. Seema: I don’t agree with the fact that futures trading help farmers and growers.   As I said it helps the speculators and middlemen to make huge money.   Hardly any farmer or grower participates in futures market. In futures trading a different segment of players participate with the intention of making instant money.

In fact, our farmers don’t have the bargaining power.  During the time of cultivation money is offered (by the middlemen) as advance for their crops, and the poor farmer is compelled to sell their produce at a prefixed price (to those who have given them the money as advance).   Making use of futures trading these manipulators creates a favourable price fluctuation and makes millions.  So it is baseless and absurd to argue that futures trading help farmers. In fact, futures trading help only to exploit farmers.  Speculators and middlemen are the real beneficiaries.

Futures trading platform is seen as an alternate market and many developing nations have this system of trading.

Dr. Seema: Let me reiterate. In its present form and structure it is being misused in our country at least. As I said above, futures trading have been largely liable price fluctuation.  Common mass is the victim of massive price raise. In fact, a bill (FCRA amendment) has been introduced in the parliament during the last winter session to control hoarders, black marketers and speculators.   The Bill is being deliberated by our parliamentary standing committee.  There legislation will bring the entire commodity market under strict vigil.

Has the standing committee suggested any immediate measures, other than the bill, to control futures trading?

Dr Seema: In our previous meetings we discussed the urgency of controlling of futures trading in commodities as a step forward to check price raise. But the action has to be initiated by the Central government.  Commodity futures market is directly controlled by the Consumer affairs ministry. But unfortunately neither the ministry nor the concerned officials have done anything concrete to control this manipulation and thereby has miserably failed in their responsibilities to reign in the market manipulative mechanisms in futures trading.

Our understanding is that there is no system existing to control either the manipulation mechanisms in futures trading or those who are manipulating the market through futures trading.  Let me reiterate, in the present scenario, there is no potent system to protect the market from manipulators.  In short what I intend to remind you is, futures trading in its present form, per se, is harmful to the society.  We have enough evidences to prove the point.

Could you please elaborate on the Bill?

Dr. Seema: Bill is under discussion. The discussion is incomplete.   I am sure this bill will be a solution to the present ongoing manipulations in the futures market.  If this legislation is passed in parliament and then implemented in its letter and spirits the manipulative forces could be kept at miles distance.  As per the provisions of the bill representatives of the civil society can intervene.  Stringent action can be contemplated against the violators of the rules and regulations of the market.  It will never be another bureaucratic set up where the entire decision making power vests on one chair.

The general feeling is that the futures trading have to be under strict vigil.  In the present condition it helps only the big players who are squeezing the farmers and smaller traders to make big money.  The consumers are also affected in a major way for the speculators who rule the futures market make use of the system to jack up prices of the commodities and make windfall gains.   In the standing committee also, there is a consensus against the under regulated futures trading and we will recommend strong actions against manipulations and malpractices in the market.

The upcoming bill will have enough safeguards against manipulations. We have given full thought how to protect the common man from getting exploited and enough provisions are included in the bill. I feel the bill will control the market in all aspects and will plug all the loopholes of exploitation. The bill also proposes to keep all essential commodities and food materials away from futures trading.

Do you mean to say that the Union Government is not concerned of what is happening in commodity futures trading?

Dr. Seema: I would say yes.  During various ministerial and committee discussions the Central Government can be heard talking loud about containing futures trading. But hardly any steps are being taken to restrain this manipulative system.   According to the findings of the standing committee there is no effective system or machinery to control (the manipulative forces).  Even during the budget speech Union Finance Minister Mr. Pranab Mukherjee did not even spell a word on any measures to control price rise.  But during the meeting on price rise many Congress leaders argue against futures trading saying that it is responsible for inflation.  But the government seems unwilling to take any step towards controlling futures trading. The same people who are protesting against futures trading are, infact, protecting the manipulators by not taking concrete steps through effective legislation to eliminate these manipulative forces. This is the double standard the Centre has been taking.

How to correct the system?

Dr Seema: I strongly advocate for a complete ban of the present system of futures trading until we replace it with an effective and flawless mechanism, so that the middlemen and other manipulators are kept away. We need to have a proper market regulatory system to control manipulation. According to me the present system is inefficient and also insufficient to curb any market manipulation.  In the present scenario futures trading is only helping the speculators and the middlemen to make huge money. It does not help the farmers, producers or the consumers at any point of time.  The manipulators may be vehemently arguing in favour of futures trading but in reality this form of trading only help price rise and inflation.  The standing committee for consumer affairs has the same opinion.

There is an allegation that the mechanism of futures trading has been misused for major tax evasions.

Dr Seema: Our committee has discussed this issue once during our meeting.  Tax evasion is a serious issue.  But unfortunately the government is not serious enough.  The government does not seem to bother to take effective steps to prevent the heavy tax evasion that is caused to the exchequer through manipulative transactions in futures trading. There is no doubt that the government is losing hefty sum by way of tax evasion, but interestingly the  rulers at the centre are little perturbed  at this loss. During the budget related discussion this issues was raised in the House by some members.  Answering their questions the minister concerned replied that the government was aware of this (tax manipulations through futures trading) and they are gearing up to curb such manipulations.

While there are allegations on futures trading more Commodity exchanges are being permitted. Is this not a contradiction?

Dr. Seema: More exchanges will lead to more manipulations.  Without an effective controlling system and efficient number of manpower in the present regulatory setup, the government should not permit any more commodity exchanges to operate in the market. That will only help the manipulators having money power. This will result in high price fluctuation and the common man will be the victim.

What is the current status of the FCRA (Amendment) Bill?  Will it be a solution to the current problems of the commodity market?

Dr. Seema: The Bill is under discussion. The discussion is incomplete.   I am sure this bill will be a solution to the present ongoing manipulations in the futures market.  If this legislation is passed in parliament and then implemented in its letter and spirits the manipulative forces could be kept at miles distance.  As per the provisions of the bill representatives of the civil society can intervene.  Stringent action can be contemplated against the violators of the rules and regulations of the market.  It will never be another bureaucratic set up where the entire decision making power vests on one chair. The general feeling is that the futures trading have to be under strict vigil.  In the present condition it helps only the big players who are squeezing the farmers and smaller traders to make big money.  The consumers are also affected in a major way. The speculators who rule the futures market make use of the system to jack up prices of the commodities and make windfall.   In the standing committee also there is a consensus against the under regulation of futures trading and we will recommend strong actions against manipulations and malpractices in the market.

The upcoming bill will have enough safeguards against manipulations. We have given full thought how to protect the common man from getting exploited and enough provisions are included in the bill. I feel the bill will control the market in all aspects and will plug all the loopholes. The bill also proposes to keep all essential commodities and food materials out from futures trading.