Eyeing co-ops to harness financial resources: The Tribune India


Parsa Venkateshwar Rao Jr

Senior journalist

A day before the July 6 cabinet reshuffle, the Cabinet Secretariat announced in a press release: Cooperation).

And he went on to elaborate the implicit vision of the measure: “In our country, an economic development model based on cooperation is very relevant where each member works with a sense of responsibility. And the press release ends by saying, “The central government has demonstrated its deep commitment to a community development partnership. The creation of a separate Ministry of Cooperation also responds to the budget announcement made by the Minister of Finance.

Returning to the budget speech of Minister of Finance Nirmala Sitharaman, we find in paragraph 94, in the section under the heading “Government financial reforms”, the statement of intent: “The government undertakes to develop multi-state cooperatives and will give them all the support. To further streamline the “ease of doing business” for co-ops, I propose to set up a separate administrative structure for them. The government has therefore been pondering this issue for some time. He wants to exploit the cooperatives.

So there are two aspects to this ministry. It is an economic ministry. It treats cooperatives like banks, mainly in the agricultural sector. There are also urban cooperative banks, but the sector is rooted in agriculture. The main reason for the creation of the National Bank for Agriculture and Rural Development (NABARD) in 1981 was to provide financial support to cooperatives. It is interesting to note that the Reserve Bank of India (RBI) has placed the cooperative banks under its responsibility, to supervise their operation. The Ministry of Cooperation is in some ways similar to the Ministry of Corporate Affairs, which is linked to the functioning of the Ministry of Finance. The basis of cooperatives in the country is the large number of cooperative banks spread across the country. The Multistate Cooperative Societies Act (MSCS) was enacted in 2002. There are 20 multistate cooperative societies under the Ministry of Agriculture and Farmer Welfare, as well as the 1,469 cooperative societies in various states, with Maharashtra leading the way with 567 of them, followed by 147 in Telangana and 133 in Delhi, and just four in Uttar Pradesh.

The range of registered cooperative societies is reflected in the list of those registered before 1986. They include Boots Employees Cooperative Credit Society Limited, Canara Bank Officers Cooperative Thrift and Credit Society Limited. There is another list of 1,296 Multi-State Cooperative Societies and Banks, which includes the Multi-State Cooperative Society for the Development of Entrepreneurs from Farm to Foreign Exports, which operates in Andhra Pradesh and Telangana and has been registered January 16, 2020.

There is then a vast network of cooperatives spread across the country, which seems to reflect the underlying philosophy of cooperation as articulated by the 19th century British entrepreneur and visionary Robert Owen, and which is now known as of Owenite socialism. It should be noted that the actors of cooperatives are different from the shareholders of a financial institution. Cooperatives raise capital, generate profits and are used by stakeholders. It is intended for internal circulation and consumption. It is indeed a taboo in free market enterprise where shareholders seek the benefits of business transactions, and they can never use the resources for their personal needs.

So what would the Modi government want to do with cooperatives, large and small? Does he want to integrate them into the Atmanirbhar plan and articulate it with the various programs such as Startup India, Make in India, Skill India et al? The government may want to rationalize these many small units, merge them into larger businesses, and turn them into real financial resources for new businesses. There is the felt need that the financial infrastructure in India is inadequate, that the formal banking is not able to meet the challenge of financial inclusion. Banks and cooperative societies can then be put into operation to fill the gaping holes. Cooperatives are then an untapped financial resource in terms of funds to be raised and the ready-to-use institutional framework of a bank. It is interesting that the Modi government woke up to the prospect of using the cooperative network to solve some of the financial infrastructure problems.

In doing so, the government could kill the spirit of cooperatives, the idea of ​​self-help and the pooling of resources in a small group. The philosophy of cooperatives is that small is beautiful. If it becomes big, like too big to fail, then it ceases to be a cooperative. Another essential aspect of cooperatives is autonomy, and it is the autonomy of a group of people who live in a community or share the common interests of a community. Members of a cooperative should not be reduced to the status of anonymous shareholder of a large corporation. The idea behind a cooperative is idealistic, something intimate and harmonious.

The characteristic that the Modi government has shown over the past seven years has been to dream big, to do big things big, the very antithesis of what a cooperative is.

Instead of encouraging more cooperatives to emerge and thrive, where the model is that of a kibbutz, of life and values ​​shared at the interpersonal level, the government could end up transforming the cooperatives into something like micro, small and medium-sized enterprises (MSME).

Co-operatives are not a small business. It is a worldview of cohesive local communities, something that is needed as a social balm for a society that still lives in the shadow of gargantuan, national and multinational corporations. The cooperative is an antidote to lost capitalism. It offers an alternative worldview, which many may consider utopian. But he respects the utopian spirit. Prime Minister Modi, it seems, is keen to transform cooperatives into capitalist enterprises, where ruthless competition is the leitmotif.


Louis R. Hancock

Leave a Reply

Your email address will not be published.