Cooperation Ministry - the logic of it

The story: Indian government formed the "Ministry of Cooperation", headed by Home Minister Amit Shah, in July 2021. The goal is to strengthen the coop

Cooperation Ministry - the logic of it

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• The story: Indian government formed the "Ministry of Cooperation", headed by Home Minister Amit Shah, in July 2021. The goal is to strengthen the cooperative movement. This move was indicated first in the Budget speech by finance minister on 01st Feb, 2021.
• Details: Till now, this subject was looked after by the Ministry of Agriculture.

1. The Ministry of Cooperation will provide a separate administrative legal and policy framework for strengthening the cooperative movement in the country.
2. It will try deepening Co-operatives as a true people based movement reaching upto the grassroots.
3. In India, a Co-operative based economic development model is quite relevant where each member works with a spirit of responsibility. The Ministry will work to streamline processes for ‘Ease of doing business’ for co-operatives and enable development of Multi-State Co-operatives (MSCS).

• Cooperative movement: By definition, cooperatives are organisations formed at the grassroots level by people to harness the power of collective bargaining towards a common goal. In agriculture, cooperative dairies, sugar mills, spinning mills etc are formed with the pooled resources of farmers who wish to process their produce. India has 1,94,195 cooperative dairy societies and 330 cooperative sugar mill operations. In 2019-20, dairy cooperatives had  procured 4.80 crore litres of milk from 1.7 crore members and had sold 3.7 crore litres of liquid milk per day. Cooperative sugar mills account for 35% of the sugar produced in India.

1. In banking and finance, cooperative institutions are spread across rural and urban areas. Village-level primary agricultural credit societies (PACSs) formed by farmer associations are the best example of grassroots-level credit flow.
2. These societies anticipate the credit demand of a village and make the demand to the district central cooperative banks (DCCBs). State cooperative banks sit at the apex of the rural cooperative lending structure. Given that PACSs are a collective of farmers, they have much more bargaining powers than an individual farmer pleading his case at a commercial bank.
3. There are also cooperative marketing societies in rural areas and cooperative housing societies in urban areas.

• Finances: NABARD’s annual report of 2019-20 counts 95,238 PACSs,363 DCCBs and 33 state cooperative banks in India. The state cooperative banks reported a total paid-up capital of Rs 6,104 crore and deposits of Rs 1,35,393 crore, while the DCCBs’ paid-up capital stood at Rs 21,447 crore and deposits at Rs 3,78,248 crore. The DCCBs, whose main role is disbursal of short-term loans to the farming sector (crop loan), distributed Rs 3,00,034 crore in loans. The state cooperative banks, which mainly finance agri-processing industries such as sugar mills or spinning mills, disbursed Rs 1,48,625 crore in loans.
• Laws governing cooperative societies: Cooperation is in the concurrent list, so both the central and state governments can govern them. A majority of the cooperative societies are governed by laws in their respective states, with a Cooperation Commissioner and the Registrar of Societies as their governing office. In 2002, the Centre passed a MultiState Cooperative Societies Act that allowed for registration of societies with operations in more than one state. These are mostly banks, dairies and sugar mills whose area of operation spreads across states. The Central Registrar of Societies is their controlling authority, but on the ground the State Registrar takes actions on his behalf.
• Hope for growth: Over the decades, the cooperative structure managed to flourish and leave its mark only in a handful of states like Maharashtra, Gujarat, Karnataka etc. Under the new Ministry, the cooperative movement may get the required financial and legal power needed to penetrate into other states also. Cooperative institutions get capital from the Centre, either as equity or as working capital, for which the state governments stand guarantee. This formula had seen most of the funds coming to a few states such as Maharashtra, Gujarat, Karnataka while other states failed to keep up.
• Political angle: Cooperative institutions, be it the village-level PACS or the urban cooperative housing societies, elect their leaders democratically, with members voting for a board of directors. In states like Maharashtra, these served as schools for development of leadership. In Gujarat, Amit Shah had headed the Ahmedabad District Central Cooperative Bank for a long time. In the present Maharashtra legislature, there are at least 150 legislators who have had some connection with the movement, including NCP chief Sharad Pawar and Deputy Chief Minister Ajit Pawar. The purse strings of the local economy always remain with the cooperative institutions. 

 

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