States Suggestions on New Cooperative Policy

In News

• Recently, a two-day national conference on a new cooperative policy was held in Delhi.

Key suggestions on New Cooperative Policy

• Foreign Direct Investment (FDI):
  • Allow Foreign Direct Investment (FDI) in the cooperative sector, particularly in Primary Agricultural Cooperative Societies (PACS) to improve infrastructure
  • It should be allowed for augmentation of resources and infrastructure of cooperative societies.
  • FDI suggestion came from Haryana.
• Upper age limit:
  • Fix an upper age limit of 70 years for board members in cooperative societies.
  • The recommendation of an age limit was put forward by Maharashtra.
• Technology upgradation:
  • Creation of a technology upgradation fund for the sector is also being thought of.
• Land available with PACS:
  • It can be leveraged for expanding the resource base of cooperative societies.
  • PACS have more land than the Railways.
• Sahakar se Bajar:
  • PACS should be given better market linkages under the label “Sahakar se Bajar ” (cooperative to market).
• Electronic voting:
  • There were also suggestions for electronic voting to be implemented in cooperative societies.
• Lease to private company:
  • Storage facilities available with PACS to be leased out to private e-commerce operators like Amazon.

Significance of this move

• FDI can drive the expansion of cooperative infrastructure across states: particularly the cold chain network, which is essential for storage, transportation and preservation for fruits and vegetables and dairy products.
• Presently, there is no such age bar and the suggestion is aimed at governance reforms.

Challenges Associated with this Cooperative sector

• 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 instalments, wind up their operations.

Implications of the move

• 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.

Source: IE