Rs 2,500 cr plan to revive weak co-ops | india | Hindustan Times
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Rs 2,500 cr plan to revive weak co-ops

A MEMORANDUM of understanding to be signed between NABARD and Central and State Government at Bhopal to introduce Vaidyanathan Committee recommendations this month will unshackle primary agriculture credit cooperative societies and district central cooperative banks from mandate of State Cooperative Department.

india Updated: Sep 14, 2006 14:37 IST

A MEMORANDUM of understanding to be signed between NABARD and Central and State Government at Bhopal to introduce Vaidyanathan Committee recommendations this month will unshackle primary agriculture credit cooperative societies and district central cooperative banks from mandate of State Cooperative Department.

They will receive financial autonomy and they would be free to carry out business with agencies outside district and take loans from any nationalised or private commercial bank like ICICI. Their existing financial transaction is restricted to NABARD.

At present they sell seed and fertilisers through public distribution system, but with the MoU it will no longer be necessary. According to information, the Centre will pump in Rs 2,100 crore under the MoU to revive the cash-starved primary cooperative societies. The total package is of Rs 2,500 crore.

“Agriculture societies that are financially unsound would thus receive fresh lease of life,” Cooperatives Commissioner Prabhat Parashar informed over phone from Bhopal. Of the 4,500 primary cooperative societies in the State, more than 50 per cent have reached financial ebb.

The MoU will, however, make election to the societies mandatory within six months in case they dissolve. Besides, management information system and common accounting system would be put in place for the beneficiaries. The societies would be run on the guidelines of NABARD and Reserve Bank of India and the money to be released from former would be disbursed by the monitoring committee to be headed by district collectors.

But there are cracks in the rosy façade. Even as the Centre throws in the money to make cooperatives more autonomous at village level, there is no surety of their long-term sustainability. There is no system in place till now to assess their financial viability individually before thrusting them with cash, sources said.

Their accountability, too, is under question, as there are no clear signals as to who would be responsible if the office-bearers of societies swindle money of poor and uneducated farmers. This is specifically so when large number of cooperative institutions across the State have cheated the educated depositors in cities and made good their escape.

When contacted, Apex Bank managing director Sushil K Mishra said that several factors were being worked out and the picture would be clearer once MoU was signed.