Recently, in the cabinet reshuffling, the government announced the formation of a separate Union Ministry of Cooperation, a subject that till date was looked after by the Ministry of Agriculture.
What is a co-operative society?
- A co-operative society is a voluntary association of individuals having common needs who join hands for the achievement of common economic interest.
- Its aim is to serve the interest of the poorer sections of society through the principle of self-help and mutual help.
- The main objective is to provide support to the members.
Objectives of the new Ministry
- It will provide a separate administrative legal and policy framework for strengthening the cooperative movement in the country.
- It will help deepen Co-operatives as a true people based movement reaching upto the grassroots.
- It will strengthen the Co-operative based economic development model which is already very relevant in India 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).
Status and Importance of cooperative movement in India
- At presence there are 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 the country.
- 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.
- 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.
- There are also cooperative marketing societies in rural areas and cooperative housing societies in urban areas.
- NABARD’s annual report of 2019-20 counts 95,238 PACSs, 363 DCCBs and 33 state cooperative banks in the country.
- In urban areas, urban cooperative banks (UCBs) and cooperative credit societies extend banking services to many sectors that would otherwise have found it difficult to get into the institutional credit structure.
- According to Reserve Bank of India data, the country has 1,539 UCBs.
Need for the new Ministry
- Various studies have shown the cooperative structure has managed to flourish in only in a handful of states like Maharashtra, Gujarat, and Karnataka etc.
- Under the new Ministry the cooperative movement would get the required financial and legal power needed to penetrate into other states also.
- In recent years, the cooperative sector has witnessed drying out of funding.
Laws governing cooperative societies
- The 97th amendment to the Constitution, 2011 inserted Article 19(1) (c) by recognizing the right of the people to form cooperative societies as a fundamental right.
- It also added a new Article 43B in the DPSPs for the promotion of cooperative societies and Part IXB regarding the cooperatives working in India.
- Like agriculture, Cooperative Societies is in the state list.
- 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.
- The Central Registrar of Societies is their controlling authority, but on the ground the State Registrar takes actions on his behalf.
Evolution of co-operatives in India
- The formal launch of the cooperative movement in India occurred with the introduction of the Cooperative Societies Act in 1904.
- In 1912, another Cooperative Societies Act was passed to rectify some of the drawbacks of the earlier law.
- The next landmark change came in 1919, when cooperation was made a state subject.
- That allowed the various states to come up with their own legislation governing cooperatives.
- 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.
- In 2002, the Centre passed a Multistate Cooperative Societies Act that allowed for registration of societies with operations in more than one state.