New Union Ministry of Cooperation

Cooperatives in focus: Indian cooperative sector is quite strong in some states and sectors - Maharashtra, Gujarat, Karnataka, Kerala, MP, Odisha - an

New Union Ministry of Cooperation

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• Cooperatives in focus: Indian cooperative sector is quite strong in some states and sectors - Maharashtra, Gujarat, Karnataka, Kerala, MP, Odisha - and the July 2021 decision to make a Union ministry of Cooperation is quite significant. Why do it?
• Scale of it: India has 8 lakh registered cooperatives, mostly in rural and semi-urban areas. More than 40 crore people are directly impacted, so controlling this means tremendous political leverage.
• Funding in cooperatives: The first funding in any cooperative is always from the members, who pool money as share capital to start the cooperative. At this stage, a State or the Centre can also become members and give some capital contribution. Later comes bank financing.

1. Loans can be taken from specialied bodies like National Cooperative Development Corporation (NCDC) as long-term loans, or working capital needs or making infrastructure
2. The key leverage for Union govt. is the "grant component under Central govt. scheme" as part of the NCDC infrastructure loans; it can be 15 to 30% and is favoured by most coops
3. NCDC: It is based at Delhi, under Ministry of Agriculture, and is a statutory body.
4. Funding also arrives when governments engage cooperatives in schemes like food processing, animal husbandry, rural employment, etc. They get grants.
5. AIF - Agriculture Infrastructure Fund - can give funds for storage infra creation

• Guarantors: Governments can also be guarantors of loans taken by cooperatives. Example: Chhattisgarh's Markfed borrows Rs.10000 cr p.a. from NCDC to procure foodgrains from farmers, and state stands guarantee for it.
• Why a new Ministry: Today, respective Ministries have some control over their cooperatives like NAFED (Agriculture ministry), Fiscopfed (Animal husbandry and fisheries ministry). But now the top policy decisions will be taken by Amit Shah directly, and a new Union versus State stage will be set. Why? States have major say in their cooperatives.
• Summary: The 97th amendment 2011 tried bringing uniformity in laws governing this sector in India, and asked for mandatory registration of cooperatives. The Supreme Court is now (2021) hearing a plea if that amendment hurts states' exclusive power to deal with cooperatives.

 

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