COOPERATIVE SOCIETIES ACT

1. Context 

2. Multi-State Cooperatives

• According to the International Cooperative Alliance (ICA), cooperatives are people-centred enterprises jointly owned and democratically controlled by and for their members to realise common economic, social and cultural needs and aspirations.
• Multi-state cooperatives are societies with operations in more than one state, for instance, a farmer-producers organisation procures grains from farmers from multiple states.
• The board of directors are from all the States in these collectives and operates in and controls all the finances and administration.
• There are close to 1, 500 MSCSs registered in India with the highest number being in Maharashtra.

3. Concerns 

• The independent and autonomous character of cooperative societies was to be crucial in their functioning.
• The inclusion of cooperatives in the planning process as development instruments made the sector an avenue for dispensing patronage to the supporters of ruling political parties.
• Moreover, the state government's policy to contribute to the share capital of the cooperatives enabled governments, "in the name of public interest" to directly intervene in the working of legally autonomous cooperatives.

• Besides, MSCSs were formed to ease the operation of collectives throughout the country.
• MSCSs are facing issues regarding trust, which is the very basis of cooperation.
• This has brought MSCSs under multiple controls from the Centre.
• Monitoring is one of the important institutional functions in a collective organisation but if monitored from much above, it takes a top-down approach as opposed to a grassroots one.

4. The Bill seeks to change

• To plug the "loopholes" in the MSCS Act, the Centre introduced a Bill seeking to amend the 2002 law for more "transparency" and "ease of doing business".
• The amendments have been introduced to improve governance, reform the electoral process, strengthen monitoring mechanisms and enhance transparency and accountability.
• The Bill also seeks to improve the composition of the board and ensure financial discipline, besides enabling the raising of funds in multi-State cooperative societies.

5. Central Co-operative Election Authority 

• The Bill creates a Central Co-operative Election Authority to supervise the electrical functions of the MSCSs.
• The Authority will have a chairperson, vice-chairperson and up to three members appointed by the Centre.
• Notably, the constitutional domain of States in regulating cooperative societies was upheld by the Supreme Court last year when it struck down a part of the 97th Constitution Amendment.

• To make the governance of multi-State cooperative societies more democratic, the Bill has provisions for appointing a Cooperative Information Officer and a Cooperative Ombudsmen.
• To promote equity and facilitate inclusiveness, provisions relating to the representation of women and Scheduled Caste/Tribe members on the boards of the multi-State cooperative societies have also been included

For Prelims & Mains