Bill to amend the Multi-State Cooperative Societies Act introduced in Lok Sabha

The government has introduced the Multi-State Cooperative Societies (Amendment) Bill, 2022, the purposing merger of “any cooperative society” into an existing multi-state cooperative society.

What is the present law?

• As per the present law, enacted 20 years ago, only multi-state cooperative societies can amalgamate themselves and form a new multi-state cooperative society.

Key Points about the Amendment:

• The merger of “any cooperative society”: Any cooperative society may, by a resolution passed by a majority of not less than two-thirds of the members present and voting at a general meeting of such society, decide to merge into an existing multi-state co-operative society:
  • Provided that such resolution shall be subject to provisions of the respective State Cooperative Societies Act for the time being in force, under which such cooperative society is registered.
• Establishment of a “cooperative election authority”: The Bill also seeks to establish a “cooperative election authority” to bring “electoral reforms” in the cooperative sector.
  • Composition of the authority: The authority will consist of a chairperson, a vice-chairperson and a maximum of three members to be appointed by the Centre.

Why do some parties oppose this, Bill?

• The opposition wants that this Bill should be referred to a Standing Committee and has flagged certain issues:
  • Bill’s provisions encroach on the rights of State governments. It infringed on the cardinal principle of autonomous functioning as provided in Article 43B of the Constitution.

• • Cooperative federalism should have been followed before the preparation of this Bill.
  • This (Bill) may lead to the concentration of power of the Central government.

What are Cooperatives in India?

• The International Cooperative Alliance (ICA) defines a Cooperative as “an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.”
• Examples of Successful Cooperatives in India:
  • National Agricultural Cooperative Marketing Federation of India (NAFED),
  • Indian Farmers Fertilisers Cooperative Limited (IFFCO)
  • AMUL

Constitutional Provisions:

• The Constitution (97th Amendment) Act, 2011 added a new Part IXB regarding the cooperatives working in India.
• The word “cooperatives” was added after “unions and associations” in Article 19(1)(c) under Part III of the Constitution.
• This enables all the citizens to form cooperatives by giving it the status of a fundamental right of citizens.
• A new Article 43B was added in the Directive Principles of State Policy (Part IV) regarding the “promotion of cooperative societies”.

About the Multi-State Cooperative Societies (MSCS) Act, 2002:

• Multi-State Cooperative Societies: Although Cooperatives are a state subject, there are many societies such as those for sugar and milk, banks, milk unions, etc whose members and areas of operation are spread across more than one state. The Act was passed to govern such cooperatives.
  • For example, most sugar mills along the districts on the Karnataka-Maharashtra border procure cane from both states.
  • Maharashtra has the highest number of such cooperative societies at 567, followed by Uttar Pradesh (147) and New Delhi (133).
  • The MSCS Act was passed to govern such cooperatives.