1128 The Indian Economic Journal • Volume 62(3), October-December 2014 ARTICLES / 5 DYNAMIC RELATIONSHIP BETWEEN SPOT AND FUTURES PRICES OF TURMERIC - EVIDENCE FROM NATIONAL COMMODITY AND DERIVATIVES EXCHANGE LTD. (NCDEX) GOURI PRAVA SAMAL & ANIL KUMAR SWAIN India’s growth story in the coming years would be commodity intensive. However, volatile price movement, ambiguity in the demand-supply situation and lack of information about the availability of a commodity could be issue of concern for every stakeholder in the supply chain. Commodity futures trading would help to hedge against price risk. Further, India is the largest producer, consumer and exporter of turmeric in the world which accounts for about 80 per cent of world turmeric production and 60 per cent of world exports. Thus, taking into consideration, the importance of turmeric in Indian economy, the paper presented the area, production, productivity and export trends of turmeric in India in the present scenario. Further, the volatility feature of turmeric prices lead the author to examine the dynamic relationship between spot and futures prices of turmeric using the Granger Causality Test .Empirical estimates highlight the following evidences: (i) the futures markets dominate spot markets for turmeric in India; (ii) the F-statistic indicates a strong flow of information from the futures markets to spot markets than the reverse; (iii) the unidirectional causal relationships exhibited by futures and spot price series imply that the futures markets of turmeric help to discover prices in the spot markets. INTRODUCTION The global liberalization and incorporation of financial markets has shaped new investment opportunities, which in turn require the development of new instruments that are more proficient to deal with the amplified risks. Investors who are vigorously engaged in industrial and emerging markets require to hedge their risks from these internal as well as cross-border transactions. Agents in liberalized market economies who are exposed to volatile commodity prices entail suitable hedging products to deal with them. The commencement of liberalization and economic expansion in these emerging economies demands that corporations