Cabinet clears bill for reform in policies governing cooperatives

India has nearly 900,000 such cooperatives, the most in the world, which account for nearly 20% of the country’s gross domestic product (GDP).

The Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday approved the Multi-State Cooperative Societies (Amendment) Bill, 2022 which seeks to bring major reforms in policies governing businesses collectively owned and run by members who share profits.

The Union Cabinet chaired by PM Narendra Modi approved the Multi-State Cooperative Societies (Amendment) Bill, 2022 which seeks to bring major reforms in policies governing businesses collectively owned and run by members who share profits. (PTI)

India has nearly 900,000 such cooperatives, the most in the world, which account for nearly 20% of the country’s gross domestic product (GDP).

The Centre is aiming at an expansion of the sector to spur job creation and it has called upon states to forge a common policy approach towards the same. In July 2021, the Modi government created a separate ministry for cooperation, led by Union home minister Amit Shah, carving it out of the ministry of agriculture.

Under the Constitution’s division of responsibilities, cooperatives fall squarely in the domain of states. The Centre, however, has a say in multi-state cooperatives, which number around 1,500. The bill approved by the Cabinet on Wednesday seeks to amend Multi-State Cooperative Societies Act, 2002.

The government plans to table the amendment bill in upcoming winter session of Parliament, information and broadcasting minister Anurag Thakur said.

The bill provides for an election authority governing multi-state cooperatives for the first time to ensure polls are held in a fair and timely manner and curb malpractices. It has provisions to debar offenders for three years.

The bill comes in lockstep with the Centre’s push for setting up of a farm-centric multi-state organisation that will focus on organic products and high-quality seeds. The new cooperative for organics will undertake both production and purchase of produce from farmers. It will also brand and market them.

Dairy brand Amul, flatbread manufacturer Lijjat Papad and fertiliser chain IFFCO are some of the India’s biggest cooperative enterprises, while there are a large number of banks and lending institutions based on the model.

The bill also seeks to ensure professional management of cooperatives societies through new provisions for co­opted directors in fields such as banking, management, cooperative management and finance.

The amendments also provide for electronic submission and issuance of documents to provide a comprehensive digital ecosystem for multi-state co-operative societies. A centerpiece of the government’s plans to revamp the cooperatives sector is digitization of the nearly 95,000 primary agricultural cooperative societies or PACS, which are last-mile lending institutions for millions of farmers.

A key amendment proposed in the bill seeks to legally mandate the representation of women and Scheduled Caste/Scheduled Tribe members on the board of multi-state cooperative societies, according to the bill viewed by HT.

In August, Amit Shah had organised a two-day conference with states to develop a common policy for the cooperative sector.

Shah laid out an agenda for transforming cooperatives in the country to boost jobs and growth, including digitisation, expansion and reforms. The Union government has rolled out plans to revamp the cooperative sector and the conference aimed at ensuring that the state governments align their own policies with an overall roadmap.

“There’s a lot of skepticism around cooperatives, especially in Maharashtra, which are associated with politics and power. With the new changes, it is expected that they would learn from earlier mistakes and bring transparency. The key is implementation,” said Sakshi Abrol, policy manager at the Nation First Policy Research Centre.