While Sen, chairman of the committee, has favoured continuation of ban on rice, wheat, tur and urad, other members felt that ban was not a solution to deal with the price volatility.

The committee, which submitted its report to the government on Tuesday noted that “Indian data analysed in this report does not show any clear evidence of either reduced or increased volatility of spot prices due to futures trading”.

The report contains supplementary notes by the chairman, Sharad Joshi, Siddarth Sinha and Prakash Apte. In the supplementary notes, Sen said the best course of action would be to identify those commodities where there is possibility of futures trading affecting expectations that may influence inflation in essential commodities and insulate these from futures trade.

“Therefore, the suspension of futures trading in the four sensitive commodities should continue and in the case of sugar and edible oils, discussions with processors held on how much hedging benefits they currently derive from futures markets, and a decision taken accordingly,” he added.

The committee pointed out that though the volume of futures trading in India has increased phenomenally in recent years, its ability to provide instruments of risk management has not grown correspondingly.

“The reason for this is high basis risk in most contracts, which keeps out potential hedgers and lends to greater dominance by speculators. This is a serious area which should be addressed by the exchanges and the regulator,” it said.

The committee also made a strong case to allow the aggregators to hedge on the exchange on behalf of the farmers. “The vibrant agriculture markets including derivatives markets are the frontline institutions to provide early sign of future prospect of the sector. Vibrancy in these markets give signal about commodities which deserves flow of investment. These markets deserve to be promoted for giving such signal,” the report said.