GS Paper 2
Syllabus: Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation
Source: LM
Context: The Multi-State Cooperative Societies (Amendment) Bill 2023 was passed by the Lok Sabha.
Cooperatives in India and issues faced by them:
Meaning: Co-operatives are voluntary, democratic, and autonomous organisations controlled by their members who actively participate in its policies and decision-making.
Efforts to promote them:
- After independence, the first five-year plan (1951-56) emphasised the adoption of co-operatives to cover various aspects of community development.
- 97th Amendment (2011): It inserted Article 43B in the DPSP of the Indian Constitution inserted,
- As per Article 43B. States shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of cooperative societies.
Issues faced by the co-operatives:
- Inadequacies in governance
- Politicisation and the excessive role of the government
- Inability to ensure active membership
- Lack of efforts for capital formation
- Inability to attract and retain competent professionals
- Elections to co-operative boards have been postponed indefinitely
What are Multi-state Co-operative Societies?
- Regulated by the Multi-State Co-operative Societies Act 2002, these are societies that have operations in more than one state (like FPOs).
- Part IXB (also inserted by the 97th amendment) of the Indian constitution is applicable only to multi-state co-operative societies (as per an SC verdict), as states have the jurisdiction to legislate over state co-operative societies.
About the Multi-State Cooperative Societies (Amendment) Bill 2023: It seeks to amend the Multi-State Co-operative Societies Act 2002.
| Key features | 2002 Act | 2023 Bill |
| Election of board members | Elections to the board are conducted by its existing board. | Co-operative Election Authority: The central government will establish the Authority to conduct such elections. It will consist of a chairperson, VC, and up to 3 members appointed by the central government on the recommendations of a selection committee. |
| Amalgamation of co-operative societies | Amalgamation and division by passing a resolution at a general meeting with at least two-thirds of the members present and voting. | Allows state co-operative societies to merge into an existing multi-state co-operative society, subject to the respective state laws. |
| Fund for sick cooperative societies | Co-operative Rehabilitation, Reconstruction and Development Fund: Multi-state co-operative societies that are in profit for the preceding three financial years shall finance the Fund. | |
| Restriction on redemption of government shareholding | The shares held in a multi-state co-operative society by certain government authorities can be redeemed based on the bye-laws of the society. | Any shares held by the central and state governments cannot be redeemed without their prior approval. |
| Redressal of complaints | Co-operative Ombudsman: The central government will appoint one or more such Ombudsman with territorial jurisdiction.
They shall complete the process of inquiry and adjudication within 3 months from the receipt of the complaint.
Appeals (within a month) → Central Registrar appointed by the central government. |
Importance of the Bill:
- By increasing their transparency and implementing a system of frequent elections, it will strengthen cooperatives.
- The Bill aims to address issues with the operation and governance of cooperative societies as well as match its provisions with those in Part IXB of the Constitution.
Issues related to the Bill:
- Imposing a cost on well-functioning societies: Sick multi-state co-operative societies will be revived by a Fund that will be financed through contributions by profitable multi-state co-operative societies.
- Dilute autonomy and independence of co-operatives: By empowering the government to restrict redemption of its shareholding in multi-state co-operative societies.
Insta Links:
Bill to amend Multi-State Cooperative Societies Act introduced in LS
