Multi-state Cooperative Societies

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    In News

    • Recently, the Union Cabinet gave its approval for the creation of three new multi-state cooperative societies.

    Major Highlights

    • About: The Government will set-up three new cooperative bodies under the Multi-State Cooperative Societies (MSCS) Act, 2002 viz.
      • National multi-state cooperative export society
      • National multi-state cooperative organic society 
      • National multi-state cooperative seed society 
    • These societies will act as national nodal points for production, procurement, processing, branding, labelling, packaging, storage, marketing and distribution of quality seeds.
    • Key roles of proposed societies:
      • To manage various activities related to the organic sector by providing certified and authentic organic products. 
      • Promotion of seed replacement rate (SRR), variety replacement rate (VRR) and reduce the yield gaps and enhance productivity
      • To conduct strategic research and development(R&D). 
      • To develop a system for preservation and promotion of indigenous natural seeds.

    Significance

    • It will help in promoting organic products, seeds and exports. Higher exports will help increase production of goods and services by the cooperatives at various levels, generating more employment. 
    • It will facilitate business by various cooperative societies across the country with support from relevant union ministries.
    • Processing of goods and enhancing the services to match international standards will also generate additional employment
    • Increased export of cooperative products would promote “Make in India”, leading to Atmanirbhar Bharat.”

    What are Cooperative Societies?

    Background:

    • The term cooperative Societies was first used during the farmers’ protest against exorbitant interest rates charged by bankers of Poona and Ahmednagar. 
    • However, it came with structure and shape post British enactment of the Cooperative Credit Societies Act, 1904.
    • It drafted cooperation as a provincial subject and the provinces were authorised to make their own cooperative laws under the Montague-Chelmsford Reforms.
    • This categorization carried on to the Government of India Act, 1935. In 1942, the Government of British India enacted the Multi-Unit Cooperative Societies Act to cover Cooperative Societies with membership from more than one province.
    • Present status:
      • About: After independence cooperatives became an integral part of Five-Year Plans. In 1984, the Parliament of India enacted the Multi-State Cooperative Societies Act to remove the plethora of different laws governing the same types of societies.
      • Multi State cooperative societies: Cooperatives are a state subject, but there are many societies such as those for sugar and milk, banks, milk unions etc whose members and areas of operation are spread across more than one state. 
      • They draw their membership from both states, and they are thus registered under the MSCS Act. Their board of directors has representation from all states they operate in. 
      • Administrative and financial control of these societies is with the central registrar, with the law making it clear that no state government official can wield any control on them.

    Constitutional Provisions

    Fundamental Rights:

    • Article 19: Right to form cooperatives, Associations or Unions.

    Directive Principles of State Policy (DPSP) 

    • Article 43: The State shall endeavour to promote cottage industries on an individual or co-operative basis in rural areas.

    Major committees/reports on Cooperatives

    • 1954: All-India Rural Credit Survey Committee Report
    • 1990: Chaudhary Brahm Prakash Committee 
    • 1996:  Mirdha Committee
    • 2000: Jagdish Kapoor Committee 
    • 2001: Vikhe Patil Committee 
    • 2004: V. S. Vyas Committee 

    Way Ahead

    • Multi-state cooperative societies are not restricted to a single state thus, there is a need to support the voluntary establishment and democratic operation of cooperatives. The proposed step is in the right direction to not only aid in their functional autonomy but also advancement of the economic and social well-being of its members.

    Multi State Cooperative Society (MSCS) Act

    About:

    • The MSCS Act of 2002 was enacted to consolidate and amend the laws related to cooperative societies. It substituted the Multi State Cooperative Societies Act of 1984. 
    • The Act was passed in 2002 with an objective to facilitate the incorporation, functioning, and organization of the cooperative societies that have its jurisdiction in more than one state. 
    • The Act ensures voluntary formation and proper operation of the Multi State Cooperative Societies that are member-driven institutions, and they are based on self-help and mutual aid. 
    • The Multi-State Co-operative Societies (Amendment) Bill, 2022, was introduced in the Lok Sabha on December 7, 2022.  It amends the Multi-State Co-operative Societies Act, 2002.

    Definition:

    •  “Multistate Cooperative Society” means a society registered or deemed to be registered under this act and includes a national cooperative society and a federal cooperative. 

    Aim & Objectives: 

    • To work in the interest and welfare of its members in more than one state. 
    • Social and economic betterment of its members by way of self-help and mutual aid
    • To organize cooperative education programs for its members, employees, and directors. 

    Eligibility: 

    • It is not mandatory for society to have branches in more than one state, it may have it limited to one state, and it shall not cease to be a “Multi State Cooperative Society,” as long as it serves the interest of members in more than one state.

    Right to vote: 

    • Every member who is entitled to subscribe the shares of the society are entitled for voting.
    • Conversion into MSCS: A Cooperative Society may extend its jurisdiction by converting into an MSCS by an amendment to its bye-laws, provided such amendment shall be registered by the Central Registrar.

    Source: TH