The Union government is drafting a national cooperative policy to enhance India’s cooperative sector, guided by a high-profile panel. This panel has recommended the creation of an umbrella organisation, supervised by the Reserve Bank of India and the National Bank for Agriculture and Rural Development, to streamline cooperative credit and financing. It has also proposed rationalisation of the liquidation process for nonviable cooperatives to expedite resolution. Chaired by former Union commerce minister Suresh Prabhu, the panel has suggested the formation of a task force representing all stakeholders.
Many of the panel’s suggestions, however, are greeted with scepticism. Critics say the top-down approach of the panel will be ineffective and lead to bureaucratic hurdles. They argue that the proposed umbrella organisation, while promising to streamline financing, could stifle the autonomy and democratic spirit that define India’s cooperative movement. To truly unlock the potential of cooperatives, the focus should shift towards empowering individual societies, fostering member participation, and promoting transparency through robust governance mechanisms.
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National Cooperative Policy
The policy, aligned with the vision of ‘Sahakar se Samriddhi’ (Cooperation leading to Prosperity), looks to strengthen and extend the cooperative movement. Recognising the vital role of cooperatives in poverty reduction, food security, and environmental management, Prime Minister Narendra Modi established a dedicated ministry for cooperatives, with Home Minister Amit Shah as minister. The policy updates the 2002 National Policy on Cooperatives.
Realising the policy’s vision requires more than just financial support and infrastructure upgrades. Cultivating a culture of cooperation at the grassroots level is crucial. This entails investing in capacity building for cooperative leaders, promoting member education, and fostering collaboration between different cooperatives. By empowering local communities to take ownership of their development, India can truly unleash the transformative potential of the cooperative movement.
Mr Prabhu says this policy can transform India’s socio-economic landscape by increasing the GDP contribution of cooperatives. Emphasising the equitable distribution of income and wealth creation, the government notes that cooperatives, while contributing economically, also distribute income more evenly.
India has nearly 8.5 lakh cooperative societies, 80% of which are non-credit cooperatives, serving middle and lower-income groups by offering various services at nominal rates. Leading cooperatives in sectors like agriculture, housing, and dairy have significantly impacted these sectors.
It is crucial to acknowledge the diverse realities within the cooperative sector. While larger, established cooperatives enjoy greater success, smaller, rural cooperatives often struggle with limited resources and inadequate infrastructure. The policy must address these disparities and tailor support measures to cater to the specific needs of different types of cooperatives. This will ensure equitable growth and bridge the widening gap between successful and struggling cooperatives.
The policy seeks to standardise legislative provisions in the cooperative sector, fostering a conducive business environment. It includes establishing a fund to support struggling cooperatives, enhancing infrastructure, and mitigating business cycle risks. A national brand for cooperative products, traceability of services, and the establishment of new cooperatives in exports, organic products, and seeds are anticipated.
Efforts to bolster the cooperative movement include computerising Primary Agriculture Cooperative Societies, creating model by-laws, and updating the national cooperative database and policy. These steps are designed to align cooperatives with India’s economic and social needs and strengthen their governance.
While cooperatives are crucial for the country’s development, they have often been overlooked in policy planning. The new policy looks to rectify this, bringing the sector into focus. However, there are concerns about potential centralisation of power and the need to preserve the cooperative principle of self-governance. Critics argue that government intervention should enhance, not undermine, the cooperative spirit, particularly given past issues of mismanagement and corruption within the sector.
Cooperatives fall in the State list of the Constitution but in 2021, the Supreme Court struck down parts of a Constitutional Amendment which shrank the exclusive authority of States over its co-operative societies, a sector considered as a massive contributor to the economy. The SC said the Centre has power over Multi State Cooperative Societies which operate across States. For example, most sugar mills along the districts on the Karnataka-Maharashtra border procure cane from both states. However, concerns were raised that the government seeks to take away state governments’ rights.
Revitalising India’s cooperative sector is not just an economic imperative, but also a social and democratic one. By striking a balance between centralised support and local autonomy, prioritising member empowerment and good governance, and addressing the needs of diverse communities, the new national cooperative policy can become a powerful tool for inclusive growth and shared prosperity. The journey ahead will require not just robust policy frameworks, but also a collective commitment to reviving the spirit of cooperation and harnessing its potential for a brighter future.