Tribute on Balagopal

  Cooperation and Food Security

I Cooperatives in pre independent era

Indian Economy

India is predominantly an Agricultural Country. Villages form the basis of its economy. Most of the villagers’ occupation has been agriculture for centuries. A self contained economy with artisans and craftsmen formed part of village life.

Entry of the British                                  

In the middle part of the 19th century, the British East India Company initially entered Indian Sub-Continent for carrying on trade, read the mind of the different Rulers and capitalised their internal dissent and divide, gradually gained foothold and assumed political power.They controlled the social and economic life of Indians for more than two centuries.Heretofore, Indian people, with diverse culture and social background endured their  life with the existing social values and Gram  Panchayat system. They were impacted much by rules and regulations that the British brought in and administered. This change caused the people to knock at the doors of Courts for litigation functioned in urban areas by spending lot of time and money.

Trade and its Impact

The influx  of imported goods from Europe forced competition upon the village economy. This has largely affected the farmers and others artisans in the villages. As a consequence those people were unable to withstand the competition of imported merchandise, left their industries and flooded farming activities, in order to eke out their living. This pressure on agricultural lands and farming occupation had aggravated the problem of unemployment in agriculture.

After opening of the Suez Canal, Indian cotton, jute, indigo and other agricultural commodities were exported on a large scale. This opening  created prosperity and help to fill the coffers of traders and middle men, neglecting farmers living standard in the process. Their income level was low and were driven to fend for themselves.

 On  the  other hand, their socio- economic condition went from bad to worse.

The farmers were reeling under dire poverty but the British Government adopted rigorous collection drive methods for collection of land taxes against the farmers. Awaiting for opportunity, usurious money lenders utilised  the situation for lending and exploitation.Debt-burden was phenomenol, in the sense and gave rise to the adage, that » farmers in India were born with debts, live in debts and die with debts, inheriting debts to posterity. »

Agriculture and associated Problems

Fragmented land holdings, failure of monsoon and higher rates of interest on loans were other factors affecting farmers. Superstitious beliefs, loans for unproductive purposes, lack of frugality in expenditure, were other social woes worsening the socio-economic condition. Absence of meaningful health care delivery system could also be cited as other reasons for low productivity and slackness of involvement in agriculture activities. From the point of view of education and the perennial problem of drought and its afterr effects too, have driven farmers to the brink of disaster.

The Santhal(Tribal) Revolt and the Deccan Revolt

The Santhal( Tribal) Revolt against theGovernment in 1855 and the Deccan Revolt of 1875 had for reaching consequences.The social and economic subjugation had driven the tribals  and rural community to rally against the British rule.The foundation of the Rule was shaken.Unable to control the massive uprising by employing the police, the British Administration pressed into service of the army and quelled the riots by killing thousands of poor farmers and peasants.

The Deccan Riots Commission and The Deccan Agriculture Relief Act

However, sensing the deep-seated discontent in the minds of farmers, peasants and tribal and as an appeasement measure, the British Government appointed a commission to study the riot and this commission was known as the « Deccan Riots Commission ».

The commission, among other things, recommended the passing of the « Deccan Agriculture Relief Act ». This act contains provisions leading to regulation of money lending, maintenance of proper accounts, issue of documents for obtaining loans,written mortgage,withholding of arrest of farmers, court intervention in money lending cases and reduction of interest rates  etc.

Drought and Famine- Appointment of The Famine Commission

Meanwhile, wrath of nature, like drought and famine, struck rural life severely and thousands of poor farmers and peasants lost their livelihood. The Government has once again nominated a commission known as the” Famine Commission” with the objectives for thorough and detail study on such happenings and to give its recommendations for taking remedial measures.

TheLand Improvement Act

 This commission recommended the enactment of suitable legislation forsanction of land improvement loans. As such, the Land Improvement Loans Act 1833 was passed. This statute had its objectives like land reform, sinking of wells, lending of loans against the properties etc.

However, in practice the intended benefits of the legislation were not helpful to farmers, they could hardly provide real benefit to alleviate their lot. Sensing looming discontent among farmers and peasants, the British brought in another piece of legislation,” the Agriculturists Loans Act 1884.”

 This piece of legislation paved the way for sanction of the loan known as the Teccavi Loans. The lending of loans and recovery were based on the sanction of Revenue officers of the government. They did not evince enough interest on encouraging loaning activities among farmers and peasants. Further, non-sanction of loans within that time- frame, severe collection methods were other causes for failure of this arrangement.

The British Government, yielding to the circumstances, formulated and implemented various legislative methods to address the problems of rural farming community in India. However, these measures were not able to fulfil the expected aspirations of rural India. The government thought it wise to try some other system framework.

TheMadras Presidency and Sir.Fredrick Nicholson

 The Madras presidency took the lead and deputed its civil servant, Sir. Fredrich Nicholson in 1882, to involve on the system study in India and especially to undertake deep study on Raiffeissen type of Banks, functioning  in Germany and other Countries.

 »Find Raiffeisen »

Raiffeissen type of village banks, functioning in Germany at the time, attracted the civil servant and impressed him a lot. He finalized his report and released one part in 1895 and another in 1897. While concluding his report he was emphatically indicated and recommended to emulate its moral with the caption « find Raiffeisen ».

 The government of Madras presidency examined his report for establishing small sized village banks and cooperatives in Madras districts. In his efforts M. Dubernex and Sir Edward Maclagan joined hands and supported the idea of forming Peoples banks for Northern India and cooperatives societies in Punjab and elsewhere.

Second Famine Commission

 At that point of time there was no separateCooperatives Act enacted for registration of cooperatives societies.So, cooperatives societies organized in Punjab were registered under the Indian Companies Act 1882. Subsequently in 1991, other” Famine Commission” was constituted by the government to give its recommendations  for tackling the situation. This commission recommended to the government to organize Mutual Credit Associations as prevalent in those days in European countries.

 Concerning all recommendations on the plight of the farming communities, Lord Curzon had constituted a high level comittee chaired by Sir Edward Law.Other members of the comitee were Sir. Fredrich Nicholson, Duberney and others.The comittee prepared a Bill on cooperative societies and presented it on  23/10/1903. Sir Tennis Ibbertson piloted theBill  in the Central Legislaturel for adoption.On 29/03/1904, »The Cooperative Credit Societies  Act » was enacted.

The Co-operatives Credit Societies Act, 1904

This Act paved  way for the establishment of Cooperative Credit Societies in rural and urban areas, on the pattern of Raiffeissen. The main thrust of the Act stated in its preamble was thrift, self help and self confidence to be promoted among farming community and labourers. It enabled provincial governments to appoint Registrar  of  cooperatives societies. It was his prime duty to register, guideand control societies and also provide training.

        Cooperatives societies were classified into village or urban societies. The main disadvantage of such type of societies was there were no provisions in the existing Act for organization of other types of cooperative societies. Another problem was the absence of provision for formation of tier system of cooperative societies, that is, primary, central and apex  cooperative societies. Even then, about 800 cooperative credit societies at that time were  registered.

The Co-operatives Societies Act of 1912

To overcome shortcomings in the earlier Act, this was passed. It  had enabled registration of other types of societies, apart from credit societies and  provided for formation of central cooperative societies with limited liabilities. Deviating  from  earlier classification of societies based on geographical units, societies were differentiated on the basis of their liabilities, as limited and unlimited.

Montague-Chemsford Reforms 1919

       Unlike in foreign countries, cooperative movement in India primarily was patronised and nurtured by the government and it has found its place in the policy pronouncements of government at that time. In this contex, it is worthwhile to indicate that Indian people were really  demanding from the alien rule Constitutional Reforms towards  attainement of the larger goal of  self-rule.

 In this process the united struggle and effort saw the enactment of Montague-Chemsford Reforms in 1919.

 These reforms, inter alia, had transferred powers to provinces for organization of cooperatives and provided for appointment of a Minister, who could exercise powers on the subject of cooperation. Subsequently,  in various provinces,  the establishment of cooperative organizations were quite encouraging.

The Royal Commission on Agriculture

 In 1925, the government initiated the process to convulse India with cooperation. It has appointed a commission titled «The Royal Commission on Agriculture ». M. Calvert was the chairman of the commission. The terms of reference of the commission was to analyse problems on agriculture and suggest measures for resolving  issues by broadbasing  activities of cooperative societies.

Indian Agriculture Research Organisation

 The commission, in fact, had identified strengths and weaknesses in agriculture for resolution. In its remarks, the Commission had stated in unambiguous terms, that if cooperation fails, the ultimate fate  of rural India will not succeed. Its recommendations were submitted to the government in 1928.

  In 1929, encouraged by the Royal Commission’s recommendations, the government established Indian Agriculture Research organization.

Progress of Co-operatives upto 1929

Year	Number of societies (in thousands)	Number of members (in lacks)	Working capital (in crores)
1928	28.4	11.3	15
1929	94	37	75

Economic Recession and Global Economy  
              

The year 1929, witnessed the economic recession in global economy. This has affected cooperatives movement in India. Prices of agriculture commodities slumbed and farmers’ debt burden was severe. Societies' overdue loans increased. Majority of cooperative societies were necessitated by these circumstances to face closure. In Punjab province, Haryana was mostly affected. Distraint proceedings against farmers for recovery of agriculture loans has affected  the cooperative movement. In short, this era, did not augur well for Co-operatives.

Organisation of Land Mortgage Banks

In 1929, the first Central Land Mortgage Bank was organized in Chennai. This was followed by the registration of ten primary Land MortgageBanks and theProvincial Land Mortgage Bank at Mumbai in 1935. The main purpose of such banks was the provision of long term loans to farmers.

The Co-operative societies Act, 1932

In 1932 the government of Chennai legislated the Cooperative Societies Act in 1932.

Bank of India

Another milestone  is the organization of the Bank of India. Its objectives were to study the problems prevailing in agriculture credit to provide finance facilities for cooperative societies. To achieve this objective an Agriculture Credit Department was included as one of the units in the Bank of India. The comprehensive document containing major recommendations on cooperatives were prepared in 1937. This report helped a lot to restart the cooperative movement.

Multi-Unit Cooperative Societies Act, 1942

• With the emergence of cooperatives having a membership from more than one state, the Multi-Unit Cooperative Societies Act was passed in 1942, which delegated the power of the Central Registrar of Cooperatives to the State Registrars for all practical purposes.

• In 1944, the Gadgil Committee recommended compulsory adjustment of debts and setting up of Agricultural Credit Corporations, wherever cooperative agencies were not strong enough.
• Cooperative Planning Committee (1945)

• The Cooperative Planning Committee under the chairmanship of Shri R.G. Saraiya was set up in 1945. The Committee found cooperative societies to be the most suitable medium for democratization of economic planning and examined each area of economic development. 

• Pre-Independence Development

• In 1946, inspired by Sardar Vallabh Bhai Patel and led by Shri Morarji Desai and Shri Trib­huvan Das Patel, the milk producers of Khera District of Gujarat went on a fifteen day strike. Their refusal to supply milk forced the Bombay Government to withdraw its order granting monopoly procurement rights to Polson, a private dairy. History was made when two Primary Village Milk Producer Societies were registered in October 1946. Soon after on 14th December 1946, the Khera District Cooperative Milk Producers Milk Union known as Amul was registered.
• The Registrars’ Conference in 1947 recommended that the Provincial Cooperative Banks be re-organized to give greater assistance to primary societies through Central Banks. For the first time an effective linking of credit with marketing, and providing assistance by way of liberal loans and subsidies for establishment of a large number of godowns and processing plants was considered.
• It would be appropriate to mention here some developments in Bombay vis-à-vis coop­eratives, which had an impact on the cooperative sector. Shri Vaikunth Bhai Mehta took over as Minister, In-charge of Cooperation in the Bombay Government after which the cooperative movement in the province received a boost.
•  A Committee on Cooperative Education and Training under the chairmanship of Sir Janardan Madan, made recommendations for cooperative educa­tion programmes and the setting up of an Education Fund. The Agricultural Credit Organization Committee, with Sir Manilal Nanavati as Chairman recommended State assistance in agricultural finance and conversion of all credit cooperatives into multi-purpose cooperatives. It also recom­mended a three-tier cooperative credit banking system, and various subsidies.

Development of Co-operative Movement after Independence

After attaining Independence, in the functioning of the Government and its objectives there were significant changes. The Constitution of India was adopted and India was proclaimed as a Republic on 26, January, 1950.

It outlined the norms and policies to be adhered and implemented by the State.

•      People's right to have adequate facilities for life  
•     Distribution of national resources to secure public welfare
•    Implementation of economic system  to prevent concentration of wealth in few hands

In order to implement the above policies, it enabled the establishment of a “Welfare State”, through planned economic development. The Government of India has formulated the implementation of five year plan, and determined to establish a socialist pattern of society through democratic means.

Further, to strike out a balance between private and public sectors, co-operative sector was thought as a via media. In a sense, it projected to serve as a golden link between both extremes.

All India Rural Credit Survey Committee (or the A.D. Gorwala Committee)

The RBI in 1951 had convened a meeting of Co-operators, Economists and State Registrars of co-operative societies, to examine providing of financial assistance to co-operative societies.

The meeting had decided to constitute a committee to study the achievements made so far by
co-operatives, to undertake activities for speedy development of co-operatives and problems of credit in rural areas.

The RBI as a sequel to the discussion appointed Mr. A.D. Gorwala, the Deputy Governor of RBI as the chairman of the committee. This committee had visited 15 districts and collected data by enquiring 1,27, 000 people in 600 villages.

The historical report was presented to the Government in 1954. It stated emphatically, “co-operation failed but it must succeed”, Besides,  supplied authentic details and data on
co-operatives for reform and for formulating the second five year plan to the Government.

Establishment of SBI

The necessity of linking the already existing Imperial Bank of India and its subsidiaries were felt strongly   by the Government appointed committee.

On 8/5/1955, the Imperial Bank of India was converted into the State Bank of India by  the  process of nationalization.

The committee also recommended constitution of the following funds by the Reserve Bank of India  :

1)         The National Agricultural Credit (long-term) Operations Fund

2)         The National Agricultural Credit (short-term) Stabilization Fund

In deference to the recommendations, the RBI Act was amended in 1956.
 At initial stage, a corpus of Rs.10 crore was insisted to be allocated, followed by Rs.5 crore every year.

National Agricultural Credit (relief and guarantee fund)

Another arrangement was the National Agricultural Credit (relief and guarantee fund).
 The Ministry of Food and Agriculture would provide Rs.1 crore per year to this fund.

National Co-operative Developement and Warehousing Corporation

Still another recommendation was the organization of  National Co-operative Development &      Warehousing Corporation.

   National Co-operative Development Fund

The Government of India would provide Rs.5 crore. The State Governments would be sanctioned long term loans from out of this fund for co-operative marketing and processing societies.

National Consumer Goods Development Fund

The Government of India would provide Rs.3 crore to this fund.

Central Committee for Co-operative Training

The Government of India and the RBI joined hands and established theCentral Committee for
Co-operativeTraining.

Committee on Co-operative Credit or V.L. Mehta Committee

In 1959, a National Conference of State Co-Operation Ministers was held.

	Co-operative Development under FiveYear Plans First Five Year Plan (1951-56), outlined in detail the vision of the cooperative movement in India and the rationale for emphasizing cooperatives and panchayats as preferred organizations for economic and political development. The Plan emphasized the adoption of the cooperative method of organization to cover all aspects of community development. It provided for setting up of urban cooperative banks, industrial cooperatives of workers, consumer cooperatives, housing cooperatives, diffusion of knowledge through cooperative training and education and recommended that every government department follow the policy of building up cooperatives. The Second Five-Year Plan (1956-1961) emphasized “building up a cooperative sector as part of a scheme of planned development” as being one of the central aims of National Policy. It aimed at enabling cooperatives to increasingly become the principal basis for organization of economic activity. The Plan drew up programmes of cooperative development based on the recom­mendations of the All India Rural Credit Survey Committee (AIRCS)  It was envisaged that every family in a village should be a member of at least one cooperative society. Linking of credit and non-credit societies to provide better services to the farmers was also targeted. State partnership with cooperative institutions at various levels, the essential basis of which was to be assistance and not interference or control, was recommended and for facilitating State partnership in cooperatives, the Plan also recommended the establishment of a National Agricultural Credit Long-term Opera­tions Fund. The National Cooperative Development Fund was also established by the Central Government, during this period, to enable states to borrow for the purpose of subscribing share capital of non credit cooperative institutions in the country. The Industrial Policy Resolution of 1956 emphasized the need for State assistance to en­terprises, organized on a cooperative basis for industrial and agricultural purposes, and “to build up a large and growing cooperative sector”. The Committee on Cooperative Law under the chairmanship of Shri S.T.Raja in 1956 recom­mended a Model Bill for consideration of State Governments. Another important development, at this time, which affected the cooperative sector, was the National Development Council Resolution (1958). The Resolution on Cooperative Policy stressed that cooperatives should be organized on the basis of the village community as the primary unit and that there should be close coordination between the village cooperative and the Panchayat. The Resolution also recommended that the restrictive features of existing cooperative legislation should be removed. Many State Governments amended their Acts, as a result of the recommendations of the Model BillCooperative marketing and processing of agricultural produce formed an important part of the Integrated Scheme of Cooperative Development in the Second Plan. About 1900 primary marketing societies were set up and State Marketing Federations were established in all the States, as well as the National Cooperative Marketing Federation at the Centre. Marketing cooperatives along with the agricultural cooperatives played a major role in promoting the Green Revolution by providing credit and inputs to farmers as well as processing their increased outputs. The Third Five Year Plan (1961-1969) stressed that “Cooperation should become, progres­sively, the principal basis of organization in branches of economic life, notably agriculture, minor irrigation, small industries and processing, marketing, distribution, rural electrification, housing and construction and provision of essential amenities for local communities. Even the medium and large industries and in transport an increasing range of activities can be undertaken on coopera­tive lines”. From the mid-sixties onwards agro processing cooperatives, particularly in the sugar and spinning sector grew in number and contribution, driven primarily by the government’s policy of encouraging large scale industries in the cooperative sector and term loan assistance from financial institutions. With the setting up of NDDB to replicate the Anand pattern of cooperatives in milk, the Indian dairy cooperative movement received a spurt. Later on NDDB also ventured into the field of edible oils After the Indo-China war in 1962, both the Consumer Cooperative Structure and the Public Distribution System (PDS) was strengthened. The government as a matter of policy decided to give preference to consumer or other cooperatives in the allotment of fair price shops and certain States allotted new fair price shops only to cooperatives. With the growth of public deposits in Urban Cooperative Credit Societies, it was felt nec­essary to insure these under the Deposit Insurance Scheme of Reserve Bank of India. Selective provisions of the RBI Act 1934 and later Banking Regulation Act 1949 were made applicable to Cooperative Banks w.e.f. March 1, 1966 to regulate their banking business and facilitate insurance coverage of deposits. Thus, they became an integral part of the banking system of the country. Some National Institutions which came into existence in the 1960s The Agricultural Refinance Corporation was set up in 1962 by the Government of India to provide long-term loans to cooperatives, through Central Land Mortgage Banks. In 1963, the National Cooperative Development Corporation (NCDC) was established as a statutory corporation by an Act of Parliament. The establishment of the NCDC gave a great boost to the growth of cooperative marketing and processing societies. While on a visit to Anand in October 1964, impressed by the socio-economic transformation brought about by milk cooperatives, Shri Lal Bahadur Shastri, the then Prime Minister of India, spoke of the desirability of setting up a national level organization, the National Dairy Development Board (NDDB), to replicate the Anand pattern of cooperatives in milk throughout the country. Several other significant organizational developments also took place during this period such as the setting up of various National Cooperative Federations and re-organization of the National Cooperative Union of India (NCUI). In 1967, the Vaikunth Mehta National Institute of Cooperative Management was set up in Pune. Growth of consumer cooperatives was also an important devel­opment of this period. Simultaneously, the growth of Land Development Banks also accelerated and rural electric cooperatives and programmes for dairy, poultry, fishery and labour cooperatives were set up. The Fourth Five Year Plan (1969-1974) gave high priority to the re-organization of coopera­tives to make cooperative short-term and medium-term structure viable. It also made necessary provisions to provide cooperatives with management subsidy and share capital contribution, as well as for the rehabilitation of Central Cooperative Banks. It also emphasized the need to orient policies in favour of small cultivators. The Mirdha Committee in 1965 laid down standards to determine the genuineness of cooperative societies and suggest measures to weed out non genuine societies; to review the existing cooperative laws and practices to eliminate vested interest. The recommendations of the Committee resulted in amendments in the cooperative legislation in most states, which destroyed the autonomous and democratic character of cooperatives. The Fifth Five Year Plan (1974-1979) took note of the high level of over-dues. In its recom­mended strategy for cooperative development, the correction of regional imbalances and reorient­ing the cooperatives towards the under-privileged was to receive special attention. Based on the recommendations of an Expert Group appointed by the Planning Commission in 1972, structural reform of the cooperative set-up was envisaged. The Plan recommended the formulation of Farmers’ Services Cooperative Societies as had been envisaged by the National Commission on Agriculture and stressed the need for professional management of cooperatives. The Sixth Five Year Plan (1979-1985) also emphasized the importance of cooperative efforts being more systematically directed towards ameliorating the economic conditions of the rural poor. The Plan recommended steps for re-organizing Primary Agricultural Credit Societies into strong and viable multi-purpose units. It also suggested strengthening the linkages between consumer and marketing cooperatives. Consolidation of the role of Cooperative Federal Organi­zations, strengthening development of dairy, fishery and minor irrigation cooperatives, manpower development in small and medium cooperatives were some of the planned programmes. NABARD Act, 1981 The National Bank for Agriculture and Rural Development (NABARD) Act was passed in 1981 and NABARD was set up to provide re-finance support to Cooperative Banks and to supple­ment the resources of Commercial Banks and Regional Rural Banks to enhance credit flow to the agriculture and rural sector. Multi-State Cooperative Societies Act, 1984 With the objective of introducing a comprehensive central legislation to facilitate the organi­zation and functioning of genuine multi-state societies and to bring uniformity in their administration and management, the MSCS Act of 1984 was enacted. The earlier Multi-Unit Cooperative Societies Act of 1942 was repealed. The Seventh Five Year Plan (1985-1990) pointed out that while there had been all round progress in credit, poor recovery of loans and high level of overdues were matters of concern. The Plan recommended amongst others development of Primary Agricultural Credit Societies as multiple viable units; realignment of policies and procedures to expand flow of credit and ensure inputs and services particularly to weaker sections; special programmes for the North Eastern Region; strengthening of consumer cooperative movement in urban as well as rural areas and promoting professional management. With increasing demand from proponents of an autonomous cooperative movement and reforms in the Cooperative laws, the Government constituted a Committee on Cooperative Law for Democratization and Professionalization of Management in Cooperatives in 1985, headed by Shri K.N.Ardhanareeswaran. The Committee recommended the deletion of those legal provi­sions in State Cooperative Acts, which militate against the democratic character and autonomy of cooperatives, and also recommended incorporation of several provisions which could activize democratic processes for infusing professional management into cooperatives. Similarly, in 1989 the Agricultural Credit Review Committee under the chairmanship of Prof. A.M. Khusro examined the problems of agricultural and rural credit and recommended a major systemic improvement. The Committee recommended that the Eighth Plan should become the plan for revival of weak agricultural credit societies. Model Cooperatives Act, 1990 In 1990, an Expert Committee, under the chairmanship of Choudhary Brahm Perkash, was appointed by the Planning Commission to make a rapid review of the broad status of the cooperative movement, suggest future directions and finalize a Model Cooperatives Act. The Committee submitted its report in 1991. Since cooperation is a State subject and each State has its own cooperative legislation covering cooperatives whose membership is confined to the State, the report of the Committee, along with a draft Model Cooperative Law, was circulated to all State Governments for their consideration and adoption at State level. The opening up of the economy in 1990, and the liberalized economic policies followed by the government since then, led to increasing pressures for various governments, state and central, to bring about changes that would provide cooperatives a level playing field to compete with the private sector. The Eighth Five Year Plan (1992-1997)laid emphasis on building up the cooperative movement as a self-managed, self-regulated and self-reliant institutional set-up, by giving it more autonomy and democratizing the movement. It also spoke of enhancing the capability of cooperatives for improving economic activity and creating employment opportunities for small farmers, labourers, artisans, scheduled castes, scheduled tribes and women and emphasized development and training of cooperative functionaries in professional management. Parallel Cooperative Legislation From the Ninth Plan (1997-2002) onwards, there has been no specific mention about coop­eratives as a part of the Plan. Since Cooperation is a State subject and recognizing the difficulties in having the existing State Cooperative Acts amended on the lines of the Model Cooperatives Act, a section of cooperators and civil society initiated action to put in place Parallel Cooperative Legislation for self-reliant cooperatives. Self- reliant cooperatives are generally defined as those which have not received any assistance from the Government in the form of equity contribution, loans and guarantees. These Acts are largely based on the recommendations of the Choudhary Brahm Perkash Committee. Nine States namely AP (1995), MP (1999), Bihar (1996), J&K (1999), Orissa (2001), Karnataka (1997), Jharkhand (1996)), Chhattisgarh (1999) and Uttaranchal (2003), have so far enacted Parallel Cooperative Acts which are enabling and ensure autonomous and democratic functioning of cooperatives. Multi-State Cooperative Societies Act, 2002 The Multi-State Cooperative Societies (MSCS) Act, enacted in 1984, was modified in 2002, in keeping with the spirit of the Model Cooperatives Act. Unlike the State Laws, which remained as a parallel legislation to co-exist with the earlier laws, the MSCS Act, 2002 replaced the earlier Act of 1984. National Cooperative Policy (2002) o    In 2002, the Government of India enunciated a National Cooperative Policy. The objective of the Policy is to facilitate an all round development of cooperatives in the country. The policy promises to provide cooperatives with the necessary support, encouragement and assistance, to ensure their functioning as autonomous, self-reliant and democratically managed institutions, accountable to their members, and making a significant contribution to the national economy. o    Based on the recommendations made at a Conference of State Ministers for Cooperation, the Government of India in 2002 constituted a Ministerial Task Force to formulate a plan of action for implementation of National Cooperative Policy. The Task Force suggested that a single law instead of parallel laws should be introduced in the States. It also recommended, among others, that in order to depoliticize cooperatives, Members of Parliament or Members of Legislative As­semblies should not be allowed to hold office of any cooperative society. 17.   The Companies Amendment Act, 2002 o    A Committee under the chairmanship of Dr.Y.K.Alagh recommended the amendment of the Companies Act, 1956. On the basis of the recommendations of the Committee, the Producer Companies Bill was introduced in the Parliament and became law on 6th February, 2003 as Part IXA - Producer Companies in the Companies Act, 1956. Based on the cooperative principles of mutual assistance, it provides an alternative to the institutional form that is presently available to cooperative enterprises. NCDC Amendment Act, 2002 o    Recognizing the need to improve its scope of lending and to bring about changes in its funding, the NCDC Act was amended in 2002, which has enabled it to cover notified services, livestock and industrial activities and more importantly to directly fund cooperatives against suit­able security. 19.     Task Force on Revival of Cooperative Credit Institutions o    To nurse the rural cooperative credit system back to health, to ensure that the rural credit doubled over three years and that the coverage of small and marginal farmers by institutional lending was expanded substantially, the Government of India in August 2004 set up a Task Force to sug­gest an action plan for reviving rural cooperative credit institutions and legal measures necessary for facilitating this process. The Task Force, chaired by Prof. A. Vaidyanathan, recommended that any financial restructuring which did not address the root causes of the weaknesses of the system would not result in its sustained revival and would require legal measures. The recommendations of the Task Force in accordance with its Terms of Reference are basically confined to revival of credit cooperatives for which it suggests a financial package. The Vaidyanathan Committee has also suggested a model cooperative law that can be enacted by the State Governments. Recom­mendations of the Task Force are being currently implemented. The Vaidyanathan Committee has also given its report on the long-term cooperative credit structure. 20.     Cooperative Movement at a Glance o    Cooperatives, in all spheres, today cover approximately 99% of Indian villages and 71% of total rural households in the country. Their contribution to the national economy may be seen from the following table:
Cooperative share in the economy		Percentage
Agricultural Credit Disbursed		18*
Fertilizer Distributed		36*
Production of Fertilizer		25*
Sugar Produced		50**
Spindleage		10#
Milk Procurement to *total Production		8$
Yarn Production		22#
Handlooms		54#
Wheat Procurement		33#
Fishermen Cooperatives		21#
Storage Facilities (Village Level PACS)		64#

Constitutional Amendment for Co-operative Development

Another milestone in the annals of the history of the Co-operative Legislation is the enactment of the 97^th Constitutional Amendment by both the Houses of the Parliament.

Salient Features

In part iv of the Constitution, after Art.43A – Art43 B inserted. It states,

·         Voluntary formation

·         Autonomous functioning

·         Democratic  control

·         Professional Management of co-operatives

The Legislature of the State directed to make provisions for  incorporation,regulation and winding up of co-operaive societies based on the Principles of

*Voluntary formation

*Democratic member control

*Member economic participation

*Autonomous functioning

The Amendment has stipulated the timeframe for effecting amendment to all the Stae Co-operative Societies Acts as on or before 15th February, 2013. All States and the Union Territories are still buying time for its implementation.Though some States have carried out some changes in their Acts, a public discourse or awareness campaign on the landmark changes have not taken place as it wasp expected.Even Political Parties and Social action groups have not arisen to the occasion.