What is the Ministry of Cooperation?
When in the second week of July the Cabinet Secretariat announced the establishment of the Ministry of Cooperation, a question arose as to whether the announcement date was scheduled or not, since the first Saturday in July is celebrated as the International Day of Cooperation. If that was planned, maybe India wants to revisit its history and if it wasn’t, now is the time to look back. For it is India that has played an important role in the conceptualization of the modern cooperative movement.
India’s history with the cooperative movement
Delegates from India participated in the International Co-operative Alliance (ICA), which began in August 1895 at the first Congress of Co-operatives in London. It is here that the cooperative principles have been defined to develop exchanges. Among the very few international organizations to have survived the two world wars, the ICA was granted consultative status with the United Nations in 1946.
The alliance, which established the principles of the cooperative system, relied heavily on the Rochdale principle designed by the Rochdale Society of Equitable Pioneers in an attempt to solve the problem of the cooperative system. With these principles in mind, the cooperative system expanded to include credit, consumer products, capital products and the Mondragon Corporation, based in Basque, started by Fr. José Maria Madariaga in 1956 with his students is still a successful cooperative today. It is also the seventh company in terms of asset turnover in Spain.
In India, the cooperative system was born out of rural distress. The recurring peasant uprising, the most prominent being the Deccan riots of 1879, led the British government to appoint a committee under ED Maclagan in 1915, which led to the establishment of cooperative banks in India. These banks were based on the idea of cooperatives, which the crown began to encourage especially with the enactment of the Cooperative Credit Societies Act, 1904 and the Cooperative Societies Act, 1912.
These cooperatives, however, never worked in India because, according to the testimony recorded by a witness before the Royal Commission on Agriculture of 1928, the excluded people never obtained credit from the cooperative society until then. that he agrees to give his work at a low rate to people who run. the society. In addition, it is recorded that the people who ran the cooperative society were sitting on one side of the road and the other people on the other side of the road.
Independent India gave impetus to the cooperative sector because the founding fathers understood the role that cooperatives could play in development. From 1951, there were a total of 181,000 cooperatives in the country with a total of 15.5 million members. It was this vision that led to the establishment of the National Cooperative Development Corporation (NCDC) by parliament in 1963. NCDC was responsible for planning, promoting and providing financial assistance to the cooperative. in different sectors. Along with this, institutions such as the National Bank for Agriculture and Rural Development (NABARD), when the Reserve Bank of India (RBI) was already looking at expanding and strengthening credit unions.
Challenges encountered after independence
The resulting problem was that several institutions worked under different chiefs, such as the NCDC under the Ministry of Agriculture (later renamed the Ministry of Agriculture and Farmer Welfare in August 2015) and NABARD reporting to the Ministry of Finance. There was no synchronization and the cooperative sector lacked a common policy and agenda. There is no doubt that the number and strength of cooperative societies has increased under the planning of the state.
Data of the National Cooperative Union of India (NCUI) for the year 2007-08 shows that there were a total of 150,000 primary credit societies with a total of 180 million members, which is lower than the number of societies without credit, which stands at 260,000 with a total of 250 million members. 2004-05 data shows that the annual turnover of non-credit companies amounted to INR 700 billion.
Both the Union and state governments have given equal importance to cooperatives as a form of organization aimed at strengthening the rural economy. It is, however, this over-reliance on the state for financial, administrative and logistical support that has also limited the cooperative’s reach in the country.
Entry 32 in List II of Schedule Seven of the Indian Constitution gives state governments the power to incorporate, regulate and terminate cooperation, other than those specified in List I. Entries 43 and 44 of list I of the seventh annex entrust to the Union Government with constitution, regulation and liquidation of the commercial company, including the banks, the insurance companies and the financial cooperation, as well as of a company whose objects are not not limit to a single state. The Supreme Court of India, based on the doctrine of divisibility, noted that there is no overlap with regard to cooperative societies and that the only authority rests with the states, whereas, as regards concerns multi-state cooperative societies, having objects not confined to a single state, power belongs exclusively to parliament.
This 2002 law on multi-state cooperative societies, which falls under the Ministry of Agriculture, Cooperation and Farmers’ Welfare, allows the Union government to act on the issue. Like most of the large cooperatives in India like the Gujarat Co-operative Milk Marketing Federation Ltd better known as AMUL, Shri Mahila Griha Udyog Lijjat Papad, better known as Lijjat Papad are working nationally and internationally. The role of the Union Government has become imperative and a new Ministry of Cooperation would act as a catalyst in the growth and expansion of such cooperation in India.
Political and administrative obstacles for the new ministry
With all that is said and done, the new ministry faces serious political and administrative challenges ahead. The first serious challenge is to control the politicization of cooperatives and to manage the administration according to market standards. This is where the Ministry can fall back on the Rochdale Principles again. The cooperative must operate on an open and voluntary basis, this is a parameter that will lead to inclusiveness and promote social harmony.
The cooperative must function on the ground as a democratic institution, with each member having a say in policies and decision-making. This in turn will strengthen local institutions and lead to participatory governance. Members must contribute equally and have control of the capital of their cooperative.
The ministry must regulate the sector, but at the same time must ensure that it does not infringe on the autonomy of the cooperative, state and union laws must ensure that the governance autonomy of the cooperative is recorded in their jurisdiction. The ministry should facilitate an appropriate training program for the members of the cooperative and its employees. The timely dissemination of information would only improve the functioning of cooperatives.
The ministry is certainly a step in the right direction, but it is still the very first step. The development of the cooperative sector will depend on policies, which will be launched in the coming days, and that is what will make the difference.