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Multi-State Cooperative Societies (Amendment) Bill, 2022

Published: 15th Dec, 2022

Context

The government has recently introduced the Multi-State Cooperative Societies (Amendment) Bill, 2022, to improve governance and bring transparency & accountability. The Bill aims to amend the Multi­State Cooperative Societies (MSCS) Act, 2002.

What are multi­-state cooperatives?

  • They are societies that have operations in more than one State, for instance, a farmer producers Organisation that procures grains from farmers from multiple states.
  • At present, India has more than 1,500 multi-State cooperative societies, with the highest number being in Maharashtra.
  • The MSCS Act 2002 was passed to govern such cooperatives whose members and areas of operation are spread across more than one state.

What are the issues with the cooperative sector?

  • Issues regarding trust: This has brought MSCSs under multiple controls from the Centre.
  • Monitoring: Monitoring from much above, takes a top-down approach as opposed to a grassroots one.

What does the Bill seek to change?

  • To plug Loopholes in the MSCS Act: Bill seeks to amend the 2002 law for more “transparency” and “ease of doing business”.
  • 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 boardsand ensure financial discipline, besides enabling the raising of funds in the multi-State cooperative societies.
  • Creation of a central Cooperative Election Authority: The Bill provides for the creation of a central Co­operative Election Authority to supervise the electoral functions of the MSCSs.
  • Its composition:
    • A chairperson
    • vice chairperson
    • up to three members appointed by the Centre
  • Insertion of a new Sectionrelated to the “establishment of the Cooperative Rehabilitation, Reconstruction and Development Fund” for the revival of “sick multi-state cooperative societies”.
  • The merger of “any cooperative society” into an existing multi-state cooperative society.

Issues in the Bill

  • Misuse of power: The Bill may lead to “the concentration of power of the Centre”, which could impact the “autonomy” of MSCSs and create the potential for “misuse”.
  • Encroachment: 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.

Related Constitutional Provisions:

  • 97thConstitutional 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 acknowledgment to cooperative societies.

Ministry of Cooperation:

  • The Union Ministry of Cooperation was formed in 2021, its mandate was looked after by the Ministry of Agriculture before.
  • Objectives of creation of the new ministry:
    • To realize the vision of "Sahakar se Samriddhi" (prosperity through cooperation).
    • To streamline processes for ‘'Ease of doing business’' for co-operatives and enable the development of Multi-State Co-operatives (MSCS)
    • To provide a separate administrative, legal, and policy framework for strengthening the cooperative movements in the country.
    • To deepen the cooperative as a true people-based movement reaching up to the grassroots level.

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