SUCCESS & CHALLENGES FOR COOPERATIVE MOVEMENT IN INDIA
Dr BALRAJ VISHNOI
The values universally recognized as
cornerstones of cooperative based societies and organization depends on
self-help, democracy, equality, equity and solidarity. Voluntary and open
membership with democratic control, economic participation, autonomy, training and
information are significant concern for community as a whole in cooperatives.
The
cooperative sector in India completed 110 years of its existence in 2014 and
till today struggling with the twin issues of farmer’s indebtedness and
poverty. Its presence in almost all walks of rural life and a covering almost all
villages of the country with presence in urban areas too, the cooperatives have
come to be recognized as one of the most important economic and social organizations
today and are meant to be enterprises of the citizen.
In 1942, the government enacted the
Multi Unit Cooperative Societies Act which was an enabling instrument for
incorporation and winding up of cooperative societies. The Reserve Bank of
India formed in 1934, had agriculture credit as a part of its basic mandate.
Multi-Unit Cooperative
Societies Act, 1942
With the emergence of cooperatives having a membership from more than one state such as the Central Government sponsored salary earners credit societies, a need was felt for an enabling cooperative law for such multi-unit or multi-state cooperatives. Accordingly, the Multi-Unit Cooperative Societies Act was passed in 1942, which delegated the power of the Central Registrar of Cooperatives to the State Registrars for all practical purposes.
With the emergence of cooperatives having a membership from more than one state such as the Central Government sponsored salary earners credit societies, a need was felt for an enabling cooperative law for such multi-unit or multi-state cooperatives. Accordingly, the Multi-Unit Cooperative Societies Act was passed in 1942, which delegated the power of the Central Registrar of Cooperatives to the State Registrars for all practical purposes.
In 1944, the Gadgil Committee recommended
compulsory adjustment of debts and setting up of Agricultural Credit
Corporations, wherever cooperative agencies were not strong enough.
Promotion and development of
cooperatives as autonomous, independent and democratic organization so that
they can play their due role in the socio-economic development of the country.
The
Policy further aims at reduction of
regional imbalances and strengthening of cooperative education, training and
human resource development for professionalisation of cooperative management.
Presently , District Cooperative Milk Producer Unions and
State Dairy Federations deserve
credit for (a) turning India into the largest milk producing nation of the
world, and secondly (b) bringing substantial raise in the family income of
millions
of milk producers across the
country.
Challenges today in terms of inadequate capital formation
1 Politicisation
of cooperative movement by few self interest politicians:
Cooperative sector, as it exists today in most of the States, is weak
and inactive due to politicisation of cooperative leadership as the Boards of a
majority of cooperative Bodies are dominated by politicians.
2
Bureaucratisation :
When the colonial rulers officially
brought the cooperatives to India, they created the post of the Registrar of
Cooperative Societies, with a view to operating the final levers of control
over these institutions and not allowing the cooperative sector to blossom as a
people’s
movement.
3
Government control:
4
Failure of 2 important cooperative values :
a) Self Help - Self-help has been
envisaged as a basic tenet of cooperatives. In its very genesis the movement is
opposed to both Market as well as State.
b) Member Centrality- Cooperatives by
their very nature are inward looking organisations meant to serve the member
community unlike the corporates which operate for profits. The
focus of the activities of a
cooperatives should focus on itsmembers.
Focus:
State should open the doors for
cooperativisation instead of privatisation but this not occured. Current
perception is that the cooperative sector in present structural-functional form
& lacks values and competence to face such competitive challenge in open
liberal system. Thus needfull to inculcate values
such as: a)
self-help and b) member centrality in
cooperative societies for successful functioning like enterprises and large cooperative
organization.
Needful to form forming Expert
Committees on short as well as long term credit structures in State cooperative
banks and DCCBs and to prepare a draft model law based on 97th
amendment for autonomy of cooperatives and reforms through revival packages and
declaration of schemes such as interest free loan yojana by Rajasthan
government.
There is increased viability in the
spread and depth of coverage of the cooperative movement in India including
Rajasthan for instance in some States ;
we will find highly intense and in-depth activities related to cooperatives
whereas in others states there is absence of the cooperative spirit and
movement objectives neglected. Even
where they exist, their financial and business strength varies substantially.
The performance of cooperatives varies in terms of functional activities
without structural and infrastructural needs of employees as negated by
management in majority. Most important challenge for
cooperative movement is reform related to 85% of India’s farmers falling in the
category of Landless, Marginal and Small landholders.
Primary
challenges for them are:
a) Lacks access to organized markets
for their produce and inadequate availability of agriculture credit
b) Dominance of activities related to non-agricultural
nature predominantly in rural area
C) Cooperatives provides the significant institutional
structure with the capacity to handle problems mentioned above. Cooperatives can
provide adequate credit to the rural people at affordable price with low interest
rates but the challenge lies in time-bound recovery due to natural calamities
or low rainfall etc. d) Cooperatives plays major role in other activities like dairy production,
fisheries, livestock development, agro-forestry and crop conservation with
marketization etc.
e) Cooperatives provides linkages between
credit and market to develop into
multi-purpose rural institutions as a vital role for development of farmers.
f) The
significant role of cooperatives in sale of consumer goods, sugar production , housing and ware houses
construction.
g) Reforms needed to comprehensively revive and strengthen cooperative sector
by adopting a multi-dimensional reform agenda covering all aspects of legal, institutional
, policy changes with the focus on role of bureaucracy and reducing political
interference.
According to the 97th Constitutional
amendment act 2011, implemented in 2012 with the main purpose to provide
autonomy to cooperatives and
laying down the following matters,
namely:--
a) Provisions for incorporation,
regulation and winding up of co-operative societies based on the principles of
democratic member-control, member-economic participation and autonomous
functioning;
b) Specifying the maximum number of
directors of a co-operative society (not
exceeding twenty-one members);
c) Providing for a fixed term of
five years from the date of election in respect of the elected members of the
board and its office bearers;
(d) Providing for a maximum time
limit of six months during which a board of directors of a co-operative society
could be kept under suspension;
(e) Providing for independent
professional audit;
(f ) Providing for right of
information access to the members of the co-operative societies;
(g) Empowering the State Governments
to obtain periodic reports of activities and accounts of co-operative
societies;
(h) Providing for offences relating
to co-operative societies and penalties in respect of such offences.
Today after 2 years we find it as a
CHALLENGE that provisions mentioned
above to ensure the autonomy and democratization of co-operatives and to ensure the accountable management for the members
of cooperative societies.
Need of the present scenario for successful cooperative
movement
1) To promote and build cooperative
societies on the principles of voluntary and open membership.
2)
Democratic
and member-centric participation and autonomous functioning.
3)
Need
to be understood that cooperative societies are autonomous voluntary associations
of persons united to meet all members common economic, social and cultural
aspirations and requirements.
4)
The
Cooperatives should not be treated as a part of the government institutional
machinery.
5)
Regarding
the empowerment of Co-operatives as an
aim of 97th constitutional
amendment 2011, it is needful that the State shall endeavour to promote
voluntary formation, autonomous functions, democratic control and professional
management of the co-operatives.
6) To form and run cooperatives based
on principles of voluntary and open membership, democratic control, economic
participation and autonomous functioning without control of Government in States and
Union .
7) The essential condition for registration of a
society should be simplified but with vigilance by mohalla/ward committees ;bye-laws
should provide for social and economic betterment of its members through
self-help and mutual aid in accordance with the cooperative principles ; reforms
in the governance of the cooperative society by removing the restrictive
provisions which conferred excessive power to the Government such as powers of
issuing directions, making rules, appointing nominees, conducting elections,
directing special audit etc; strategic alliance with companies, private and
public sector entities and equity participation in other cooperatives.
8)
Federal
cooperatives duly making provision for registration and codification of their
enlarged duties and functions.
9) Conferment of affirmative duty upon
cooperatives for organizing cooperative education programmes for its members,
directors and employees.
10) Prescribing clear grounds for disqualification of members of society
.
11) Provision for redemption of shares on their face value.
12) Prohibition to hold office of Chairman or President, etc. by members after becoming Ministers, Members of
Parliament and Members of Legislative Assembly.
13) Elections: The responsibility to conduct timely elections by the
society and if the society fails to do so, the Registrar can conduct elections
at the cost of the society.
14) The nomination of the Union or State
Government on the board of cooperative society is restricted to a minimum of
one where the share capital of government is less than 26 per cent and to a
maximum of three where the same is 51 percent.
VIEW OF 2nd ADMINISTRATIVE REFORM COMMISSION:
a) An Article should be added to Part-IV of the Constitution
in the form of
43B where the State should be made responsible for making
such laws
that will ensure autonomous, democratic, member driven and
professional
cooperative institutions. In that case, a large scale
Constitutional
amendment on the pattern of Parts-IX and IX-A which was
introduced
by the 73rd and 74th Amendments, will not be necessary. The
proposed
Article 43B may read as follows:
Article 43B: Empowerment of
Co-operatives: “The State shall endeavour
to secure by suitable legislation
or economic organisation or any other way
autonomous, democratic, member
driven and professional cooperative
institutions in different areas
of economic activity particularly those relating
to agriculture.”
Advisory Council and feels that this coupled with the
amendment
suggested in the Directive Principles would be a step in the
right direction
to make the cooperative institutions voluntary, democratic,
professional,
member-driven and member-centric enterprises. Accordingly,
the following
amendments may be made in the Constitution:
i. Under Article 19, 19(1)(h) may be added as follows:
“(h) to form and run cooperatives
based on principles of voluntary
and open membership, democratic
member control, member
economic participation, and
autonomous functioning free from State
control.”
ii. Correspondingly, Article 19(4) should be amended as
follows:
“(4) Nothing in sub-clauses (c)
and (h) of the said clause shall affect
the operation of any existing law
in so far as it imposes, or prevents
the State from making any law
imposing, in the interests of [the
sovereignty and integrity of
India or] public order or morality,
reasonable restrictions on the
exercise of the right conferred by the
said sub-clause”.
Advisory Council and feels that this coupled with the
amendment
suggested in the Directive Principles would be a step in the
right direction
to make the cooperative institutions voluntary, democratic,
professional,
member-driven and member-centric enterprises. Accordingly,
the following
amendments may be made in the Constitution:
i. Under Article 19, 19(1)(h) may be added as follows:
“(h) to form and run cooperatives
based on principles of voluntary
and open membership, democratic
member control, member
economic participation, and
autonomous functioning free from State
control.”
ii. Correspondingly, Article 19(4) should be amended as
follows:
“(4) Nothing in sub-clauses (c)
and (h) of the said clause shall affect
the operation of any existing law
in so far as it imposes, or prevents
the State from making any law
imposing, in the interests of [the
sovereignty and integrity of
India or] public order or morality,
reasonable restrictions on the
exercise of the right conferred by the
said sub-clause”.
Cooperative Credit and rural India
Cooperative credit institutions provides
monetary resources in rural areas and for simplified credit access for the
rural people. Cooperative Credit faced challenge in terms of financial degradation
. Main causes are:
( (a)
State interference and politicization.
(b)
Mis- management.
( (c)
Degradation of resource base,
Dr C.Rangarajan Committee on Financial
Inclusion reported causes like dependence on external funding, excessive State
intrusion, multiplicity of control, huge accumulated losses, low recovery, lack
of business initiatives and regional disparity. Around half of the Primary
Agriculture Credit Societies (PACS), a fourth of the intermediate tier, viz., the District Central Cooperative Banks
(DCCBs), and under a sixth of the State level apex institutions, viz., the State
Cooperative Banks (SCBs) are loss-making. The accumulated losses of the system
aggregate too high. Non-Performing Assets (NPA), as a percentage of
loans outstanding at the level of SCBs and DCCBs.The Task Force on Revival of
Rural Credit Institutions (Vaidyanathan Committee) observed that, “the financial position
of the system is weak and deteriorating.
………………..to be continue -2
