In Brief: The Case For A Separate Union Ministry Of Co-operation

by Sakshi Abrol - Aug 7, 2021 06:25 PM
In Brief: The Case For A Separate Union Ministry Of Co-operation 
Union Minister Amit Shah
  • Even though the benefits of the cooperative model are apparent, operational difficulties and policy gaps have marred the practice over the past two decades.

    It is in plugging these very loopholes that the genesis of this Ministry can be traced.

While the purpose and exact mandate of the new Ministry of Cooperation are yet to be detailed out, it is clear that it will provide for a separate administrative, legal and policy framework for strengthening the co-operative movement in the country. This, in turn, should give the much-needed fillip to the government’s project of creating a conducive market ecosystem for agricultural commodities where the role of the middlemen has significantly been reduced.

Come to think of it, the be-all and end-all of co-operatives is to collectivise resources to reach economies of scale and help farmers overcome the disadvantages of fragmented and small landholdings, low appetite for investment and innovation, and negligible bargaining power as singular players in the market.

A company owned by farmers has the potential to increase their income by ensuring greater returns and better price discovery; the potential to increase agricultural productivity by ensuring access to credit, collective wisdom and surplus for investment; and finally, the potential to add to the nation’s growth.

Unmet potential and the need for a separate ministry

Even though the benefits of this model are apparent, operational difficulties and policy gaps have marred the practice over the past two decades. And it is in plugging these very loopholes that the genesis of this Ministry can be traced.

Consider the case of agriculture co-operatives. Complex value chains, products differentiated by quality and type, and expectation mismanagement have made aggregation of farmers into business groups an uphill task. Furthermore, time-consuming and convoluted compliances often dampen the spirit of willing participants.

Take, for example, certain state laws on registration that require exhaustive details on the proposed directors. Rummaging this information in a country where datasets from different departments often do not speak to one another and details as basic as land records are still being digitised is no mean feat. This is, however, not to say that we haven’t made any progress. Innovative strategies like using satellite imagery to digitise land records and the creation of a national farmers’ database under Agristack have been deployed. But these efforts can be effectively synergised for greater impact by only a dedicated ministry.

Ease of doing business for co-operatives will also occupy centre stage with the establishment of this Ministry. Running a collective like an enterprise requires financial planning, aggregation and procurement plans across the value chain, quality control, backward and forward linkages, and information on consumer preferences. Additionally, required are adequate extension services like training and upskilling, much like that provided by an incubator. A conducive social business environment is important if we are to have an outward-looking and futuristic agrarian sector.

The Ministry will additionally have a lot of cleaning up to do as decades of political interference and bureaucratic bungling have spelt doom for sectors such as co-operative banking. Mumbai-based CKP Co-operative bank’s failure last year is a case in point. Years of financial irregularities, lack of proper risk assessment and under-regulation of these banks have put the life savings of thousands of people at risk. Clearing this mess would possibly occupy a sizeable bandwidth of the Ministry.

Despite several success stories, the existence of systemic problems make the upscaling of co-operatives difficult. Identifying, categorising and prioritising these problems will possibly be the mainstay of interventions planned under the Ministry of Co-operation. Technology integration at the ground level, uniform policy across states, convergence with other schemes and a single-window clearance, among other things, will be the herculean tasks that the Ministry may undertake.

Thus, the decision to announce a ministry for this purpose is both timely and sagacious. By and large, the formation of a ministry to institutionalise the co-operative movement in the country is also in line with our history of shared practices and the promise of a people-driven, prosperous economy.

Sakshi Abrol works as Policy Manager at Nation First Policy Research Centre.
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