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Current Affairs

Multistate cooperatives

Date: 22 December 2021 Tags: Bills & Laws

Issue

The centre will be amending the Multi State Cooperative Societies (MSCS) Act, 2002, Union Cooperatives minister Amit Shah has announced.

 

Background

The decision comes on the back of centre’s intention to plug the existing loopholes in the act.

 

Details

  • The Multi State Cooperative Societies (MSCS) Act, 2002 was passed to govern cooperatives whose operations are spread across more than one state.

  • At present, there are many cooperative societies that operate in the area of sugar and milk, banks, milk unions etc. They come under state subject.

  • These cooperatives have members belonging to more than one state. The board of directors comes from all the states that they operate in.

  • The central registrar has administrative and financial control of these societies and no state government official can wield any control on them.

 

Reasons for amendment

  • The central registrar, who is the Central Cooperative Commissioner, was meant to allow smooth functioning of multi-state cooperatives. However, there are some obstacles.

  • Checks and balances and transparency in operation do not exist in multi-state societies unlike state registered societies.

  • Majority of financial and administrative control of such societies are exercised by board of directors. Only for expenditure above certain level that the annual general body meeting of the society has to be called.

 

Other concerns in the act

  • The central registrar can allow inspection of the multi-state societies under special conditions. There is no day-to-day government control on such societies.

  • The man-power infrastructure for such societies is not present. There are no officers or offices at state level and majority of work is done online.

  • Members of the society can seek justice only in Delhi. There is no mechanism to resolve the issue at the state level.

 

Misuse of act

  • Many societies have made use of loopholes to launch ponzi scheme, which has affected small and medium stakeholders.

  • The state has been unable to do anything as they do not have necessary powers and structure.

 

Expected amendments

  • There are plans to increase manpower in Delhi and also the states to ensure better governance of the societies.

  • There are also demands that administrative control of such societies should be vested in the state commissioners so that day-to-day cases can be easily resolved.