The Narendra Modi government is clearly keen to rewrite the contours of the Centre-state relationships. The passing of the agriculture reform laws was perhaps the first major move in this direction. Agriculture continues to be, as per the Constitution, a state subject and the Centre used an obscure provision which allows it to pass laws controlling the production, distribution and marketing of goods – to do so. This has now been followed up by the creation of a Union ministry for cooperation, helmed by no less a personage than Home Minister and de facto Number Two in the government, Amit Shah.
Predictably, the Opposition-ruled states have dubbed this as yet another attack on federalism by the Modi government, since cooperatives are also in the state list. The Centre has argued that the creation of the ministry will re-energise the moribund cooperative movement in the country by providing it with an appropriate ‘administrative, legal and policy framework’.
There is no denying the need to reinvent the cooperative sector, which has become a cesspool of financial mismanagement, corruption and misuse of political power. Success stories like Amul are the exception rather than the rule. While the Reserve Bank of India has taken some steps to regulate multi-state and urban cooperative banks – the failure of the Punjab and Maharashtra Cooperative Bank is still fresh – other cooperatives, particularly in agriculture and allied sectors, have seen little reform over the years.
The spirit of the cooperative movement – of consumers or producers becoming owners and benefiting from collective power – has been given the go-by, with many cooperatives becoming personal fiefs of politicians. The case for reform is strong, but since there is enormous political capital to be gained, the Centre’s view is being viewed with understandable suspicion by states. It is up to the Centre to live up to its oft-touted slogan of ‘cooperative federalism’ to make the new ministry a successful agent of change.