"Sharma should resign and keep away from the ministry till he comes out clean in the matter," NCP state chief Thakur Randhir Singh told reporters here.
Terming the allegations against Sharma and other officials as "serious", Singh said the issue needs to be thoroughly investigated by a high-level committee.
The alleged scam is worth Rs 5,000 crore and stern action should be initiated against the people responsible, he added.
"The cooperative movement has miserably failed in Jammu and Kashmir over the past few years and the main cause behind it is the rampant corruption in the department," Singh claimed.
The State Accountability Commission has begun an enquiry against Sharma, who is minister of state for Cooperatives, and a few officials on allegations of embezzlement of money and illegal appointments in the department.