Cooperation must succeed!

On December 2, 2016, Supreme Court will be hearing the plea from 14 District Central Cooperative banks from Kerala ‘seeking a nod to transact business like banks’, along with a bunch of petitions on demonetization of Rs500 and Rs1000 before the Apex court. The problems faced by cooperatives in Kerala, post-demonetization, have much deeper roots and they have, beyond legal implications that will be gone into by the Supreme Court, jurisdictional, historic and political implications, which need to be addressed ‘out of court’.
Post-independence, though India’s development initiatives heavily depended on the efficient functioning of public sector undertakings (central and state level) and cooperatives (as commercial banks did not reach out to semi-urban and rural areas, majority of the rural population depended on various categories of cooperatives), both these institutional systems failed to get the nurturing needed from governments to change with the times and work efficiently in a fast moving, competitive world.
Cooperation being a concurrent subject, cooperatives became a ‘no man’s land’ in regard to legislative support, development of infrastructure and most important, skill-development and acceptance of new technology. Political leadership, across ideologies, tried to take advantage of the helplessness of cooperatives by trying to control their affairs with an eye on the huge resources they managed. Kerala CM Pinarayi Vijayan was not exaggerating, when he said, some of the primary cooperative societies in Kerala, manage finances much larger than the size of the banking business handled by some of the urban cooperative banks licensed by RBI to ‘do banking business’. What he forgot to tell is, for decades, cooperatives in Kerala have been short-circuiting the regulatory system with the knowledge of the state government. The cooperative system in India needs a cleansing, not by court interference, but through a coordinated effort in which RBI, GOI and state governments should play their respective roles. Sooner this happens, the better for the country.

M G Warrier, Mumbai


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