Government to amend the Multi State Cooperative Societies (MSCS) Act, 2002

Published: 27th Dec, 2021

Context

The government is in discussion to amend the Multi State Cooperative Societies (MSCS) Act, 2002 to “plug the loopholes in the Act”.

About

What is Multi State Cooperative Societies (MSCS) Act, 2002?

Cooperatives are a state subject, but 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.
They draw their membership from both states, and they are thus registered under the MSCS Act.
Their board of directors has representation from all states they operate in. Administrative and financial control of these societies is with the central registrar, with the law making it clear that no state government official can wield any control on them.

Since the law was enacted, 1,479 such societies have been registered, of which 9 have been deregistered since.
Maharashtra has the highest number at 567, followed by Uttar Pradesh (147) and New Delhi (133).
Credit societies constitute the bulk of registered societies at 610, followed by agro-based ones (which include sugar mills, spinning mills etc) at 244.
There are 96 multistate cooperative dairies and 66 multistate cooperative banks.

Background

The formal launch of the cooperative movement in India occurred with the introduction of the Cooperative Societies Act in 1904.
In 1912, another Cooperative Societies Act was passed to rectify some of the drawbacks of the earlier law.
The next landmark change came in 1919, when cooperation was made a state subject.
That allowed the various states to come up with their own legislation governing cooperatives.
National Cooperative Development Corporation (NCDC), a statutory corporation, was set up under National Cooperative Development Corporation Act, 1962.
The Government of India announced a National Policy on Co-operatives in 2002.
In 2002, the Centre passed a Multistate Cooperative Societies Act that allowed for registration of societies with operations in more than one state.

Status of cooperative movement in India

At presence there are 1, 94,195 cooperative dairy societies and 330 cooperative sugar mill operations.
In 2019-20, dairy cooperatives had procured 4.80 crore litres of milk from 1.7 crore members and had sold 3.7 crore litres of liquid milk per day.
Cooperative sugar mills account for 35% of the sugar produced in the country.
In banking and finance, cooperative institutions are spread across rural and urban areas.
Village-level primary agricultural credit societies (PACSs) formed by farmer associations are the best example of grassroots-level credit flow.
These societies anticipate the credit demand of a village and make the demand to the district central cooperative banks (DCCBs).
State cooperative banks sit at the apex of the rural cooperative lending structure.
Given that PACSs are a collective of farmers, they have much more bargaining powers than an individual farmer pleading his case at a commercial bank.
There are also cooperative marketing societies in rural areas and cooperative housing societies in urban areas.

Laws governing cooperative societies

The 97th amendment to the Constitution, 2011 inserted Article 19(1) (c) by recognizing the right of the people to form cooperative societies as a fundamental right.
It also added a new Article 43B in the DPSPs for the promotion of cooperative societies and Part IXB regarding the cooperatives working in India.
Like agriculture, Cooperative Societies is in the state list.
A majority of the cooperative societies are governed by laws in their respective states, with a Cooperation Commissioner and the Registrar of Societies as their governing office.
The Central Registrar of Societies is their controlling authority, but on the ground the State Registrar takes actions on his behalf.

CURRENT AFFAIRS FOR UPSC IAS