GS-2: Development Processes and the Development Industry;

GS-3: Inclusive Growth and issues arising from it.

Key phrases: Cooperatives, Registrar of cooperative societies, NABARD

Why in news:

Union government announced formation of a Ministry of Cooperation.

Analysis:

What are co-operatives?

• According to the International Labour Organisation, a cooperative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise
• There are many types of cooperatives such as Consumer Cooperative Society, Producer Cooperative Society, Credit Cooperative Society, Housing Cooperative Society and Marketing Cooperative Society.

Importance of cooperatives

• It provides agricultural credits and funds where state and private sectors have not been able to do very much.
• It provides strategic inputs for the agricultural-sector; consumer societies meet their consumption requirements at concessional rates.
• It is an organization for the poor who wish to solve their problems collectively.
• It softens the class conflicts and reduces the social cleavages.
• It reduces the bureaucratic evils and follies of political factions.

Cooperative evolution in India

• Cooperatives were first started in Europe and the British Government replicated it in India to mitigate the miseries of the poor farmers.
• First credit cooperative society was formed in Banking in 1903 with the support of the Government of Bengal
• Enactment of the Cooperative Credit Societies Act, 1904 gave Cooperative a definite structure and shape.
• In 1919, cooperation became a provincial subject and the provinces were authorised to make their own cooperative laws under the Montague-Chelmsford Reforms.
• National Cooperative Development Corporation (NCDC), a statutory corporation, was set up under National Cooperative Development Corporation Act, 1962.
• The Government of India announced a National Policy on Co-operatives in 2002.

Current status in India

• The country has 1,94,195 cooperative dairy societies and 330 cooperative sugar mill operations.
• Constitution (97th Amendment) Act, 2011 added a new Part IXB right after Part IXA (Municipals) regarding the cooperatives working in India.
• Village-level primary agricultural credit societies (PACSs) formed by farmer associations are the best example of grassroots-level credit flow
• Central Government recently established a distinct ‘Ministry of Co-operation' to realize the aim of ‘Sahakar se Samriddhi' (Prosperity via Cooperation) and to revitalize the cooperative movement.
• Cooperative Societies is in Item No. 32 in the State List

Success story

• Most successful Indian cooperatives such as the Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF)/Amul, Indian Farmers Fertiliser Cooperative Limited (IFFCO) and Krishak Bharati Cooperative Limited (KRIBHCO), are outside government control.
• 94 million poor linked with banks through 7.5 Million SHGs, availing them of collateral free credit.
• Poor women of these SHGs in India collectively control the financial business with an annual turnover of Rs 100,000 crores-savings account balance of Rs. 19,500 cr and credit outstanding of over Rs. 75,500 cr
• A cooperative Shrreja Mahila milk producer company started with 24 women and now has 90k women and annual turnover of 500 cr -NDDB helped setting this up.

Issues faced –Why is it stagnant?

• After Independence, cooperative institutions became an instrument of planning and state action. Too much of government interference is killing them
• Recent initiatives such as an umbrella organisation for urban cooperatives and a new Ministry of Cooperation at the Centre threaten to further this approach in the absence of safeguards.
• Cooperatives have also become avenues for regulatory arbitrage, circumventing lending and anti-money laundering regulations
• In almost all States, the Registrar of cooperative societies has become an instrument of inspection and domination, one which imposes uniform by-laws, and amends them when individual societies do not fall in line
• Rural-urban dichotomy in the regulatory treatment of cooperatives is specious and outdated. It perpetuates age-old divisions based on the nature of operations and population size.
• People are not well informed about the objectives of the Movement, rules and regulations of co-operative institutions.

Way ahead

• Regulation and the supervision of cooperative banks should move to a new body from the Reserve Bank of India (RBI) for urban banks and the National Bank for Agriculture and Rural Development (NABARD) for rural banks.
• Powers of the RCS need to be scaled back. A British Indian innovation, it failed to stick to its original role of a facilitator: a friend, philosopher, and guide to cooperative societies.
• New areas are emerging with the advancement of technology and cooperative societies can play a huge role in making people familiar with those areas and technologies.
• To strengthen the cooperatives there should be market linkages for agricultural farmers as well as cooperative societies
• Ministry of Cooperation should make it easier for cooperatives to do business, right from registration to winding up. It should liberate multi-state cooperatives from government control
• Ministry of Cooperation should identify the areas where cooperatives-based business enterprises can be made, provide the capital, technology and providing the ease of doing business.
• Focus on women: Should be a focus on women cooperatives because they are less than 3% of the 8 lakh cooperatives in the country.

Source: The Hindu