Left loath to let go of co-operative credit system

The Left parties along with the West Bengal state government is against the withdrawal of 'state governments equity holding' from the co-operative system as was suggested by the A Vaidyanathan task force on revival of co-operative credit institutions.

The West Bengal state government has requested the central finance ministry to reconsider the recommendations of the task force and discuss the issue with the states before taking a final decision.

Buddhadeb Bhatacharjee, West Bengal's chief minister, said in a letter to P Chidambaram, Union finance minister: "The desirability of total withdrawal of state government from the cooperative system has to be carefully assessed, for the state government is mandated to look after the welfare of the people of the state - poor people of particular."

Bhattacharjee added, "The delinking of the co-operative system from the state government may not be at all appropriate".

The task force recommended total delinking of the state government from the co-operative credit structure and handing over the entire jurisdiction to RBI through a memorandum of understanding between the central and the respective state government.

Proposed allocation of financial liabilities for recapitalisation of co-operative credit system will subject the states and the co-operative credit system to excessive financial strain, Bhattacharjee said.

The soft loan option suggested by the task force will increase the debt burden of the states which is undesirable, he added.

The West Bengal government however has agreed to consider a reasonable contribution.

The letter said it was unjust to ask the co-operative credit system to share a huge load for recapitalisation as it was not in a position to do so.

For cleansing the balance-sheet of the cooperative system, the task force has assessed the recapitalisation need to be around Rs 15,000 crore, which would be shared among the Centre, state and cooperatives in the ratio of 53:31:16.