BY:

B.D. SHARMAF O R M E R D I R E C T O R , I C A – A P

&F O R M E R C H I E F E X E C U T I V E ,

N AT I O N A L C O - O P E R AT I V E U N I O N O F I N D I A ( N C U I )

Co-Operative Law as an Instrument of Strengthening Co-Operative Identity: An INDIAN Experience

-ICA-AP Co-Operative Research Conference, 16th September, 2014 BALI

Scope of Paper

Evolution of Co-operative Laws in India.

Evolution of Co-operative Identity.

Inclusion of provisions in Co-Operative.

Steps for Effective Integration of Co-Operative Identity in COOP.

A. Backdrop of Co-operative Law in Pre-Independence Period

Indian Co-operative movement emerged as solution to problems of Farmers.

Deteriorating rural economy prompted emergence of Informal credit COOPS in Rural and also Urban Areas.

Recommendation of FREDRIK NICHOLON to create rural credits Co-operatives based on RAIFFELSEN patterns of rural credit COOPS of Germany.

Co-operative Credit Societies Act of 1904

First Co-operative law.

Applicable in whole of India.

A central legislation.

This law creating a simple framework of administration of COOPS .

Creation of Institution of registrar whose role was to register and motivate people to COOP.

Govt. Role very minimal.

Law recognized “SELF RELIANCE”, SELF-HELP, MUTUALITY, DEMOCRACY” as COOP Principles.

Co-operative Society acts of 1912

Scope of law was widened to cover Co-operatives in rural and Urban areas in the field of credit, marketing, consumers, workers etc.

Was based on British Industrial Provident Societies Act.

Co-operative principles of “Self reliance, self-help, mutuality, democracy” were retained.

Application of law led to diversification of Co-operative sector.

Co-operations becomes state subject

Review of progress/growth of coops by MACLAGON Committee (1915) and recommending a federal structure for COOPS.

As a result of MONTAGUE-CHELMSFORD recommendation for constitutional reforms (1919) cooperation became state subject.

States enact their own laws; Bombay state takes lead followed by Bihar, Orissa, Tamilnadu etc..

State coops laws retain provision of coop law of 1912.

Important provision made in Bombay coop societies act, 1925 defining purpose of Co-operative, “ to facilitate information working of COOPS for promotion of thrift, self-help & cooperation”.

1925 act amended as Maharashtra coop societies act of 1960, “where as with a view to provide orderly development of coop movement in the state of Maharashtra in accordance with directive principles of state policy enunciated in the constitution of India . . . . “

B. Post-Independence period

Major shift in economic policyi. Economic planning to establish socialistic pattern of society ii. Mixed economy iii. Recognition of cooperative sector as balancing sector

State financial partnership in Co-operative was incorporated in coop laws (rural credit survey committee).

Increased state control over coops.

Distance between the membership and coops.

ST RAJAH committee of 1956 on COOP law

Simple coop law.

Decentralization of powers of registrar.

Societies to confirm to common economic interest of members, social justice.

Amalgamation with the consent of members . . . . .

Impact of state partnerships on coops

Negative impact on democratic management.

Dependency of syndrome.

Quantitative growth of coops.

Image as Pseudo coops.

Politicization of coops.

National development council (1958) resolution

Criticized state parternership in coops.

Emphasized de-officialisation.

VL Mehta committee recommended framework for administration and amendments in coop law.

Vested interests in coops

Coop growth attracted vested interest in coops to misuse them for their own benefits (MIRDHA committee, 1965).

Removal of restrictive provision to curb vested interests (guidelines issued by Govt. Of India).

Coop movement called upon govt. to suitably amend coop law to restore democratic character of coops (1976 coop congress).

Chaudhary Brahm Perkash Committee model coop law

Implementation of new economic policy (1990).

Committee recommended features of model coop law

i. Enunciation of state policy and ICA cooperative principles in the beginning of the act itself

ii. Removal of restrictive provisionsiii. No rule making power to Govt.iv. Greater responsibility to federationsv. No equity of govt. in coopsvi. Accountability of board and responsibility of members definedvii. Role of registrar to be reducedviii. Constitution of coop tribunals

Emergence Parallel coop law

A.P. mutually aided cooperative societies acts for unaided coops by govt.

Non involvement of govt. in such coops at all. Only broad monitoring required.

Committee on democratization and professionalization of coops (Ardhanari Swaran Committee)

Review of various state coop laws are against coop identity.

Role of registrar need to be positive.

Federation of coop to play more active role for promoting guiding coops.

Professionalization has to be made of coop management.

Globalization and coop law

Increasing advocacy for amendment of coop law.

Producer company law for producer companies following coop.

principles and complete in the market.

Owned by primary producers.

Undertake activities relating to primary produce.

Members equity not trade able in stock exchange.

Multistate coop law of 2002

Replaces erstwhile multiunit coop act of 1942. based on review by an expert committee in 1977 – first multistate coop law of 1984 and presently multi state coop law of 2002.

This law includes coop identity statements of ICA, 1995 as an annexure mentioned in first schedule.

National Coop Policy 2002

Recognizes coop identities and calls for necessary amendments in coop law accordingly.

Although coop law has been liberalized through various amendments.

Legal interpretation of identity is yet to be provided by law or by law of coops.

High power committee (ShivaJi Rao Patil Committee) recommended constitutional amendments to restore coop identity.

Parliament has passed constitutional amendments bill in 2011 & it has become law on 08.02.2012.

Evolution of coop Identity

Stage 1:

Application of Rochdale Principles (till 1936)

i. Open membershipii. Democratic control (one member one vote)iii. Distribution of surplus in proportion to transactionsiv. Limited interest on capitalv. Political and religion neutralityvi. Cash tradingvii. Promotion of education

…..contd.

Stage 2

ICA commission on coop principles (1966)

i. Open and voluntary membershipii. Democratic governmentsiii. Limited return on capitaliv. Education of members and public in coop principlesv. Surplus belong to member vi. Cooperation among coops

……contd.

Stage 3:

ICA cooperative identity

i. Backdrop – globalization

ii. Consists of three components:a) Coop definitionb) Coop valuesc) Coop principles

A. Coop definition: Defines characteristics of coopi. Autonomyii. Association of personsiii. Voluntary organizationiv. Common economic, social and cultural needsv. Jointly and democratically controlled enterprise

B. Values

i. Basic values : Self help, self responsibilities, democracy, equality, equity, solidarity.

ii. Ethical Values : Honesty, Openness, social responsibility, care for others.

C. Cooperative principles

i. Voluntary & open membershipii. Democratic member controliii. Member economic participationiv. Autonomy & independencev. Education, training and informationvi. Cooperation amongst coopsvii. Concern for community

…..contd.

Integration of cooperative identity in working & business of coops

Making specific provision in law for enforcement of coop identity

Levels of integrations

a. Members levelb. Board membersc. Professional managersd. Federationse. Govt.f. HRD institutes