Cooperation Ministry

10th July, 2021 Polity

Context:

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.

Ministry of Cooperation 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.
In our country, a Co-operative based economic development model is very relevant 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).

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 with the pooled resources of farmers who wish to process their produce.
The country has 1,94,195 cooperative dairy societies and 330 cooperative sugar mill operations.

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.
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.

The state cooperative banks reported a total paid-up capital of Rs 6,104 crore and deposits of Rs 1,35,393 crore, while the DCCBs’ paid-up capital stood at Rs 21,447 crore and deposits at Rs 3,78,248 crore.
The state cooperative banks, which mainly finance agri-processing industries such as sugar mills or spinning mills, disbursed Rs 1,48,625 crore in loans.
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.

Cooperation is in the concurrent list, which means both the central and state governments can govern them.
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.
In 2002, the Centre passed a MultiState Cooperative Societies Act that 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 behalf.

It is an “assault” on federalism since cooperatives is a state subject.
Real aim of the government is to gain control of cooperatives in Maharashtra and Gujarat.
Opposition questioned the need for the ministry when even the multi-state cooperative societies are already governed by a central Act – the Multi State Cooperative Societies Act of 2002.
Opposition has questioned the need for carving out a separate ministry since there was already a department of cooperation. Administratively it makes no sense.

Cooperative movement is strong only in the few states like Gujarat, Karnataka. The ministry can strengthen it across the India.
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 such as Maharashtra, Gujarat, Karnataka while other states failed to keep up.
Over the years, the cooperative sector has witnessed drying out of funding. The ministry can streamline the funding.