Empowering India's Cooperative Sector: The Multi-State Co-operative Societies (Amendment) Act 2023
The Parliament passed the Multi-State Co-operative Societies (Amendment) Act 2023, which was enacted on August 3, 2023. The Union Home Minister and Minister of Co-operation, said, "With the passing of this bill by the House, a new era will begin in the country's cooperative movement."
The Multi-state Co-operative Societies (Amendment) Act 2023 establishes the Cooperative Election Authority with a view to introducing electoral reforms in the cooperative sector. A multi-state cooperative society will now require prior permission from government authorities before redeeming their shareholding. The Act will allow any cooperative society to merge into an already existing MSCS. Under the old rules, only an existing MSCS could merge with another one. Additionally, it proposes the creation of a Cooperative Rehabilitation, Reconstruction, and Development Fund, which will provide financial support and assistance to struggling or distressed cooperative societies to help them recover and develop. Furthermore, it proposes the appointment of one or more cooperative ombudsmen and a co-op cooperative information officer to improve transparency, accountability, and grievance redressal within MSCS, making them more responsive to their members' needs. According to the data published by the National Cooperative Union of India, there are now approximately 8.6 lakh cooperatives in the country.
In the country, there are cooperative societies that have membership drawn from more than one state, known as multi-state cooperative societies. These societies are also referred to as societies with objectives confined to more than one state. There are approximately 1500 such societies, governed by the Multi-State Cooperative Societies Act 2002. The new act comprises around 48 provisions, which can be summarized into six main categories. For instance, in provisions related to elections, one of the key features is the establishment of a cooperative election authority with powers equivalent to the Election Commission of India. This authority is responsible for conducting cooperative elections, ensuring they are free, fair, and conducted in a timely manner. The second important category pertains to the composition of board members, aiming to ensure representation of women and SC/ST individuals on the boards of cooperative societies. Numerous significant provisions have been added to address these concerns.
This bill is highly beneficial for strengthening cooperatives. It introduces numerous provisions that were absent in the previous act, making it highly facilitative for all cooperatives and ensuring full transparency. Cooperatives have never received such extensive attention before, and this is the first time the act has been amended and implemented. Companies like Amul, IFFCO, CAMPCO, and KRIBHCO are exporting large quantities and have become multinational brands, thereby transforming into multinational cooperatives. This will empower us to become a significant society, and individuals who join these cooperatives as members will also achieve substantial growth. This aligns with our vision for the next 10-year plan.
In the cooperative sector, as such, multi-state cooperatives are not very numerous in number. However, multi-state cooperatives serve as examples for other cooperatives in different states, as they are a unique type of cooperative where members are located in different states. Generally, cooperatives are small, and there are millions of them across the country. Nevertheless, multi-state cooperatives are exceptional because they have successfully expanded beyond their originating state. Therefore, it is crucial for them to have a conducive business environment. The new amendment introduces a time-bound registration process, which can be completed digitally in this digital age. Additionally, the Ministry of Cooperation, leading the efforts for rejuvenation and revival, will closely oversee numerous cooperatives. The ministry has repeatedly emphasized the need to nurture cooperative startups. These factors highlight the importance of making business operations, registration, and bylaws more accessible and flexible through the multi-state act. Consequently, the states will strive to establish the largest cooperative society in the world.
The multi-state Cooperative Society Amendment Act contains ample provisions that will guide the cooperative movement for the next 25 years. It introduces crucial amendments to enhance governance and transparency. Additionally, it promotes digitalization and implements a multi-dimensional process to ensure fair elections. The act establishes rules for recruitment and sets up a transparent recruitment process. In my opinion, the act's most significant feature is its strong emphasis on inclusivity.
According to the National Cooperative Database, there are approximately 8.5 lakh cooperatives in the country. Prior to the establishment of this ministry, accurate data regarding the location, activities, membership, and turnover of these societies was unavailable. Therefore, after the ministry was formed we began working on the national database. The initial phase focused on mapping three primary sector cooperatives, namely agricultural, dairy, and fisheries societies. We have successfully mapped 2.5 lakh of these societies throughout the country in the database. Additionally, we have mapped over 5 lakh societies from other sectors, completing 95 percent of the database work. The database is now ready in terms of data capture and has been made accessible to all stakeholders, including regional cooperatives (RCs), federations, ministries, and other relevant parties. This comprehensive database will facilitate evidence-based policymaking for the cooperative sector, enabling us to realize the vision of prosperity through cooperation. It serves as a valuable tool for the ministry and all stakeholders involved.
Inclusivity serves as the defining feature of this policy. The policy aims to ensure representation of women on the board of directors, thereby encouraging their participation in the decision-making process and bringing a fresh entrepreneurial perspective to the cooperative sector. Additionally, the policy ensures representation of marginalized sections, such as Scheduled Castes (SC) and Scheduled Tribes (ST), on the board. As cooperatives revolve around their members, it becomes crucial to incorporate inclusivity measures, especially considering the ongoing social and economic growth and demographic changes in the country. The policy adequately provides opportunities for the participation of marginalized sections, empowering them to play a decisive role. This approach fosters alignment between the cooperative sector and the needs of those at the bottom of the socioeconomic pyramid, as the cooperative sector's principles revolve around member centrality. By prioritizing member service, the cooperative sector can continue to progress. Furthermore, the policy includes provisions for transparency and governance, establishing a robust system that facilitates developmental changes. These changes can be effectively monitored, bringing about positive transformations that are now enshrined in the national cooperation policy. Regarding education and training, although the cooperative education fund existed in previous Multi-State Cooperatives (MSCs), the current policy places adequate emphasis on utilizing the fund to educate board members, startups, entrepreneurs, and other individuals.
The ombudsman is a key feature of this bill. According to the provisions outlined in the bill, the government has the authority to appoint one or more ombudsmen who will have territorial jurisdiction over cooperatives. The fundamental concept behind this provision is to provide a recourse for cooperatives that are unable to address grievances internally. In such cases, they can approach their respective ombudsman by filing an application. The ombudsman will possess powers to enforce attendance, request documents, and other relevant authorities, making it an empowered body. The ombudsman will be responsible for deciding on the application within a specified timeframe. They can issue directions to the society for the resolution of the grievance, as well as impose costs, fines, and other penalties. If a member is dissatisfied with the decision of the ombudsman, they have the option to appeal to the Central Register of Cooperative Societies, and the same option is also available to the societies themselves.
The Multi-State Co-operative Societies (Amendment) Act, 2023 is a significant step towards strengthening the cooperative sector in India. The Act aims to address the challenges faced by co-operatives, such as inadequate governance, politicization, and the inability to attract competent professionals. By allowing state co-operative societies to merge into existing multi-state co-operative societies, the Act promotes collaboration and synergy among cooperatives. Furthermore, the Act facilitates the amalgamation and division of multi-state co-operative societies, providing them with greater flexibility and autonomy. With these amendments, the Act seeks to foster the growth and development of co-operatives as people’s institutions based on self-help and mutual aid.
Author is an Advocate practicing in the High Court of Bombay.
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