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‘Ministry of Cooperation’

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    Polity & Governance
  • Published
    12th Jul, 2021


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.