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 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:

• 97^thConstitutional 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.