ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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A New Ministry for Cooperation

In attempting to harness cooperatives, the union government seems to erode federalism.


The newly created Ministry of Cooperation appears to confound a wide audience, as speculation is rife about what is the implicit purpose for such an endeavour. What precedes this move, and what has recently added to this discussion, make this new ministry a topic of intense discussion. Announced on 6 July 2021, this historic move seeks to provide a separate administrative, legal and policy framework for strengthening the cooperative movement, apart from deepening a true people-based movement, an economic development model that will now have a ministry to streamline ease of doing business and enhance the multistate cooperative societies. This announcement follows the finance ministers budget announcement in February 2021, where the concerned minister referred to a separate administrative structure. A little earlier, in 2020, the Banking Regulation (Amendment) Act, 2020 was passed to bring urban cooperative banks under the direct supervision of the Reserve Bank of India (RBI), following public scandals in certain banks and claims of mismanagement. However, this centre staging of cooperatives at this juncture needs to be understood in the context it arrives, and with the key elements that underscore this development. Most recently, the Supreme Court in Union of India v Rajendra Shah and Others (2021), has partly struck down the 97 constitutional amendment that sought to provide a clear framework for the administration of cooperatives across the country. The courts adjudicated that the amendment violated the powers of state legislatures with respect to items in the state list, by legislating on a matter specifically contained in Item 32 of the state list under Schedule 7. In what is a fillip towards the federal character of cooperatives, the Court clearly stated that cooperatives and any form of legislation pertaining to them are strictly within the domain of the state government and legislatures, and only in matters of multistate cooperatives does Parliament have sanction to legislate.

In this context, the new ministry is already entering into a factitious territory. At the outset, the proviso towards creating something separate, inter alia distinct, is already entering contested terrain. The ruling dispensation does not have a favourable record in promoting a cooperative federalism and has, in essence, circumvented the powers of state legislatures at several moments in the recent past. This seems to be the case here, too. The bulk of the cooperative movement, whether in the form of credit societies, banks, producer cooperatives are administered by states, with some states, especially Maharashtra and Kerala, being prominent. The choice of carving this ministry independent of the already existing department under the Ministry of Agriculture and Farmers Welfare indicates a carefully calibrated attempt at challenging the existing domination of cooperatives by certain sections of the political spectrum.

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Published On : 20th Jan, 2024

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