Multi-State Cooperative Societies (Amendment) Bill, 2022

Context: Recently the Central Government introduced the Multi-State Cooperative Societies (Amendment) Bill, 2022 in Lok Sabha. The Bill proposes to amend the Multi-State Co-operative Societies Act, 2002 in light of the 97th Constitutional Amendment Act of 2011 which inserted Part IXB in the Constitution.

About the Cooperative Societies

• A co-operative society is a voluntary association of individuals having common needs who join hands for the achievement of common economic interest.
• Its aim is to serve the interest of the poorer sections of society through the principle of self-help and mutual help.

97th Constitutional Amendment Act 2011:

• It established the right to form cooperative societies as a fundamental right (Article 19).
• It included a new Directive Principle of State Policy on the Promotion of Cooperative Societies (Article 43-B).
• It added a new Part IX-B to the Constitution titled “The Co-operative Societies” (Articles 243-ZH to 243-ZT).
• It authorizes the Parliament to establish relevant laws in the case of multi-state cooperative societies (MSCS) and state legislatures in the case of other 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.

The objective of the introduction of the Bill:

• The bill is introduced with an objective to enhance transparency and accountability and improve the ease of doing business by reducing the period of registration.

Significance of Cooperative Societies:

• The village cooperative societies provide important inputs for the agricultural sector.
• Consumer societies meet their consumption requirements at concessional rates.
• Marketing societies help the farmer to get remunerative prices.
• The Cooperative processing units help in value additions to the raw products.
• They also help in building up storage, warehouse, cold storage, rural roads and in providing facilities like irrigation, electricity, transport, education and health.
• They play the role of a balancing factor between the public and private sectors and also supplement the work of the government and its agencies.
• Many Cooperative societies have Successfully promoted rural development
  • National Cooperative Development Corporation (NCDC)
  • National Agricultural Cooperative Marketing Federation of India (NAFED)
  • AMUL and Co-operative Rural Development Trust (CORDET)
• They play an important role in poverty reduction, promoting women’s empowerment, and improving literacy rate and skill development.

Key highlights of the bill:

• Cooperative election authority: The Bill also seeks to establish a “cooperative election authority” to bring “electoral reforms” in the cooperative sector.
  • As per the proposed amendment, the authority will consist of a chairperson, a vice-chairperson and a maximum of three members to be appointed by the Centre.
• Establishment of a Fund & concurrent audit: The Bill seeks to insert a new Section related to the “establishment of the Cooperative Rehabilitation, Reconstruction and Development Fund” for revival of “sick multi-state cooperative societies”.
  • It also proposes to insert Section relating to “concurrent audit” for such multi-state societies with an annual turnover or deposit of more than the amount as determined by the Centre.
• Complaints redress: The government has proposed to insert a Chapter relating to “complaints redress”.
  • This proposes to appoint one or more “cooperative ombudsman” with a territorial jurisdiction to inquire into members’ complaints.
• Role of the ombudsman: The ombudsman will complete the process of inquiry and adjudicate within a period of three months from the date of receiving the complaint and may issue necessary directions to the society during the course of inquiry.
• Monetary penalties and imprisonment: The government has also proposed to amend the existing Act to increase monetary penalties on multi-state co-op societies for violating provisions of the law to a maximum Rs 1 lakh.
  • The imprisonment term has also been proposed from a maximum six months at present to up to one year in the proposed amendments.
• Cooperative information officer: The Centre has also proposed to make provisions for the “appointment of cooperative information officer” to provide information on affairs and management of the multi-state co-op society concerned to members of such society.

Contentious clause of the Bill:

• Merger of cooperative society: The Bill proposes merger of “any cooperative society” into an existing multi-state cooperative society.
• Original statute: As per the present law, enacted 20 years ago, only multi-state cooperative societies can amalgamate themselves and form a new multi-state cooperative society.
• Amendment: Any cooperative society may, by a resolution passed by majority of not less than two-thirds of the members present and voting at a general meeting of such society, decide to merge into an existing multi-state co-operative society provided that such resolution shall be subject to provisions of the respective State Cooperative Societies Act for the time being in force, under which such cooperative society is registered.

Criticisms against the bill:

• No provision in the Constitution: According to the critics, the Constitution distinguishes between Cooperative Societies of State and Multi-State Cooperative Societies which are governed by the Union of India.
  • No provision of the Constitution makes way for merging a cooperative society which is incorporated under State law with a Multi-State Cooperative Society.
• Centre’s encroachment: Through the introduction of the Clause concerning the merger through the Bill, the Centre is indirectly encroaching on the rights of State Co-operative Societies according to critics.
  • It is being argued that such actions “impinges” on the rights of the States and is against India’s federal structure.
• Beyond legislative competence: It is also being claimed that this is beyond the legislative competence of the Union as State cooperative societies are within the exclusive jurisdiction of States.

Way Forward:

India has more than 1500 multi-State co-operative societies serving as an important tool to promote economic and social betterment of their members. In order to make the governance of these multi-State Cooperative societies more democratic, transparent and accountable, provisions for setting up of the Cooperative Election Authority, Cooperative Information Officer and  Cooperative Ombudsman have been proposed in the amendment.

Developments over the years also necessitated changes in the existing Act so as to strengthen the cooperative movement in multi-state cooperative societies. Therefore, the government proposed to amend the Act.”

Source:  The Hindu