BY: B.D. SHARMA FORMER DIRECTOR, ICA – AP & FORMER CHIEF EXECUTIVE, NATIONAL CO-OPERATIVE UNION OF INDIA (NCUI) Co-Operative Law as an Instrument of Strengthening Co-Operative Identity: An INDIAN Experience - ICA-AP Co-Operative Research Conference, 16 th 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 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” 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 policy i. 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 provisions iii. No rule making power to Govt. iv. Greater responsibility to federations v. No equity of govt. in coops vi. Accountability of board and responsibility of members defined vii. Role of registrar to be reduced viii. 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 based on review by an expert committee in 1977 – first multistate coop law of 1984 and presently multi state coop law of 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

Evolution of coop Identity Stage 1: Application of Rochdale Principles (till 1936) i. Open membership ii. Democratic control (one member one vote) iii. Distribution of surplus in proportion to transactions iv. Limited interest on capital v. Political and religion neutrality vi. Cash trading vii. Promotion of education

…..contd. Stage 2 ICA commission on coop principles (1966) i. Open and voluntary membership ii. Democratic governments iii. Limited return on capital iv. Education of members and public in coop principles v. Surplus belong to member vi. Cooperation among coops

……contd. Stage 3: ICA cooperative identity i. Backdrop – globalization ii. Consists of three components: a) Coop definition b) Coop values c) Coop principles A. Coop definition: Defines characteristics of coop i. Autonomy ii. Association of persons iii. Voluntary organization iv. Common economic, social and cultural needs v. 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 membership ii. Democratic member control iii. Member economic participation iv. Autonomy & independence v. Education, training and information vi. Cooperation amongst coops vii. 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 level b. Board members c. Professional managers d. Federations e. Govt. f. HRD institutes