For Rajesh, a small farmer in Uttar Pradesh, most concerns revolve around his small plot of land, where the stalks of green chana (gram) dictate his livelihood. In good years, he can expect a crop of 56 quintals. In bad years, it can drop to 28. And then he has to deal with the fl uctuations in prices, which in 2008 varied by 10% around a base of Re 1, per quintal.

Rajesh sighed; the weather was unpredictable, but at least he could gather good information on the commodity prices, thanks to the Mumbai Multi-commodity Exchange (MCX) blackboard hanging on the wall of the post offi ce in the next door village, 10 kilometres away (see box). Thanks to regular updates sent from Mumbai to the larger post offi ce in the taluk, and then printed and mailed to the local post offi ce, he had access to data from the Mumbai MCX and other exchanges in India. He might not know what exact quantity he will end up with, but he will know at what price he can sell it.

History
India's fi rst exchanges for trading commodities started over 135 years ago, when cotton was traded in about twenty regional exchanges spread around the country. These exchanges were so-called forward markets, wherein the sellers typically carried the physical goods with them. These were pit-based facilities, with buyers and sellers shouting their bids. These trades were almost always accompanied by physical delivery of the goods. Cotton was handed over for hard cash - although in those days the cash was often gold, or silver coins, or guaranteed bank drafts.