Published: 3rd Aug, 2023
Context
Rajya Sabha passed the Multi-State Cooperative Societies (Amendment) Bill, 2023.
- The Bill had been approved by Lok Sabha recently, and was now passed in Rajya Sabha by voice vote.
Highlights of the Bill:
- Objective: The Bill seeks to establish a ‘Cooperative Election Authority’ with a view to introducing electoral reforms in the cooperative sector.
- Need of the Bill: There are about 6 lakh cooperatives in the country, out of which active Primary Agricultural Cooperatives (PACs) are around 63,000 which needs regulations.
- The Bill amends the Multi-State Co-operative Societies Act (MCSA), 2002. It establishes the Co-operative Election Authority to conduct and supervise elections to the boards of multi-state co-operative societies.
- A multi-state co-operative society will require prior permission of government authorities before the redemption of their shareholding.
- A Co-operative Rehabilitation, Reconstruction and Development Fund will be established for the revival of sick multi-state co-operative societies. The Fund will be financed through contributions by profitable multi-state co-operative societies.
- The Bill allows state co-operative societies to merge into an existing multi-state co-operative society, subject to the respective state laws.
What are Multi-state Cooperative societies?
- 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.
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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.
Why multistate cooperative societies are significant?
- The mission of the multi-state society is to facilitate the voluntary formation and democratic functioning of cooperatives as peoples institutions based on self-help and mutual aid and enable them to promote their economic and social betterment and to provide functional autonomy.
- Cooperative Society provides financial assistance to its members. The members are responsible for raising capital to help those in need.
- It mainly protects the weaker sections within rural communities from exploitation by wealthy individuals and companies.
Laws governing Cooperative societies in India:
- As per the Constitution, states regulate the incorporation, regulation, and winding up of state co-operative societies.
- Parliament can legislate on matters related to incorporation, regulation, and winding up of multi-state co-operatives.
- The Multi-State Co-operative Societies Act, 2002 provides for the formation and functioning of multi-state co-operatives.
- In 2011, the Constitution was amended (adding Part IXB) to specify guidelines for running co-operative societies.
- These guidelines provide for: (i) composition of the boards of co-operatives, (ii) election of members of the board, (iii) audit of accounts of co-operative societies, and (iv) supersession of the board.
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The Supreme Court, in July 2021, held that Part IXB will only be applicable to multi-state co-operative societies, as states have the jurisdiction to legislate over state co-operative societies. |
What are the present concerns in management of Cooperatives?
- Inadequacies in governance
- Politicisation and excessive role of the government
- Inability to ensure active membership
- Lack of efforts for capital formation
- Inability to attract and retain competent professionals
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