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New Union Ministry of Cooperation

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July 12, 2021

Why in news?

As part of the latest Cabinet reshuffle, the government announced the formation of a separate Union Ministry of Cooperation, a subject that was till date looked after by the Ministry of Agriculture.

What are the objectives?

  • The Ministry of Cooperation is aimed at strengthening the cooperative movement in the country.
  • It will provide a separate administrative legal and policy framework at this end.
  • It will help deepen Co-operatives as a true people-based movement reaching up to the grassroots.
  • The Ministry will work to streamline processes for ‘Ease of doing business’ for co-operatives.
  • It will also enable development of Multi-State Co-operatives (MSCS).

What is the cooperative movement?

  • Simply, 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.
  • Village-level primary agricultural credit societies (PACSs) formed by farmer associations are the best example of grassroots-level credit flow.
  • There are also cooperative marketing societies in rural areas and cooperative housing societies in urban areas.
  • As market conditions are evolving, cooperatives in States such as Kerala have got into complex operations: running IT parks and medical colleges.
  • More avenues for expansion, such as insurance, remain untapped and the regulatory regime must evolve in step.
  • Though not uniform across India, cooperatives have made significant contributions in poverty alleviation, food security, management of natural resources and the environment.

How are cooperative societies governed?

  • The legal architecture of the sector began evolving since 1904 under colonial rule.
  • In 2002, the Multi State Cooperative Societies Act was passed, taking into account the challenges arising out of liberalisation.
  • Agriculture and cooperation are in the state list.
  • So, a majority of the cooperative societies are governed by laws in their respective states.
  • The MultiState Cooperative Societies Act, 2002 allowed for registration of societies with operations in more than one state.
  • The Central Registrar of Societies is their controlling authority. But on the ground, the State Registrar takes actions on his/her behalf.

What is the need for a new Ministry?

  • Policy focus - Alongside the state and the market, cooperatives play a vital role in the country’s development.
  • But they are seldom the focus of policy planning.
  • The creation of a new Union Ministry will redeem the cooperatives sector from this negligence.
  • Management - Despite regulatory oversight by the RBI and States, there is considerable autonomy for the sector which is often misused.
  • Consequently, the cooperatives sector has become an instrument of patronage and pilferage.
  • Mismanagement and corruption destroyed the sector in some States.
  • Cooperatives are also effective in mediating politics at the local level, outside of the parliamentary system.
  • It is thus essential to restore the importance of the cooperative societies for their intended purposes.
  • Funding - The cooperative structure has managed to flourish and make an impact only in a handful of states.
  • These include states like Maharashtra, Gujarat, Karnataka etc.
  • [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 while other states failed to keep up.]
  • Over the years, the cooperative sector has witnessed drying out of funding.
  • Under the new Ministry, the cooperative movement would get the required financial and legal power to penetrate into other states also.

What is the way forward?

  • The premise of a cooperative is that decisions are made by those affected by them.
  • Thus, the case for transparency and efficiency in the sector is strong.
  • That goal must be pursued not by a fearful control mechanism but by advancing the cooperative spirit.
  • But there is a fear that the new Ministry would concentrate even more powers in the hands of the Centre.
  • If the move is an attempt to appropriate the significant political capital of the cooperative, it would turn counterproductive.
  • The new Ministry should thus be a catalyst and not turn into a command authority.

 

Source: The Indian Express, The Hindu

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