InvestorQ : As we approach Budget 2020 on February 01, 2020, what are the budget expectations for Commodity Markets to give an immediate boost to the business?
Rashi Mehra made post

As we approach Budget 2020 on February 01, 2020, what are the budget expectations for Commodity Markets to give an immediate boost to the business?

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sarah Leo answered.
9 months ago
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If I recollect right, the last time the budget had a big shift to commodity markets was in 2016 when the regulation of commodity markets was brought under the purview of SEBI. This was done by merging the Forward Markets Commission (FMC) into the SEBI. Since then, the demands of the commodity markets have been growing but the Budgets have not exactly been in sync. Here are two ideas that can give a short term boost to the trading in the commodity markets.

Firstly, it is high time the budget scrapped the concept of CTT. It may be recollected that commodity transaction tax (CTT) was imposed on commodity market transactions in 2013, on the lines of STT. Since then, the commodity volumes have failed to scale the pre-CTT levels. The reasons are not hard to seek. Commodity trading is a highly leveraged business and any additional costs tend to get magnified. Each year, the commodity traders have been demanding scrapping of CTT. It is high time this budget bites the bullet.

Secondly, the electronic National agricultural market (E-Nam) is long overdue. This has been discussed and debated for a long time and was part of previous budgets but made little progress. The NAM will allow the farmers to sell agri futures and lock in a price by directly selling to the mandis without going through the middlemen. This could be an effective use of the commodity futures market wherein farmers get a better price and also manage their risk. Budget 2020 can be the time to take this initiative to its logical conclusion and implement on a national basis.

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