Why are commodities futures markets important in India ?
India’s farmers, and downstream industrial users of agricultural output are exposed to extremely high risks. The creation of commodities derivatives markets will provide them with the choice of hedging themselves against price fluctuations. It will improve the liquidity and price discovery in the underlying spot markets. Once futures markets exist, the private sector will maintain buffer stock which will reduce spot price volatility and the private sector will do this far more efficiently than government sponsored efforts at maintaining buffer stocks.
