MULTI-STATE COOPERATIVE SOCIETIES BILL (Syllabus: GS Paper 2 - Governance)

Context: Union Home Minister and Minister of Cooperation replied to the discussion on the Multi-State Cooperative Societies (Amendment) Bill, 2022 in the Lok Sabha.

• The Union Cabinet has given approval to this bill to increase transparency, accountability and profit in multi-state cooperative societies.

Highlights of the Bill

• The Bill amends the Multi-State Co-operative Societies Act, 2002.  It establishes the Co-operative Election Authority to conduct and supervise elections to the boards of multi-state co-operative societies. 
• A multi-state co-operative society will require prior permission of government authorities before the redemption of their shareholding.
• A Co-operative Rehabilitation, Reconstruction and Development Fund will be established for the revival of sick multi-state co-operative societies. 
•  The Fund will be financed through contributions by profitable multi-state co-operative societies.
• The Bill allows state co-operative societies to merge into an existing multi-state co-operative society, subject to the respective state laws.

Key Issues and Analysis

• Sick multi-state co-operative societies will be revived by a Fund that will be financed through contributions by profitable multi-state co-operative societies.  This effectively imposes a cost on well-functioning societies.
• Giving the government the power to restrict redemption of its shareholding in multi-state co-operative societies may go against the co-operative principles of autonomy and independence.