Indian Commodity Derivatives Market & Economic Growth: A Perspective

Abstract

When all the major asset classes saw a downturn post-financial crisis of 2008,only commodity derivatives exhibited a stable performance. This strengthens the argument that commodity markets hold prospects for strong economic growth, particularly for developing nations. This paper endeavours to review literature to find evidence in support of the underlying link between financial markets and economic growth. Also, a review of the extant literature pertaining to Indian commodity market has been done. A survey of empirical investigation shows a number of cases of inefficiency in the markets that needs to be checked. Further, the paper discusses a theoretical model that strives to help in achieving the super ordinate goal of economic growth through development of efficient commodity market. The model presses upon four key areas for growth that collectively aids in accelerating the pace of Gross Domestic Product (GDP) growth. However, this requires addressing the challenges blocking the efficient functioning of commodity markets, which have also been highlighted.