The government’s demonetisation move to check black money is likely to pave the way for policy reforms in the cooperative sector to bring fiscal discipline and stop mismanagement of funds of rural farmers in district cooperative banks, agriculture and allied sectors. Sources in the ministry of cooperative and markets told The Indian Express, “The Union finance ministry has given the nod to the state governments to push reforms in the cooperative sector to root out corruption.”
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A senior state minister said, “Maharashtra has already initiated the process of sweeping reforms to check corruption and massive losses that left farmers in doldrums in the last 15 years. The demonetisation drive will help us to expedite reform process across cooperative sectors including banking and agriculture and allied societies.”
Chief Minister Devendra Fadnavis believes, “The cooperative sector has a significant role in rural economy and welfare of farmers. The policy reforms of the centre and state are to strengthen the cooperative sector to help the poor and farmers across rural Maharashtra.”
The chief minister believes, “Vested interests have held the cooperative sector hostage at the cost of lakhs of hard working farmers.”
In Maharashtra the total cooperative societies (sector) add upto 2.26 lakhs. It has 539 lakh members, mostly farmers associated with agriculture and allied activities like dairy, fisheries etc. The objective cited is that reforms in cooperative sector including district central cooperative banks are inevitable to weed out corruption and restore better administrative practices.
A senior officer associated with reforms in the Maharashtra State District Cooperative Bank during 2010 said, “The mismanagement of finances in DCCBs and other cooperative sectors leading to losses is primary reason for non-development of rural economy.”
The state economic survey for 2015-16 establishes the poor functioning of cooperative sectors. The survey states that 55.2 per cent of primary agriculture credit societies are running into losses. The PACs provide short term agriculture credit for seasonal agriculture operations. PACs include farmers services societies and adivasis cooperative societies. Last year, the PAC losses were 3.4 per cent higher. The scenario in other agro processing cooperative is worse.
As the economic survey states, of the total 119 cooperative ginning and pressing societies 63 per cent are in loss. Of the total 131 spinning cooperative mills 81.8 per cent are incurring losses. The 646 cooperative handloom and 2091 powerlooms societies recorded losses upto 46.6 per cent and 55.9 per cent respectively.
In the dairy sector, 24,762 societies and 88 cooperative dairy unions registered losses of 43 per cent and 51 per cent respectively.
A former CM who did not wish to be named said, “The financial plunder in the cooperative banks resulted in poor development in rural Maharashtra.”
Successive union finance ministers starting from P Chidambaram to present minister Arun Jaitley reiterate the need for reforms in the sector.
According to a state minister, “The established Congress-NCP leaders who wield political and financial clout in the cooperative sectors are always wary about reforms as it undermines their control in their constituencies.”
Former Congress minister Harshvardhan Patil said, “Our objection is not against reforms to end corruption in cooperative sector. Our anger is against secondary treatment to the sector by the BJP government.”