Future Agenda for Cooperatives

FUTURE CO-OPERATIVE AGENDA

B. Yerram Raju*

 

The Home Minister and Union Minister for Cooperation, Amit Shah held a meeting of state ministers to reformulate and revise the National Co-operative Policy, 2022 in the aftermath of the resistance of the states to the  97^th Constitutional Amendment 2012 and the consequential changed milieu in the Co-operative movement of the Country.

 

The widely spread Co-operatives from brooms to looms; from fertilizer to food; from production to consumption; from milk to silk and from labour to power have their roots lie in the setting up of Primary Agricultural Co-operative Credit Societies (PACS) in 1904. Entire cooperative legislation has been catering more to the credit cooperative structure al bait several imbalances and irregularities and faulty accounting practices. Urban Cooperative Banks (UCBs), like the community banks in the US, has been serving the limited requirements of the interested cooperators and have become symbols of mismanagement and poor governance, requiring continual intervention and regulatory architecture from the RBI to protect the interests of the depositors who invested in those banks.

‘Cooperatives are operatives in misappropriation’, bemoaned some famous cooperators like L.C. Jain and eminent bankers like Burra Venkatappapaiah, in the yesteryears. After the Third Five-Year Plan, the Five-Year Plan (FYP) documents removed the chapter on Cooperation. After NABARD assumed charge of supervision of the rural cooperative credit structure, their size and contribution to agriculture and rural development significantly declined giving more space to the less-interested commercial banks. There has been a strategy retreat from ‘Farmers’ Service Societies’ (multi-purpose cooperatives) financed earlier by the commercial banks

Context, Rationale, and the problems

The lofty ideal of Gram Swaraj embedded in Panchayats and Cooperatives came to occupy secondary status despite the 73rd and 74th Amendments to the Constitution of India, mired in confusing objectives and corrupt practices. Cooperatives originally started with the laudable socio-economic goal of helping the unreached and as effective instruments of financial inclusion, are today under the seizure of the political elite and became in fact the seedbeds of political power. The elected representatives like the Presidents, Vice Presidents, and Board of Directors appointed secretaries would do the things they want and not what the members legitimately expected of them.

Cooperative Federalism demands that the states have to be taken on board over any new policy changes as the subject of cooperation falls in the domain of the states and not the union government.

Martin Luther King Jr, once stated, “Almost always, it is the creative dedicated minority that has made the world better.” The largest food brand in India – AMUL proved that cooperatives are the best bet for survival. “If you want to be incrementally better, be competitive. If you want to be exponentially better, be cooperative,” a Canadian Lesson Book on Cooperatives quoted.

Recommendation:

            The Government should reformulate its Future Co-operative Agenda to professionalize and democratize the Co-operatives and also to facilitate the development of the Co-operatives as Self-reliant and economically sustainable organizations in order to provide an environment for the members to have improved access, economies of scale, insuring them against unforeseen risks, safeguarding them against market imperfections and bestowing the advantages of Co-operative Collective Action, based on International Co-operative Principles.

Policy on Future Co-operative Agenda:

 

Definition of cooperatives should avoid their classification that gives a long arm to the regulator.

 

* While upholding the values and principles of Cooperation, the Policy recognizes the Cooperatives as an autonomous association of persons, united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.

 

This Policy addresses the hitherto unaddressed or neglected issues of management, governance, audit, and member-run democratic structure of the cooperatives in the country through legal, accounting, technological and structural changes and therefore would prove its supremacy over other economic instruments in the interest of inclusive growth, a goal not to be missed by any democratic government.

 

Registrar of Cooperatives – role shall not be so much of intervention as registration, maintaining membership data and arbitration over the issues that arise among the co-operators and cooperatives.

 

Key Risk Areas:

1. The political will to implement such policy throughout the length and breadth of the country.
2. Speed of action
3. Resources for implementing change – Budgetary provisions; Endorsement of Niti Aayog – the think tank of the present government and
4. Approvals from RBI and SEBI, where required.

 

Strategies To Achieve The Objectives:

          Technology offers a level playing field and therefore, there must be a plan for technology infusion. Co-operatives being financially weak enterprises owing to their excessive obligations enjoined upon by the state governments, funds for technology management should come from the State Government as a one-time grant/support with conformance to certain discipline by the leadership in Co-operatives from the primary to the apex levels in all the spheres.

          The Investment in technology can come as a grant or soft loan assistance from either the government or an international organization. Co-operatives that have adequate collaterals to offer can be enabled to do so with the approval of their respective General Body. The tenor of assistance can be mutually agreed upon between the giver and taker.

Monitoring and Implementation

There shall be a Policy Review Committee, meeting at half-yearly intervals, at the State and Union Government levels with the concerned Secretary-in-charge to chair the deliberations at quarterly intervals. The concerned Minister shall present to the Parliament’s first session of the year, a review of the efficacy of the delivery instruments under the Cooperative Act.

 

Conclusion

The vision for the twenty-first century should withstand the challenges of a competitive business environment where excellence, efficiency, and high productivity parameters will be the priority. Emphasis will continue to be laid on an improvement with co-operative governance through the process of restructuring and rejuvenation.