Centre will bring changes in laws to strengthen cooperatives: Amit Shah
The central government will soon bring changes in laws to strengthen cooperatives, home and cooperation minister Amit Shah said on Saturday, while detailing an agenda to reset governance in a sector critical to the rural economy.
In July, Prime Minister Narendra Modi shuffled his cabinet, carving out a new ministry of cooperation, which was earlier a department under the agriculture ministry.
“We are bringing within a short time changes to the Act to smoothen processes in areas like multi-sector cooperatives. This will be a big step in our march towards development,” Shah told a conference of cooperative societies. “We have (also) decided that shortly we will have a new cooperation policy.”
Shah did not specify any particular law. Cooperatives in India are governed by two main laws at the central level: the Cooperative Societies Act, 1912, and the Multi-state Cooperatives Societies Act, 2002.
Outlining his plans, Shah said his ministry would focus on building cooperative societies as a pivot of a whole gamut of economic activities in the rural sector, from farm inputs to credit.
Cooperatives are collectives of small producers who pull in their resources to achieve scale and collective bargaining power in markets. India’s cooperative sector is the world’s largest and covers almost 98% of the countryside, with over 900,000 societies with a membership of about 290 million people, according to data from the National Cooperative Union of India.
While there are some iconic cooperative businesses in the country, such as dairy giant Amul and seasoned flatbread maker Lizzat Papad, as well as the fertiliser chain IFFCO, the sector in many areas is hobbled by inefficiencies and opaque patronage systems.
““We will bring changes to the Act to strengthen the cooperative sector. Cooperatives are not a new concept in our 10,000-year-old history. It will be a model for India’s development and play a key role in India becoming a $5 trillion economy,” Shah said.” Shah said, addressing an international conference on cooperatives in the capital.
Shah said a national software platform, which will be available in local languages, will link primary agricultural credit societies (PACS), district cooperative banks, and the National Bank for Agriculture and Rural Development (NABARD), potentially creating an integrated financial grid.
Cooperative banks, both urban and rural, are lending institutions registered under the Cooperative Societies Act, 1912. They are usually run by an elected committee. In March, Parliament passed a law to bring them under the oversight of the Reserve Bank of India after several such banks faced financial crises.
The minister said processes governing cooperative institutions will have to be made transparent, which are likely to be reflected in the proposed law. New changes are aimed at bringing ease of doing business for cooperatives and development of multi-state cooperatives, he said.
“The main mandate of my ministry is rural development, agriculture and development of the small individual. Our target is to create 300,000 PACS, so that for every one or two villages there is one PACS,” Shah said.
PACS are village-level lending networks that are often the first stop for farm loans in a country where big scheduled commercial banks still don’t adequately cover the poor.
Shah said there was a debate that the cooperative sector came under the jurisdiction of states. “I can explain it legally, but I don’t want to get into this issue. We will work for all states.”
According to Shah, digitisation of the cooperative sector would be the key to its transformation. “The potential of everything from Kisan credit cards to all kinds of priority sector lending will be increased,” he said, adding the “cooperative sector is central to Prime Minister Narendra Modi’s vision of Atma Nirbhar Bharat (self-reliant India).”