More often than not, Amit Shah’s name comes up in conversations about his handling of the home ministry or his political strategies and their execution. But his work as head of the Ministry of Cooperation is no less important for statecraft and is equally vital for its political potential. For decades, Indian politicians have treated the cooperative sector as a potent concoction of money, politics and development to reach out to the masses and enhance their party politics. Looking at the activities of the new ministry, it’s clear that Shah’s latest obsession is the sahakari kshetra.
Since Independence, India’s cooperative sector has been a vehicle for its socialist and democratic values and has fostered an inclusive development model that has penetrated the interiors like no other. Despite the lack of a visitor’s room, a staff strength of less than 500 and running on a budget of around Rs. 900 crore, the Ministry of Cooperation, India’s youngest central ministry, is one of the most ambitious and busiest. After all, its job carries the powers to touch all the Narendra Modi government’s ministries—defence to finance to textiles.
Located in Krishi Bhavan, the ministry is an incubator for the idea of mammoth Indian governance through eight lakh Primary Agricultural Credit Societies (PACS), including thousands of districts and state cooperatives.
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Plan for PACS
Shah recently brought in Gyanesh Kumar as the cooperation ministry secretary with the agenda of touching every village, town and city. Sources close to the ministry claimed that Shah wants to fast forward the modernisation of PACS and remove legal hurdles faced by established cooperatives like IFFCO and Amul—the backbone of India’s rural economy.
Sources said the Modi government wants to enhance the scope of PACS business, multiply its turnover and make it a nodal centre for services such as Direct Benefit Transfer (DBT), Interest Subvention Scheme (ISS), Crop Insurance Scheme (PMFBY) and supply inputs like fertilisers and seeds. The centre also wants PACS to break the monopoly of public sector banks in the sector.
After a series of reforms, the Modi government wants to use PACS as a last-mile parallel structure to deliver more than 400 central and state government schemes, projects and services. Interestingly, the Modi government, which is accused of helping capitalists, wants to make the cooperative sector the backbone of governance.
As things stand, many PACS, if not all, are inefficient, indulge in malpractice and are under heavy political influence. So the first step in the right direction would be to make them transparent. Investment in primary, district and state cooperative banks is desirable only when it’s already digitised. That way, nodal agencies and regulators like the National Bank for Agricultural and Rural Development (NABARD), Reserve Bank of India (RBI) and even secretary Gynash Kumar can track the status of loans and deposits of the sahakari mandalis sitting in New Delhi.
Last week, on 29 June, the Modi Cabinet decided that 63,000 PACS will be computerised at a cost of Rs. 2,516 crore, benefitting about 13 crore small and marginal farmers. Dilip Sanghani, the president of the National Cooperative Union of India, which boasts 8.5 lakh members said, “We are becoming modern. We will give software in 17 local languages to primary credit societies. You must remember our profit never goes in private hands.”
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Cooperative sector’s new avatar
This is not Amit Shah’s first tryst with cooperatives. He was active in Gujarat’s cooperative sector back in the 90s. He was thrust into the limelight when he took over as chairperson of Ahmedabad District Cooperative Bank, which was on the cusp of bankruptcy (due to corruption and mismanagement). But he soon turned it into one of the most profitable cooperative banks in the state. He knows the nuts and bolts of successful cooperatives, their benefits to the local economy and the advantage it can bring to political patries. The control over cooperatives means access to the ‘crowd’ that politicians love.
Evidently, Shah is in a hurry to give India’s cooperative sector a new avatar. The ministry has just launched a web portal in local languages to coordinate its modernisation efforts. It also conducted a national conclave with more than a lakh cooperative members to prepare a first-of-its-kind National Cooperative Policy. The National University for Cooperatives is also in the making. A massive programme is underway to train managers across different levels in a cooperative. Many legal amendments in Acts governing cooperatives will also be made so that the government can take higher risks to give them business.
In a way, the cooperative sector has become a favourite child of the government. Three lakh new PACS will be given the highest priority, which is a massive step to boost the economy and employment. Meeting even half of these targets is a big gain for the district-level economy.
The Centre has already removed some taxes in the sugar sector, reduced the Minimum Alternate Tax (MAT) from 18 to 15 per cent, and surcharge from 12 to 7 per cent on cooperative organisations.
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PM Modi and Amit Shah’s interest in the sahakari sector is obvious because of the politics at play. Thirty crore Indians are involved in the cooperative sector. Maharashtra, Gujarat and Karnataka are at its forefront. Many other states, including Kerala and Uttar Pradesh, are feverishly working to expand their cooperative sector. The annual turnover of PACS is around Rs. 8 lakh crore. The business of urban and district cooperative banks stands at around Rs. 5 lakh crore. For the Modi government, the target for the cooperative sector—from village to the state level—is a combined turnover of Rs. 30 lakh crore after expansion and digitisation. It wants the cooperative sector to compete with the corporate sector in terms of efficiency and reliability.
Dolar Kotecha, chairman of Kheti bank, one of Gujarat’s oldest and largest agri and rural land development cooperative banks with a membership of 2.75 lakh farmers, said, “PACS are the only bodies that run parallel to government structures. Recently, we decided to give our members a sum of Rs. 50,000 as insurance against accidents. We will allot it in just 30 days. Any government can use PACS to execute their schemes through cooperatives.”
Milk, groundnuts, sugar, fruits, vegetables and fertiliser cooperatives aside, new ideas are also emerging under the slogan of “Sahakar Se Samriddhi”. Cooperatives for start-ups, procuring stationery for government uses, producing face masks and fishing nets, and caps for soldiers are just some of them.
On 29 May 2022, Amit Shah said at the Panchamrut dairy event in Gujarat, “I would tell you as the Minister of Cooperation that through the Cooperative Ministry, there is going to be a huge revolution in the area in the next five years under the leadership of Modiji.”
If you’re reading a clear political advantage to the Bharatiya Janata Party in Amit Shah’s statement, you are absolutely correct.
Sheela Bhatt is a Delhi-based senior journalist. Views are personal.
(Edited by Srinjoy Dey)