In News
- A parliamentary standing committee has advised the newly created Cooperation Ministry to exercise utmost prudence in chalking out activities and programmes at the national level so that federal features of the country are not impinged upon.
Proposed Actions
- ‘Cooperative Societies’ is a State subject in the Seventh Schedule of the Constitution.
- The ministry has prepared the Multi State Cooperative Societies (Amendment) Bill, 2022, to amend the Multi State Cooperative Societies Act, 2002, and it is expected to be cleared soon.
- Multiple Governance: There are many societies such as those for sugar and milk, banks, milk unions etc whose members and areas of operation are spread across more than one state. The Act was passed to govern such cooperatives.
- For example, most sugar mills along the districts on the Karnataka-Maharashtra border procure cane from both states.
- They draw their membership from both states, and they are thus registered under the MSCS Act.
- Their board of directors has representation from all states they operate in.
- Administrative and financial control of these societies is with the central registrar, with the law making it clear that no state government official can wield any control on them.
- The Cooperative Societies registered under the State Cooperation Societies Acts are governed by the concerned Registrars of Cooperative Societies.
- Many Cooperative Institutions have also been set up under the State Cooperative Laws for the promotion of Cooperative Societies.
Statistics and Data
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Challenges Associated
- The exclusive control of the central registrar, who is also the Central Cooperative Commissioner, was meant to allow smooth functioning of these societies.
- The central Act cushions them from the interference of state authorities so that these societies are able to function in multiple states.
- What was supposed to facilitate smooth functioning, however, has created obstacles.
- For state-registered societies, financial and administrative control rests with state registrars who exercise it through district- and tehsil-level officers.
- Thus if a sugar mill wishes to buy new machinery or go for expansion, they would first have to take permission from the sugar commissioner for both.
- Post this, the proposal would go to the state-level committee that would float tenders and carry out the process.
- While the system for state-registered societies includes checks and balances at multiple layers to ensure transparency in the process, these layers do not exist in the case of multi state societies.
- Instead, the board of directors has control of all finances and administration.
- For expenditure above a certain level, the annual general body meeting of the society has to be called: The annual report of these societies has to be submitted either online or offline to the central registrar.
- There is an apparent lack of day-to-day government control on such societies: Unlike state cooperatives, which have to submit multiple reports to the state registrar, multistate cooperatives need not.
- Inspection: The central registrar can only allow inspection of the societies under special conditions; a written request has to be sent to the office of the registrar by not less than one-third of the members of the board, or not less than one-fifth of the number of members of the society.
- Inspections can happen only after prior intimation to societies.
- The on-ground infrastructure for central registrar is thin: there are no officers or offices at state level, with most work being carried out either online or through correspondence.
- For members of the societies, the only office where they can seek justice is in Delhi, with state authorities expressing their inability to do anything more than forwarding their complaints to the central registrar.
- There have been instances across the country when credit societies have launched ponzi schemes taking advantage of these loopholes: Such schemes mostly target small and medium holders with the lure of high returns. Fly-by-night operators get people to invest and, after a few installments, wind up their operations.
Implications
- It will ensure better governance of the societies.
- Technology will be used to bring in transparency.
- It has been suggested that administrative control of such societies should be vested in the state commissioners.
- This way, day-to-day control can be wielded to ward off cases of fraud.
Ministry of Cooperation
Cooperative Societies
Issues, Objections and Reforms needed
Latest Developments with regard to Cooperatives
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Source: IE
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