New ministry to spur cooperative reforms

Context: In light of the launch of the new Ministry of Cooperation, the growth of the cooperative movement in the country has not been free from turbulence. Apart from disagreements within, financial irregularities and undue control and interference of the governments are identified as inhibitive factors.

Significance of cooperatives:

• A vital plank of inclusive growth in rural areas, particularly food security, poverty alleviation, and employment creation. 
• Presents democratic business models:  The International Cooperative Alliance has defined cooperatives as people-centred enterprises, owned, controlled and run by members to realise their economic, social and cultural needs and aspirations
• They present a democratic business model wherein people come together with complete equality and equity. 
• It is said to be the people’s capitalism to counter private capitalism that causes the concentration of wealth.
• Socio-economic benefits: These remain with the members and communities that establish them and steer their economic future. 
• The cooperative system has the potential to neutralise the alleged adverse effects of globalisation and privatisation.
• Cooperatives are self-financing, self-reliant and autonomous. These are voluntary organisations of members who unite to achieve their common objectives based on values and not just profit.
• The core values driving the cooperative movement are self-help, self-responsibility, democracy, equality, equity and solidarity. 
• Based on these values, the principles of cooperation are- voluntary and open membership; democratic member control; member economic participation; autonomy and independence; education, training and information; cooperation among cooperatives; and concern for the community.

Regulation of cooperatives in India:

• In British Era: 
  • British India enacted the first Cooperative Credit Societies Act, 1904. 
  • In 1919, cooperation became a State subject, and provinces were authorised to make their cooperative laws under the Montague-Chelmsford Reforms. 
  • In 1942, the British government enacted the Multi-Unit Cooperative Societies Act, intended to cover the societies whose operations extended to more than one state.
• Post-independence: 
  • In 1958, the National Development Council (NDC) recommended a national policy on cooperatives. 
  • The Government of India enacted the Multi-State Cooperative Societies Act in 1984, and the National Policy on Cooperatives was adopted in 2002. 
  • The 1984 Act was replaced by a new Multi-State Cooperative Societies Act 2002 for the speedier promotion and development of cooperatives.

Challenges faced by cooperatives:

• Financial irregularities and undue control and interference of the governments are identified as inhibitive factors.
• Regulatory issues: Though largely funded and managed as private members’ enterprises, the cooperatives are required to obtain too many approvals from the government for their business.

Way Forward: The new ministry should work upon the following - 

• Balancing government intrusion with honesty in the business:
  • The government facilitation, either through financial assistance or technical guidance, should not be intrusive to distort their autonomy.
  • However, honesty and transparency in business by the managing committees and members can only help prevent government interference.
• Addressing the current challenges: ignored problems of the cooperative sector as lack of infrastructure, poor quality of management, over-indulgence of the government, stagnant membership, delay or non-conduct of elections, inadequate human resources, and absence of professionalism.