Indian co-operative: Why is it still waiting for its moment to shine? : Daily Current Affairs

GS-2: Development Processes and the Development Industry;

GS-3: Inclusive Growth and issues arising from it.

Key phrases: Cooperatives, Registrar of cooperative societies, NABARD

Why in news:

Union government announced formation of a Ministry of Cooperation.

According to the International Labour Organisation, a cooperative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise
There are many types of cooperatives such as Consumer Cooperative Society, Producer Cooperative Society, Credit Cooperative Society, Housing Cooperative Society and Marketing Cooperative Society.

It provides agricultural credits and funds where state and private sectors have not been able to do very much.
It provides strategic inputs for the agricultural-sector; consumer societies meet their consumption requirements at concessional rates.
It is an organization for the poor who wish to solve their problems collectively.
It softens the class conflicts and reduces the social cleavages.
It reduces the bureaucratic evils and follies of political factions.

Cooperatives were first started in Europe and the British Government replicated it in India to mitigate the miseries of the poor farmers.
First credit cooperative society was formed in Banking in 1903 with the support of the Government of Bengal
Enactment of the Cooperative Credit Societies Act, 1904 gave Cooperative a definite structure and shape.
In 1919, cooperation became a provincial subject and the provinces were authorised to make their own cooperative laws under the Montague-Chelmsford Reforms.
National Cooperative Development Corporation (NCDC), a statutory corporation, was set up under National Cooperative Development Corporation Act, 1962.
The Government of India announced a National Policy on Co-operatives in 2002.

The country has 1,94,195 cooperative dairy societies and 330 cooperative sugar mill operations.
Constitution (97th Amendment) Act, 2011 added a new Part IXB right after Part IXA (Municipals) regarding the cooperatives working in India.
Village-level primary agricultural credit societies (PACSs) formed by farmer associations are the best example of grassroots-level credit flow
Central Government recently established a distinct ‘Ministry of Co-operation' to realize the aim of ‘Sahakar se Samriddhi' (Prosperity via Cooperation) and to revitalize the cooperative movement.
Cooperative Societies is in Item No. 32 in the State List

Most successful Indian cooperatives such as the Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF)/Amul, Indian Farmers Fertiliser Cooperative Limited (IFFCO) and Krishak Bharati Cooperative Limited (KRIBHCO), are outside government control.
94 million poor linked with banks through 7.5 Million SHGs, availing them of collateral free credit.
Poor women of these SHGs in India collectively control the financial business with an annual turnover of Rs 100,000 crores-savings account balance of Rs. 19,500 cr and credit outstanding of over Rs. 75,500 cr
A cooperative Shrreja Mahila milk producer company started with 24 women and now has 90k women and annual turnover of 500 cr -NDDB helped setting this up.

After Independence, cooperative institutions became an instrument of planning and state action. Too much of government interference is killing them
Recent initiatives such as an umbrella organisation for urban cooperatives and a new Ministry of Cooperation at the Centre threaten to further this approach in the absence of safeguards.
Cooperatives have also become avenues for regulatory arbitrage, circumventing lending and anti-money laundering regulations
In almost all States, the Registrar of cooperative societies has become an instrument of inspection and domination, one which imposes uniform by-laws, and amends them when individual societies do not fall in line
Rural-urban dichotomy in the regulatory treatment of cooperatives is specious and outdated. It perpetuates age-old divisions based on the nature of operations and population size.
People are not well informed about the objectives of the Movement, rules and regulations of co-operative institutions.

Regulation and the supervision of cooperative banks should move to a new body from the Reserve Bank of India (RBI) for urban banks and the National Bank for Agriculture and Rural Development (NABARD) for rural banks.
Powers of the RCS need to be scaled back. A British Indian innovation, it failed to stick to its original role of a facilitator: a friend, philosopher, and guide to cooperative societies.
New areas are emerging with the advancement of technology and cooperative societies can play a huge role in making people familiar with those areas and technologies.
To strengthen the cooperatives there should be market linkages for agricultural farmers as well as cooperative societies
Ministry of Cooperation should make it easier for cooperatives to do business, right from registration to winding up. It should liberate multi-state cooperatives from government control
Ministry of Cooperation should identify the areas where cooperatives-based business enterprises can be made, provide the capital, technology and providing the ease of doing business.
Focus on women: Should be a focus on women cooperatives because they are less than 3% of the 8 lakh cooperatives in the country.

Source: The Hindu