Project Leader: Dr. Saon Ray
Research Team: Neha Malik
Commencement: October 2012
Funded by: Multi-Commodity Exchange of India Ltd
Commodity futures in India were introduced with a dual purpose of promoting price discovery and enhancing risk management in the commodities market. This study examines the rationale of the imposition of a Transaction Tax on Commodities which had been proposed in 2008 (but was not notified). It examines this probing the theoretical arguments as well as the empirical evidence in the context of financial transaction taxes. The study examines the validity of the proposition that such taxes generate revenue while examining the price and quantity effect and the well as the effect on speculative activity.