Story link: http://www.goodnewsindia.com/index.php/Supplement/article/the-less-known-boom-at-nmce

It has been famously said that the power of information lies in the dis-intermediation it begets. High profile industries like travel, services, retailing and stock exchanges have seen several intermediate tiers fall away.

But what about the amorphous agrarian economy that keeps most of India’s billion people busy? You would say it’s an intractable eel and walk away. But the much mocked Indian administrative/political ‘system’ has gamely tried—and is succeeding. Minds without names have conjured up savvy solutions that are working.

For over a year now, the National Multi Commodity Exchange ( NMCE ) has been running an online trading system for commodity futures. So far rubber, spices, oil seeds, metals etc. have been traded and in the last couple of months rice, wheat and bullion have been added. The total is 51. In just one year the business has grown to over Rs.5000 crores.

NMCE has pioneered many innovations that threaten ‘bucket shops’ linked to run exploitation cartels. NMCE’s transparent system is built on inviolable contracts that require verified delivery receipts at recognised warehouses. Futures and derivatives trading at NMCE enable a farmer to know the opportunities --or disincentives-- that await him in the future.  NMCE’s structure --’demutualised’-- ensures that there is no conflict of interest between those that own it, manage it and use it.

What the NSE has done for the organised sector of the economy, viz. industries, NCME seeks to do for the disorganised sector.

The implications are enormous. GoodNewsIndia has long lamented [see the two concluding paras at this link ]that in the great cerebral debate between the globalisers and the swadeshis, the need for within-country ‘globalisation’ has been ignored. Producers are denied fair prices, free markets and export opportunities. Grain and crop procurement prices are wrought every year from politicians after adopting many pressure strategies. NMCE will go some way in bringing about freedom for producers.

NMCE’s popularity is growing. Today there are over 200 traders in cities and towns across India. They are all connected by vsats in a robust virtual ecosystem. The number of traders is expected to go to 500 soon.

Let us revisit gold for a moment. Is it a rich man’s luxury? In India, no. The rich may own a lot of it but for the poor it’s a survival tool. They hold it in small quantities and add to it in tiny driblets as and when able. It is their collateral asset for hard times that come upon them suddenly. It’s the only asset they carry away as they travel and migrate looking for work. Without a little of it most Indian families would be ruined. Indians over the millennia have survived because of it. Not for nothing is India’s demand for gold is 800 tonnes which is worth $40 billion. If a drill-down survey is done, it would reveal that a major portion of this is held in individual quantities of about 5o gms or less. An open trading system as the one NMCE has pioneered will reform the market for this poor man’s commodity as valuable to him as salt.

Various