The Hindu Business Line : Leave the co-operative movement alone

The co-operative movement in India had a premature birth. The British conceived it with apprehension, lest it developed into a genuine network of autonomous democratic and professional bodies, as had happened in the Scandinavian countries. That, they feared, would turn the co-operative organisations into a training ground for the new leadership. The British, therefore, put the new baby in incubator, ostensibly to nurse. Unfortunately, the baby’s growth was stunted a nd it became incapable of getting off the incubator.

Lucrative activity

The baby has grown into a weakling needing governmental help all along. The political leadership after Independence found financing and supporting the co-operative bodies a lucrative activity for itself.

“The co-operation has failed, the corporation must succeed,” was the refrain of the Rural Credit Survey. “Uplift of masses is impossible without co-operation,” was another slogan. The co-operative movement entered banking business, flagrantly violating the principle that its services should be limited to its members. Co-operative banks became alluring for politicians. They developed a whole set of new techniques, of avoiding, postponing and falsifying elections, filling up membership with cronies, giving contracts and loans to their supporters, and dodging audit.

The genuine leaders of the co-operative movement became concerned about these developments, and ushered in some checks and balances. But now the registrar and the politician intervene in the affairs of the co-operatives so much that co-operatives can well be said to have become a part of the government machinery.

Post-Independence, a problem that did not exist under the British rule cropped up. Every time the government changed hands and a new party came to power, there were attempts to create hurdles for the co-operatives controlled by the previous rulers and, if possible, scuttle them.

The only solution lay in making the movement stand on its own feet and develop, freeing itself entirely of all governmental control and supervision.

There was a serious hurdle in that path, though. Article 19 (1)(c) of the Constitution gives citizens the fundamental right to form associations and unions. The implicit presumption is that it includes the right to form co-operatives.

That presumption, however, was not accepted in a number of court decisions. The judiciary held that citizens had a right to form co-operatives, but once registered, the co-operative societies became creatures of law subject to the legislation of the State.

Centre’s manoeuvres

The Centre was unprepared to let go of the goose that laid golden eggs. Several attempts have been made to form co-operatives by improving the legislation and providing model laws. In 1989, the Planning Commission constituted the Brahma Prakash Committee to come up with a model co-operation Bill. In 1990, the draft Bill was finalised. It was endorsed by the Planning Commission and received the support of State governments in 1992. Unfortunately, not one State has adopted the model law. The Centre then came up with the Multi-State Cooperative Societies (MSCS) Act, in terms of the recommendations of the Brahma Prakash Committee. But, thereafter, political upheavals happened at too rapid a pace to permit any progress on the laws.

Amendment Bill

Yet another committee, under the chairmanship of A.Vaidyanathan, submitted a report on the subject. On the basis of this report, a Constitutional Amendment Bill was drafted. This Bill was also largely endorsed at a ministerial meet in December 2004. The Bill introduced a new Part IXB for co-operative societies on the lines of Part IX on Panchayati Raj institutions introduced during the Rajiv Gandhi regime.

The amendment enjoins State legislatures to make provisions on the incorporation, regulation and winding up of co-operative societies based on the principles of voluntary membership, democratic member-control, member-economic participation and autonomous functioning.

Further, the Amendment Bill gave detailed directives on conducting elections, auditing accounts, supercession of cooperative bodies and penalties for breach of provisions. The object, obviously, was to make co-operative organisations a part of the government machinery rather than autonomous, democratic, member-controlled forms of business organisations.

It is difficult to understand why a particular form of business organisation deserves a separate mention in the Constitution. The Panchayati Raj institutions are part of the governance machinery and their introduction has made the Indian Republic three-tiered, instead of two-tiered as contemplated in the original Constitution.

Why separate treatment?

Co-operatives are not part of the government and, therefore, need not have a separate place in the Constitution, unless it is envisaged to give similar treatment to joint stock companies, partnerships, etc. Co-operation was a State subject till a Constitutional amendment put it in the Central List. Most States have expressed their reservations on this.

If the object of the Bill is to promote voluntary, democratic, professional, member-controlled cooperatives, the amendment seeks to do exactly the opposite, that is, make it an arm of the government. This will only make the co-operative movement more dependent on the incubator it has been in for much of the last century.

The stated object of the Amendment Bill can be better achieved by a minor change to the Constitution that will make it clear that the right of association includes that to form co-operatives. Add an Article as a Directive Principle: The responsibility of the government to propel laws that would promote autonomous, democratic and professional co-operative bodies. The lesson to be drawn is: Politicians, while glibly singing the praises of the co-operative movement, have no intention of giving up their stranglehold on it. What is important for them is not so much the principles of co-operative movement as the goose that lays golden eggs.

(The author, a Rajya Sabha MP, is Founder Shetkari Sanghatana.)

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