The Modi government’s announcement to create a separate ‘Ministry of Co-operation’ has come as a surprise to many, including the opposition parties who are still trying to decipher the long-term impact of the move.
But a closer scrutiny, and it becomes evident that this decision was not sudden. In fact, it was a process in the making for quite some time.
The seeds for a separate ministry was sown during Nirmala Sitharaman’s Budget speech, in which she had said “the Modi government is committed to the development of multi-state cooperatives and will provide all support to them. To further streamline the ease of doing business for cooperatives, I propose to set up a separate administrative structure for them.”
Why a separate cooperation ministry?
Cooperatives are the best channels to keep alive the spirit of collectivism with individual responsibility. The stated objective of creating the ministry is
* to realise the vision of ‘Sahkar se Samriddhi’ (prosperity through cooperation)
* to streamline processes for ‘Ease of doing business’ for co-operatives and enable development of Multi-State Co-operatives (MSCS).
* to provide a separate administrative, legal and policy framework for strengthening the cooperative movement in the country.
* to deepen cooperatives as a true people-based movement reaching upto the grassroots.
Amit Shah as the first minister of cooperation
Whatever be the roadmap for the ministry, there was no surprises when it came to the choice of minister for the new department.
Amit Shah, with his rich experience in Gujarat’s cooperative sector in Gujarat, was a natural choice to head the new ministry.
His Gujarat model in the cooperative sector was a huge success and perhaps that is why the opposition is sceptical.
India has had a rich and successful history of the cooperative movement.
Maharashtra, Gujarat, Kerala, Uttar Pradesh are some states that have reaped rich dividends from the cooperative movement. In the process, they have empowered not just their rural population but also several politicians.
The aim of the co-operative movement was to help farmers overcome the burden of debt and help them sell their products easily to get maximum profit.
The government passed the Co-operative Credit Societies Act, 1904 paving the way for the formation of several rural credit societies.
In 1912, the government realised some of the shortcomings of the 1904 Act and passed a more comprehensive Act, known as the Co-operative Societies Act of 1912.
This Act recognised non-credit societies also.
State versus Centre: A political masterstroke?
Cooperative societies are a state subject under Entry 32 of the State List of Seventh Schedule of the Constitution of India.
The functioning of Cooperative Banks is guided by the Cooperative Societies Act of the respective states.
Now, that makes the Centre’s move interesting and intriguing. Why a separate ministry for a state subject?
Kerala’s minister for Cooperation and Registration V N Vasavan says “Creation of a new Cooperation ministry is an infringement upon the federal rights of the state governments. It comes under the purview of the state government. This is an intrusion into the authority of the state governments.”
CPM has a sweeping control over the cooperatives in Kerala.
The Shiv Sena, which is leading the Maha Vikas Aghadi coalition in Maharashtra, was on record to state that the creation of the new Union ministry of cooperation was “just to harass the cooperative sector as it has a strong network in Maharashtra compared to other states.”
Several leaders of the ruling MVA, especially those from the NCP, are active in the cooperative sector.
Former leader of the opposition in Kerala assembly and senior Congress leader Ramesh Chennithala called it a political conspiracy and said his party would consider taking the legal path against the formation of the ministry.
Two-time Kerala finance minister and senior CPM leader Thomas Issac wrote on his Facebook page that “this move has ulterior motives.”
Citing the case of Gujarat, he said “Amit Shah’s tirades first started by capturing the Cooperative banks which were the forte of the Congress party in Gujarat and the BJP there took control of it.”
“Yet another assault on Federalism. Co-operative societies are in the state list of the Constitution. No better hatchet man than Amit Shah to head the new Union cooperation ministry to take over the entire co- operative sector, bypassing the states and promote the Hindutva coops,” Isaac tweeted.
Amit Shah, the first minister of this new ministry, has a very old and successful association with the cooperative movement in Gujarat.
Before taking charge of the ministry he met some of the leading figures of the country’s cooperative sector and said “The government is determined to make cooperatives and all cooperative institutions more empowered.”
While the administrative control of the cooperatives are with the states, its banking functions are regulated by Reserve Bank of India under the Banking Regulation Act, 1949 (as applicable to Cooperatives).
This dual control has led to a lot of irregularities in the functioning of the cooperative banks. The fact that most cooperative banks are controlled by powerful politicians contributed to their poor supervision and the lack of political will to change things.
In June 2020, the Centre promulgated an ordinance to bring all urban cooperative banks and multi-state cooperative banks under the supervision of the RBI in order to protect the interest of depositors.
The Ordinance amended the Banking Regulation Act, 1949 as applicable to cooperative banks. However, it did not affect the existing powers of the state registrars of Co-operative Societies under state co-operative laws.
The creation of cooperation ministry may further give the Centre some control over the functioning of the cooperatives in different states.
Farmers protest and removing middlemen … the Amul way
And while the Centre-state tussle could be one aspect, there may be other dimensions of the move.
We all know the success story of Amul as a cooperative society.
Amul was founded in 1946 to end the exploitation of middlemen.
According to details on its website, the exploitative trade practices followed by local trade cartel led to the formation of cooperative society. Sardar Vallabh Bhai Patel advised the angry farmers to get rid of middlemen by forming their own cooperative which would ensure that procurement processing and marketing all stay under their control.In 1946, farmers went on a milk strike and subsequently formed their own cooperative.
Now, fast forward to the ongoing farmers protest and the new farm laws. One of the declared objectives of the new farm laws is to remove the middlemen who exploit the small and marginal farmers.
The government has often said that the present protest by farmers is being led by the big farmers who have vested interest.
Will the new ministry have a role to play in the larger objective to empower the small and marginal farmers without being dependent on the states?
We don’t know for now.