A major flaw of the draft bill is its decision to retain the provision for continuation of government directors on the boards of co-operatives where state equity exceeds 55 per cent. This will perpetuate government control and interference when the wide general membership of co-operatives should be enough for them to be deemed as publicly owned. The Centre, which should normally have set an example, has refused to loosen its stranglehold over the multi-state cooperatives, most of which are money spinners. What is worse, the draft bill does not permit such co-operatives even to return the government investment to unshackle themselves. Many large co-operatives, including the giant cash-rich fertiliser co-operatives like Iffco and Kribhco would be too willing to do so to get rid of the official directors. The Centres apathy towards the sector is also reflected in the way it has been obstructing the Cooperative Bank of India, which is intended to serve as the national level apex financial institution owned and operated by the co-operatives themselves, from becoming functional. While the bank formally came into being a couple of years ago, it is still waiting for the Centre to suitably amend the Banking Regulation Act to enable it to start banking operations.
The countrys vast co-operative sector with an estimated total working capital of Rs 1,32,000 crore is crying out for reform. While some states, notably Andhra Pradesh and Bihar, have recently amended their laws to give greater functional autonomy to co-operatives, most others have yet to do so. The governments of states like Madhya Pradesh, Maharashtra, Gujarat and Orissa have only indicated their intentions to liberate cooperatives. Comprising over four lakh co-operative societies whose nearly 190 million members are spread over nearly all the villages in the country, the economys third sector has grown steadily into a considerable economic force providing a variety of goods and services to the rural and urban masses.
Millions of tiny and small entrepreneurs can greatly enhance their security by forming co-operatives to survive in the competitive market-driven economy of today. Operation Flood is a shining example of how the co-operative movement can help diminutive milk producers scattered in the remotest villages. The Amul experiment has proved how successful co-operatives can compete even with multinationals. However, the likes of Amul are too few in number. For, most the co-operatives have been converted into virtual appendages of the state, forcing them to take up inherently loss-making ventures and services on behalf of the government. Unless the co-operatives are restored their democratic functioning and independent decision taking powers, there is little hope for this sector.