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Bill to amend Multi-State Cooperative Societies Act introduced in LS

GS Paper 2

Syllabus: Governance

 

Source: The Hindu, Live Mint

 Context: A Bill to amend the Multi-State Cooperative Societies Act was introduced in the Lok Sabha recently.

 

Background:

  • Multi-State Cooperatives: MSCS is a Cooperative Society with objects to serve the interest of the members in more than one State.

 

MSCS Act, 2002

  • The MSCS Act was passed to govern such cooperatives whose members and areas of operation are spread across more than one state.
  • At present, India has more than 1,500 multi-State cooperative societies.

 

Need for amendment:

  • To strengthen governance, reform the electoral process, improve the monitoring mechanism, and ensure ease of doing business in multi-State cooperative societies.
  • To improve the composition of boards and ensure financial discipline, besides enabling the raising of funds in the multi-State cooperative societies.

  

Key amendments suggested:

  • To establish a “cooperative election authority”.
  • To make provisions for the “appointment of cooperative information officer”.
  • To appoint one or more “cooperative ombudsmen” with territorial jurisdiction to inquire into members’ complaints.
  • Insert a new Section related to the “establishment of the Cooperative Rehabilitation, Reconstruction and Development Fund” for the revival of “sick multi-state cooperative societies”
  • Insert Section relating to “concurrent audit” for such multi-state societies with an annual turnover or deposit of more than the amount as determined by the Centre.
  • The merger of “any cooperative society” into an existing multi-state cooperative society.

  

Federal Issues concerning the bill:

  • No provision of the Constitution makes way for merging a cooperative society, which is incorporated under State law with a Multi-State Cooperative Society.
  • The Centre is indirectly encroaching on the rights of State Co-operative Societies through the introduction of the clause concerning the merger.
  • Beyond the legislative competence of the Union as State cooperative societies are within the exclusive jurisdiction of States.

 

Constitutional Provisions regarding Cooperative Societies:

  • 97th Constitutional Amendment Act 2011
  • The right to form cooperative societies is a fundamental right (Article 19).
  • New Directive Principle of State Policy on the Promotion of Cooperative Societies (Article 43-B).
  • A new Part IX-B to the Constitution is titled “The Co-operative Societies” (Articles 243-ZH to 243-ZT). 

Creation of a new Ministry of Cooperation – which gave more acknowledgement to cooperative societies.

 

Related news: The government is planning to set up a “National Cooperative Export Society” to help boost India’s exports.

Insta Link:

Urban, multi-State cooperative banks to come under RBI supervision

 

Mains Link:

Q. The concept of cooperatives builds on the idea of communities creating infrastructure by using local materials and family labour, which is a vital component of inclusive development. Elaborate. 15M