Relevance: GS-2: Government policies and interventions for development in various sectors and issues arising out of their design and implementation;  Development processes and the development industry —the role of NGOs, SHGs, various groups and associations, institutional and other stakeholders.

Key Phrases: Cooperatives, Primary Agricultural Credit Societies (PACS), cooperative banks, co-operative marketing society, AMUL, Ministry of Cooperation, multi-state cooperatives, National Cooperative Union of India (NCUI), National Cooperative Development Corporation (NCDC), Alternate Minimum Tax, Agriculture Infrastructure Fund.

Why in News?

• The government has envisaged the introduction of new schemes to strengthen cooperative societies from the financial year 2022-23 onwards.

Key Points:

• According to the International Co-operative Alliance, cooperatives are people-centred enterprises owned, controlled and run by and for their members to realise their common economic, social, and cultural needs and aspirations.

Significance of Cooperatives in India:

• It is an organization for the poor, illiterate and unskilled people
• It is an institution of mutual help and sharing.
• It softens the class conflicts and reduces the social cleavages
• It reduces the bureaucratic evils and follies of political factions.
• It overcomes the constraints of agricultural development
• It creates conducive environment for small and cottage industries.
• In India, cooperative sector works as the main pillar at the grassroots level to support the weaker sections and farmers.
  • National Federation of State Co-operative Banks (NAFSCOB) data of 2019-20 shows that around 138 million farmers are members of Primary Agricultural Credit Societies (PACS).
• In the banking sector, their contribution to rural credit increased from 3.1% in 1951 to an impressive 27.3% in 2002.
  • The data shows that the combined balance sheet of all state cooperative banks, as of 31 March 2015, stood at Rs 1.98 lakh crore and that of district central cooperative banks stood at Rs 4.06 lakh crore.
• Cooperatives have also evolved into different forms such as the consumers’ cooperative societies like Kendriya Bhandar, a welfare society for central government employees set up in 1963; Apna Bazar, one of the largest and oldest multi-state cooperatives and Sahakari Bhandar, a cooperative chain of retail stores.
• Then there are the producers’ cooperatives such as APCO or the Andhra Pradesh State Handloom Weavers Cooperative Society; and Boyanika, which represents the weavers cooperative societies of Odisha, and Haryana Handloom.
• The one cooperative that defines the model and is synonymous with its success is AMUL, the country’s biggest food and dairy company with an annual turnover of over Rs 38,000 crore.
  • The Gujarat Cooperative Milk Marketing Federation that sells AMUL milk products is an example of a co-operative marketing society, which is formed by small producers and manufacturers finding it difficult to sell products individually.
  • The society collects products and takes responsibility for their sale.

Steps taken:

• In 2021, a separate Ministry of Cooperation was formed to handhold cooperatives.
  • The ministry will provide a separate administrative, legal and policy framework to strengthen the cooperative movement in the country.
  • It has been created with the vision of ‘Sahakar se Samriddhi’ (prosperity through cooperatives).
  • It will work to streamline processes allowing cooperatives the ease of doing business while also enabling the development of multi-state cooperatives.
  • The National Cooperative Union of India (NCUI) and the National Cooperative Development Corporation (NCDC) work for promotion of cooperative movement in India.

Proposals in Union Budget:

• The Budget’22 has earmarked Rs 900 crore to the Ministry of Cooperation.
  • Out of this, Rs 624 crore has been earmarked for two centrally sponsored schemes – ‘Digitalization of Primary Agriculture Cooperative Societies’ (Rs 350 crore), and ‘Prosperity through Cooperatives’ (Rs 274 crore).

Education and Training; and National Cooperative Federation.

• Budget 2022 seeks to double farmers’ income by building a robust system that enables easier access to finance, the marketplace and new-age technology.
  • The government has allocated a sizeable amount for rural infrastructure development.
  • This will help farmers get better access to the marketplace.
• The cooperative sector has huge potential but there was a need for proper plans and funds to support training and development programmes.
  • The Budget, taking this into consideration made a separate allocation of Rs 25 crore.
  • This will help training institutes working in the cooperative sector conduct more programmes in the coming financial year.
  • The Budget has earmarked Rs 11 crore for strengthening training and research at VAMNICOM (Vaikunth Mehta National Institute of Cooperative Management), a national apex institute under the Ministry of Cooperation.
  • VAMNICOM has been at the forefront in development of the cooperative sector.
• NAFSCOB (National Federation of State Co-operative Banks Ltd.) data shows there are 95,995 PACS in India.
  • In 2014, the RBI gave directives to implement and use core banking solutions and technology in credit cooperatives. PACS were facing issues in adopting digitalisation.
  • In Budget 2022, Rs 350 crore has been allotted for the digitilisation of PACS.
  • It’ll help in increasing efficiency, profitability, transparency and accountability in the working of PACS.
• In this Budget, the Alternate Minimum Tax (AMT) for cooperative societies has been reduced to 15% from 18.5%.
  • In addition, the government has announced cooperatives societies having net income between Rs 1 crore and Rs 10 crore will pay 7% surcharge in place of 12%.
  • Cooperatives can use the saved profit for their own betterment or to sustain in a competitive environment.
  • Co-operatives will move towards organised farming following the reduction in AMT

• Agriculture Infrastructure Fund (AIF) can be used for the creation of post-harvest Infrastructure, will support farmers, PACS, FPOs, and agri-entrepreneurs. PACS have utilised AIF for building warehouses.
  • In 2020-21, 163 PACs in Karnataka were identified under AIF and conversion to Multi Service Centres under Nabard’s ‘Special Refinance Facility’.
  • PACS can make the best use of the Fund to diversify into multi-services such as collection centres, pack houses, warehouses, primary processing to reduce post-harvest losses, and value addition to farm produce for better market access.
• Multipurpose cooperative societies need to focus on improved marketing infrastructure to have direct market linkages and enhanced value realisation for producers who are members of cooperative societies.

• Promotion of Digital Agriculture: With a budget of Rs 60 crore on digital agriculture and impetus on start-ups, PACS and Multi-State Cooperative Societies, especially in the organised dairy and sugar sectors, are expected to focus on the use of artificial intelligence, machine learning, and blockchain technology.
• The Budget also promotes natural farming for sustainable agriculture and hence a renewed orientation of members of cooperative societies needs to be a part of the action plan for building capacity of cooperative societies.
• Centre has started consultations with stakeholders on creation of a National database of cooperatives as well as digitalisation of about 63,000 active Primary Agriculture Credit Societies (PACS)
  • It’ll make cooperatives more transparent and efficient.
• The upcoming National Cooperative Policy is expected to address all developmental issues of cooperatives.
• While the National Cooperative Policy is being framed, the cooperative education and training plan for 2022-23 calls for enhanced focus on infrastructure development, use of ICT, services marketing, natural farming, post-harvest management and value addition to make the cooperative sector vibrant.

Concerns:

• Some of the issues affecting accelerated and equitable growth of cooperatives, inter alia, are lack of effective governance, leadership and professional management in cooperative units, low level of technology adoption.

Conclusion:

• Government wants to deepen cooperatives as a "true people-based movement" reaching up to the grassroots and develop a cooperative based economy model including giving focus on ‘Make in India’.

Source: The Hindu BL

Mains Question:

Q. Creation of a separate ministry for cooperatives will help in focus for betterment of the sector. Critically analyse.