Did manipulation by top commodity traders trigger 2015 dal price rise?

Price tags are seen on the bags of pulses that are kept on display for sale outside a shop at a market in Mumbai, India January 31, 2017. REUTERS/Shailesh Andrade - RTX2YYDV

Back in 2015, prices of pulses went through the roof, with moong dal topping out at Rs 500 per quintal in a move that triggered a heated discussion over government policies, besides a storm on social media.

Back then, analysts blamed the back-to-back droughts in 2014 and 2015 as being responsible for the price, besides a perverse policy environment.

While the conversation died down after pulses prices cooled, a subsequent investigation into the price rise by the Income-Tax Department revealed that a cartel of international and national traders was behind it.

The investigation further revealed that the cartel used the operation to launder money.

An article by the Economic & Political Weekly says that leading commodities traders -- including the world's largest trader Glencore, India's Edelweiss, and NCDEX among others -- were behind the price rise. The parties under question deny the allegations.

According to the I-T Department's appraisal report, which was accessed by the EPW writer, the abnormal price situation in India was created by a coordinated collusive activity orchestrated by few trading and financial entities.

"The physical stocks of pulses (were) cornered in domestic and international markets. Significant long positions on the future were taken on exchanges to create an artificial scarcity at the wholesale and retail levels," the report says.

The report goes on to outline the modus operandi, including detailing spurious transactions that were deliberately entered into by various parties to force prices higher.

Read the full report here.