Co-operation ministry -Harbinger of hope

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.