Multi-State Cooperative Societies Amendment Bill: Cabinet gives nod to amendments in Multi-State Cooperative Societies Act to improve ease of doing business

In a bid to improve the ease of doing business, the Union Cabinet on Wednesday approved amendments to the Multi-State Cooperative Societies Act to bring transparency in the sector and reform the electoral process. The new bill was listed for the monsoon session of Parliament. The bill seeks to amend the Multi-State Cooperative Societies Act, 2002, I&B Minister Anurag Thakur said after the Cabinet briefing. 

The Bill also seeks to improve the composition of the board and ensure financial discipline, besides enabling the raising of funds in the multi-state cooperative societies. 

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To make the governance of multi-state cooperative societies more democratic, transparent, and accountable, the bill has provisions for setting up of Cooperative Election Authority, Cooperative Information Officer, and Cooperative Ombudsman, the minister added during the briefings. 

What’s the bill 

Former agriculture minister Sharad Pawar introduced the Multi-State Cooperative Societies (Amendment) Bill, 2010 in the Lok Sabha on November 15, 2010. Under the law, the Centre could appoint a Central Registrar of Cooperative Societies.  

A multi-state cooperative society can be registered if its main object is to serve the interest of members in multiple states. Its bylaws provide for the social and economic betterment of its members in accordance with cooperative principles.  

The 2010 Bill allowed the Central Registrar to declare any multi-state cooperative society as “sick”. Under the Act, the Central Government could also appoint an interim board for a maximum of five years, on the recommendation of the Registrar. The Central Registrar had the power to declare a cooperative to be viable within five years and reinstate the board of directors. 

Cooperative societies in India 

As per government data, there are around 8,55,000 cooperatives in India. Of this, 1,77,000 are credit societies, 700,000 are cooperative societies, 17 national-level cooperative unions, and 33 state cooperative banks. There are more than 63,000 active Primary Agricultural Credit Society (PACS) with more than 12 crore members. Around 91 per cent of the villages have cooperatives. 

Issues and concerns 

Over the years, the powers of the Central Registrar, who had the most powers, were questioned by experts and economists as in many cases it has led to cases of corruption.  

Another major issue was the lack of transparency as the board of directors had control of finances and administration. Also, the Central Registrar can inspect societies only under special conditions. This has even led to Ponzi schemes in some cases. 

Government’s aim 

The government has been trying to rationalise its role and increase member participation in the working of multi-state cooperative societies. This is done to increase public faith and create a conducive environment for their growth and development.  

Why do cooperatives matter 

The Gujarat cooperative movement is one of the strongest examples of a successful business model, which has succeeded in the domain of agricultural products such as cotton, groundnuts, coriander leaves, garlic, dairy, milk products, handicrafts, and the sugar sector.   

Various agricultural products marketing cooperative committees (APMC) and cooperative banks are major employers. The cooperatives in Gujarat, Maharashtra, Rajasthan, Madhya Pradesh, and other states also emerged as job-providing agencies, which absorbed cadres, supporters, and sympathisers of the political parties influential in its structure. 

One of the famous examples is AMUL, Anand Milk Union Limited, which initiated the milk revolution in India. Amul is an Indian dairy state government cooperative society, based at Anand, Gujarat. Formed in 1946, it is a cooperative brand managed by Gujarat Cooperative Milk Marketing Federation Ltd. The Amul model of dairy development is a three-tiered structure with the dairy cooperative societies at the village level, which works under a milk union at the district level, and a federation of member unions at the state level.