COOPERATIVE SOCIETIES AMENDMENT ACT

ChinmayaIAS Academy - Current Affairs December 12, 2022 GS2 Leave a comment 185 Views

The Bill to amend the Multi-State Cooperative Societies (MSCS) Act, 2002, was introduced in the Lok Sabha on December 7.
Opposition parliamentarians alleged that the Bill’s provisions encroached upon the rights of State governments, demanding that it be referred to a Standing Committee.

What are multi-State cooperatives?

According to the International Cooperative Alliance (ICA), cooperatives are people-centred enterprises jointly owned and democratically controlled by and for their members to realise common economic, social and cultural needs and aspirations. Multi-State cooperatives are societies that have operations in more than one State — for instance, a farmer-producers organisation which procures grains from farmers from multiple States.
The board of directors are from all the States these collectives operate in and control all the finances and administration. There are close to 1,500 MSCSs registered in India with the highest number being in Maharashtra.

What are the issues with the cooperative sector?

The independent and autonomous character of cooperative societies was to be crucial in their functioning. However, H.S. Shylendra, professor at the Institute of Rural Management, Anand (IRMA) points out in a 2021 paper that the inclusion of cooperatives in the planning process as development instruments made the sector an avenue for dispensing patronage to the supporters of ruling political parties.
Moreover, the policy of State governments to contribute to the share capital of the cooperatives enabled governments, “in the name of public interest” to directly intervene in the working of cooperatives which are legally autonomous.
Notably, the potency of cooperatives as an apparatus of political control can be seen in States such as Maharashtra, Kerala, Gujarat, parts of Karnataka, Tamil Nadu, Madhya Pradesh and West Bengal. Besides, MSCSs were formed to ease the operation of collectives throughout the country.
On the contrary, IRMA researcher Indranil De points out that in spite of their potential, MSCSs are facing issues regarding trust, which is the very basis of cooperation.
This has brought MSCSs under multiple controls from the Centre. Monitoring is one of the important institutional functions in a collective organisation but if monitored from much above, it takes a top-down approach as opposed to a grassroots one.
In 1991, the Choudhary BrahmPerkash Committee of the planning commission made far-reaching recommendations to reorganise multi-State cooperatives but researchers point out how the Act has not been modified as per the report.

What does the Bill seek to change?

To plug the “loopholes” in the MSCS Act, the Centre introduced a Bill seeking to amend the 2002 law for more “transparency” and “ease of doing business”.
The amendments have been introduced to improve governance, reform the electoral process, strengthen monitoring mechanisms and enhance transparency and accountability.
The Bill also seeks to improve the composition of the board and ensure financial discipline, besides enabling the raising of funds in multi-State cooperative societies.
The Bill provides for the creation of a central Co-operative Election Authority to supervise the electoral functions of the MSCSs.
The Authority will have a chairperson, vice-chairperson, and up to three members appointed by the Centre.
Objecting these amendments, Congress MP Adhir Ranjan Chowdhury said in Parliament that the Bill may lead to “the concentration of power of the Centre”, which could impact the “autonomy” of MSCSs and create potential for “misuse”.
Notably, the constitutional domain of States in regulating cooperative societies was upheld by the Supreme Court last year when it struck down a part of the 97th Constitution Amendment.
It also envisages the creation of a Co-operative Rehabilitation, Reconstruction and Development Fund for the revival of sick multi-State co-operatives societies.
This fund shall be financed by existing profitable multi-State co-operative societies which will have to deposit either ₹1 crore or 1% of the net profit into the Fund. Congress MP Manish Tewari pointed out that this would put an additional burden on MSCSs.
In order to make the governance of multi-State cooperative societies more democratic, the Bill has provisions for appointing a Cooperative Information Officer and a Cooperative Ombudsman.
To promote equity and facilitate inclusiveness, provisions relating to the representation of women and Scheduled Caste/Tribe members on the boards of multi-State cooperative societies have also been included.