Bringing parity in state cooperative laws

At the recent National Policy on Cooperatives meet, Amit Shah, Union Minister for Cooperation said that the Centre has no intention to bring new legislation for state cooperatives. He further said that uniformity needs to be brought in cooperative state laws, which will be possible only after dialogue with the state governments. This stance of the government has come contrary to a dominant perception that with the formation of the Cooperative Ministry, the government may centralize the cooperative laws in the country as Cooperation is a state subject. What is the background of a clear-cut stance of the government on this issue now? Do efforts in bringing uniformity to date have borne fruits? Why has it become so important now?

The Standing Committee on Agriculture, Animal Husbandry, and Food Processing in its report recently recommended that the Ministry of Cooperation shall exercise utmost prudence in chalking out its activities/programs at the national level, so that federal features of the country are not impinged upon and all stakeholders in the cooperative sector are duly benefitted.

They observed that cooperative societies under State Cooperative Acts are governed by the registrars of cooperative societies. It appears that the new Ministry may have taken the views of the Report seriously. The recent initiatives in the Ministry, through its outreach events conducted in the states, are also a clear indicator that the government is giving timely priority in redressing the issues of the cooperatives sector in the states and is trying to make them understand that the new Ministry is keen to take up all of their concerns.

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Bringing in uniformity in cooperative laws of the states needs extensive discussions to arrive a proper consensus. The Constitution Amendment Act 2011 was a big step toward the democratic growth of cooperatives. The Constitutional amendment was incorporated by many states like Bihar, Gujarat, Haryana, Karnataka, Kerala and Maharashtra, but the lack of its uniform implementation hindered the autonomous growth of cooperatives. A roadblock to uniformity in cooperative laws appeared when petitions were filed in the Gujarat High Court challenging the constitutional amendment on the grounds that it violated the basic structure of the Constitution. Last year, on the Centre’s plea challenging Gujarat High Court’s petition, the Supreme Court struck down certain provisions of the Constitution Amendment Act, 2011 that had clauses dealing with the working of cooperatives in the states.

At the recent National, Cooperative Policy meet, Amit Shah said that cooperative laws made in the 1950s do not have their validity in 2022. In fact, between 1950 and 1995, the state cooperative laws built upon the framework pre-dating independence making the Registrar, the centre-piece of legislation, while the members of the cooperatives were kept at the periphery. A Model Cooperative Law in 1991 was introduced to make cooperatives self-reliant, autonomous and democratic curtailing the powers of Registrars. Since then many states like Bihar, J & K, Karnataka, Jharkhand, Chhattisgarh, Karnataka and Orissa have introduced liberal cooperative legislations. A comparative analysis of the states with liberal laws and the rest of the states where liberal laws are not implemented, clearly indicates that in the rest of the states lacking liberal laws, the control mostly is in the hand of the government; the registrars are more powerful, there is lack of freedom in conducting elections and so on. In short, the democratic growth of the cooperatives is adversely affected in these states.

The National Cooperative Policy also built up consensus on key issues for democratic growth of cooperatives such as transparency, simple registration process, curtailing the powers of Registrars, ease of doing business, accountability and enjoying the freedom of operation as corporates do. The old state cooperative laws need to be reframed in the wake of current realities. Before announcing the new Cooperative Policy, a Committee of experts may be constituted with a specific mandate to bring uniformity to state cooperative laws.

The National Policy on Cooperatives in 2002, though comprehensive, failed to create uniformity in the state cooperative laws. The need of the hour is for the new National Policy to include checks and balances so as to bring in uniformity in the state laws, and ensure that the Centre-state cooperative sector relations are cordial.

(The writer is Director, National Cooperative Union of India.)