Context: The new Cooperation ministry can make a significant positive impact on the ground.
Significance of the new Cooperation Ministry:
To cater to the huge number of cooperatives in India: Over 300 million people are members of around 800,000 cooperatives in India today.
Issues faced by the cooperatives:
Declining trend: Tragically, cooperatives have suffered a serious decline over the years, with their share in institutional credit reduced to a mere 10 % today from over 60% in the early1990s.
The unholy trinity of money- lender-trader-landlords actually made a comeback in the rural credit market after 1990 when profitability norms were introduced for PSBs.
The increasingly robust partnership of women’s self-help groups (SHGs) with PSBs did enable some pushback against the trinity in recent years
Centre-state tussle: Cooperatives are a State subject under the Seventh Schedule of the Constitution has led many to raise legitimate concerns regarding politically motivated overreach by the Centre.
Rampant corruption and political manipulation: With transparency, management and governance suffering in the process.
Government interventions: Very often, state action, in the guise of supporting the poor, has ended up seriously harming their cause.
Many farmers’ movements have lobbied for repeated loan melas and loan waivers, which have only ended up undermining institutions like PSBs and Primary Agricultural Credit Societies (PACS).
Way Forward:We need a reformed and rejuvenated cooperative sector.
Role of the Centre: There is a definite role for the Centre to play, so long as it reinforces the principle of subsidiarity,which means seeking solutions to problems closest to where they are located.
This role must be one that supports, facilitates and strengthens civil society action in partnership with the most vulnerable.
Nudging the states to buy in: By making the financial support provided by the Centre conditional on the reforms undertaken by the states to professionalise and democratise the functioning of the Primary PACS.
This would involve audit and clean-up of balance sheets, installing sound accounting and monitoring systems to enable them to remain competitive and foster transparency, technological upgrade and capacity building of personnel of PACS.
Focus on capacity enhancement: The reform of cooperatives must enable them to evolve into member-centric, democratic, self-governing and financially well-managed institutions.
This was the key recommendation of the 2005 Task Force on Revival of Rural Co-operative Credit Institutions led by the eminent economist, A Vaidyanathan.
Learning from the successes of Self Help Groups (SHGs): In the years, a major positive development has been the growth of robust and powerful SHGs and SHG Federations. Learning from their successes, as also a careful diagnostic of their failures, could be very instructive.
Conclusion: It is to be hoped that the ministry will become a harbinger of the revival of cooperation in the spirit of genuine cooperative federalism.