Commodity – 04-March-2007

New addition in banned item list

On February 28th, 2007 Forward Market commission issued an order banning the contracts in wheat and rice future. The order is issued with immediate effect. According to the notification dealing in wheat and rice contract can be made only for squaring off the position and no further new positions can be taken.

“As per the directives of the Forward Market Commission, it is hereby informed that no new wheat and rice contracts will be launched till further notification," the National Commodity and Derivatives Exchange Limited said.

The move is taken as a measure to control the inflation. In the budget speech Mr. P Chidambaram said that a committee has been appointed to study the effect of trading in future market on the commodities and resultant effect on inflation. The Committee is expected to deliver their report by April end.

Anyway irrespective of the result of the committee at present the only sufferer is the investor as the prices of future contracts in wheat and rice are bound to come down.

Budget Highlight-

Mission for Pulses: Integrated Oilseeds, Oil palm, Pulses and Maize Development program to be expanded with sharper focus on scaling up the production of breeder, foundation and certified seeds; Government to fund the expansion of Indian Institute of Pulses Research, Kanpur, and offer other producers a capital grant or concessional financing to double production of certified seeds within a period of three years.

Plantation Sector: financial mechanisms for re-plantation and rejuvenation to be put in place for coffee, rubber, spices, cashew and coconut.

Fertiliser Subsidies: Based on study to be conducted, a pilot program to be implemented for delivering subsidy directly to farmer.

Petroleum and Natural Gas: 162 production sharing contracts awarded; investment of Rs.97,000 crore made in exploration; 23 coal bed methane blocks awarded for exploration.

Duty of Rs.300 per metric tonne to be levied on export of iron ores and concentrates and Rs.2,000 per metric tonne on export of chrome ores and concentrates.

Specific rates of duty on cigarettes to be increased by about 5%; duty (excluding cess) on biris to be raised from Rs.7 to Rs.11 per thousand for non-machine made biris and from Rs.17 to Rs.24 per thousand for machine made biris; duty on pan masala not containing tobacco to be reduced from 66% to 45%; withdrawal of exemption for pan masala containing tobacco and other tobacco products given to units in the North Eastern States

Source: www.indiabudget.nic.in