A decision taken by the state government last week could turn the equation between the ruling BJP and the opposition, Congress-Nationalist Congress Party, from bad to worse.
The state cabinet on January 5 decided to come up with a law to bar directors of cooperative banks who are embroiled in financial irregularities or responsible for decisions that lead to banks getting bankrupt from contesting elections to these bodies for 10 years. The cabinet also wants the proposed law to be implemented with retrospective effect from 2006. This means at least two dozen NCP-Congress heavyweights could be disqualified from contesting elections for a decade. Both the parties draw significant amount of their strength and influence from the cooperative sector that has strong presence in large parts of rural Maharashtra.
The BJP government in the state says the stern measure is necessary to discipline the sector where mismanagement is rampant. The decision is in accordance with the recommendations of the RBI, it insists.
The Opposition, Congress-NCP, alleges the cooperative sector is being targeted because it has been supporting them traditionally and the ruling BJP couldn’t make inroads. This politics of revenge will damage the sector, which has contributed to the progress of rural Maharashtra, they say.
It is a fact that the sector has been the backbone of the state’s rural economy for decades. It did wonders in rural banking, sugar, milk and to some extent cotton processing sectors and helped many farmers prosper. At the same time, the sector witnessed large-scale irregularities over the years and the Congress-NCP combine that ruled the state for 15 years did not do much to contain the rot. The cooperative banking sector saw irregularities that included embezzlement and misappropriation of hundreds of crores of rupees in the past two decades.
Besides, the apex Maharashtra State Cooperative Bank, the district banks of Nagpur, Kolhapur, Beed, Osmanabad, Buldhana, Washim have seen financial irregularities and dissolution of their board of directors for the same. Several coop banks went bust and depositors lost money.
In this background, the step could come as a much-needed remedy. It, however, remains to be seen whether the government wants to bring in reforms to discipline the cooperative banks or just corner the Opposition.
Although the economy is liberalised, the significance of cooperative sector in agriculture is far from over. Coop banks and rural credit societies are still an effective way for finance to farmers. It is not a coincidence that the Vidarbha region of the state that has seen a maximum number of farmer suicides does not have adequate network of coop banks and societies because of which farmers take loans from moneylenders and get stuck in the debt trap. In contrast, the number of farmers ending their lives is much lower in western and north Maharashtra, where there is a strong network of coop banks and societies. If the government’s motive is to reform the sector, it would help the state, but if the exercise turns into a political war between the ruling and Opposition, there could be trouble for the cooperative movement in the state.