During the recent cabinet reshuffle on July 7, the government announced the formation of the Union’s Ministry of Cooperation. The cooperative was a subject under the Ministry of Agriculture before the reshuffle. Amit Shah will be in charge of the Ministry of Cooperation with the Ministry of Interior. The ministry was established to achieve the central government’s goal of Sahkaar se Samriddhi. A separate ministry for this will rejuvenate this movement in India. It will provide a legal, political and administrative framework to energize this movement.
The cooperative movement is one of the most successful movements in Indian history, which has reached the grassroots of the country. The model of economic development which is based on it fits perfectly into the Indian scenario. It is relevant because it gives everyone a feeling of belonging and responsibility. Since everyone owns the cooperative, everyone is working to the best of their ability.
The budget presented by the Minister of Finance of India, Nirmala Sitharaman, highlighted the need to revive and strengthen cooperative societies. The formation of a separate ministry meets the budgetary objective. The center has always believed in a community-based development partnership model. The Department of the Corporation will streamline the ease of doing business ‘
. It will make the necessary changes to the framework to expand to multiple states, also known as multi-state cooperatives (MSCS).
According to the International Labor Organization (ILO), a corporate society is an autonomous association of people who come together voluntarily to achieve the goal of economic, social and cultural development. They enter into a common and democratic enterprise to run businesses.
For example, if a company has paid-in capital of one hundred rupees and has 50 members, each person contributes two rupees to the company. Since everyone’s share is equal, there is no single owner. It harnesses the strength of unity and collective work. In Indian dynamics, cooperatives generally manifest themselves in agricultural cooperatives, daily cooperatives, sugar factories, spinning mills, consumer cooperative society, producer, cooperative credit society, housing society, marketing society. harmonious, etc.
Farmers pool their resources to process agricultural products because the processed output is sold at a higher price than the raw material. India being an agricultural nation, it was the pioneer of one of the most important cooperative movements in the history of the world. India has 1,945,195 cooperative dairy companies and 330 cooperative sugar factories. According to a National Dairy Development Board report in 2020, co-ops bought about 1.80 crore liters of milk from 1.7 crore of members and sold 3.7 crore liters of milk per day. The cooperative sugar factories produce 37% of the sugar.
Farmer associations form PSCS or primary agricultural credit societies to provide credit to farmers in their regions. PSCS predicts the area’s credit needs and requests it from the central cooperative banks of the DCCB district. State cooperative banks run the DCCB. The unity of farmers in the region translates into increased bargaining power. Indian farmers also include landless workers who lease farmland for farming. Commercial banks only grant loans if they are backed by substantial guarantees.
The lack of institutional credit leaves landless peasants no choice but to turn to traditional pawn shops or sahukar. The traditional pawnbroker charges a higher interest rate and sometimes deceives the farmer, resulting in slavery. Slavery is now abolished by the Indian constitution. In addition to agricultural cooperatives, cooperative banking and financial institutions offer their services in rural and urban areas.
What are the constitutional provisions relating to it?
Agriculture and cooperation are on the competing list, which means central and state governments can pass laws on it. According to the federal structure of the Constitution, in the event of a conflict between central law and state law, the law of the Center prevails. The 97th Constitution Amendment Act added Part IXB, which talks about how cooperatives work in India.
The word cooperatives was added after unions and associations in article 19 (1) (c) of part three of the Constitution. This allows every Indian citizen to form a cooperative and makes it a basic right of citizens. Section 43B was added in the Principles of State Policy is DPSP, Part Four of the Constitution guideline to promote these companies.
How important is a cooperative in India?
The cooperative society provides institutional credit to the agricultural sector. State and private sector banks have not been able to provide funds to the sector. By pooling their resources, a group of farmers or businessmen can buy infrastructure that they cannot afford on their own. It provides a strategic contribution to the agricultural sector by overcoming constraints and creates an atmosphere conducive to development. It also provides cheap credit to cottage industries and small businesses.
Collective ownership and responsibilities minimize class conflicts and other social ills. Examples of successful Indian cooperatives that have changed people’s lives are Shri Mahila Griha Udyog Lijjat Papad and AMUL Anand Milk Union Ltd. Lijjat Papad started with a group of seven women in Bombay in 1959 with ₹ 80. In 2021, it has a turnover of Rs. 1600 crores and employs over 45,000 women. The main objective of the group is to empower women by offering them economic independence.
Anand milk union Ltd is a dairy cooperative in the village of Anand de Gujarat. It was launched in 1946 under the leadership of Sardar Vallabhbhai Patel and Tribhuvandas K Patel. Amul helped India achieve its goal of a white revolution and is the world’s largest producer of milk and dairy products. Amul was trained to fight back against the exploitation of dairy farmers by middlemen in the cities. All the dairy farmers came together, formed a cooperative, and started supplying milk directly to the Bombay Milk Scheme.
Is it necessary to have a separate ministry for cooperatives?
Yes, because only Maharashtra, Gujarat and Karnataka have a successful cooperative structure which helps people. A separate ministry is essential because agriculture requires a lot of attention and time. The only separate ministry would focus on expanding the movement in India.
The ministry would procure the necessary financial and legal power to reach every nook and cranny of India. Under the current system, cooperative institutions receive their equity from the Center and state governments vouch for these institutions. This formula was only successfully applicable in a few states such as Maharashtra, Gujarat and Karnataka. Vaikunth Mehta Institute of Cooperative Management conducted research where they discovered weaknesses in this industry.
The study found poor implementation and a lack of funds in some states. Apart from this, the sector has always suffered from the lack of training of agents. People are poorly informed about the goals, movements, rules and benefits of forming cooperative societies. These companies are tainted with monetary influence, as wealthy farmers become chairmen of the organizations. They run the organization according to their whims and wishes. They need a revolution in management tactics because a large number of members are hindering the work.
Why is Amit Shah chosen as head of the Ministry of Cooperation?
These institutions have given India multiple rulers; some of them have left their mark at the national level. Maharashtra’s legislature has around 150 legislators who have their roots in these institutions. NCP leader Sharad Pawar and Deputy Chief Minister Ajit Pawar started their political journey from cooperative elections. Amit Shah has long headed the Central Cooperative Bank in Ahmedabad district, Gujarat. Shah knows his job inside and out because it was once part of the machinery.