Constitution (97th Amendment) Act, 2011

The Constitution (Ninety Seventh Amendment) Act 2011 relating to the co-operatives is aimed to encourage economic activities of cooperatives which in turn help progress of rural India. It is expected to not only ensure autonomous and democratic functioning of cooperatives, but also the accountability of the management to the members and other stakeholders.

Reasons of Failure of Cooperative Sector

The cooperative sector has been playing a distinct and significant role in the country’s process of socio-economic development. The failure of cooperatives in the country is mainly attributable to:

• Dormant membership and lack of active participation of members in the management of cooperatives.
• Mounting overdue in cooperative credit institution
• Lack of mobilisation of internal resources and over-dependence on Government assistance,
• Lack of professional management.
• Bureaucratic control and interference in the management, political interference and over-polarisation have proved harmful to their growth.
• Predominance of vested interests resulting in non-percolation of benefits to a common member, particularly to the class of persons for whom such cooperatives were basically formed, has also retarded the development of cooperatives.

These are the areas which needed to be attended to by evolving suitable legislative and policy support with proper political will and financial support.

97th Amendment Act, 2011

As per the amendment the changes done to constitution are:-

• In Part IIIof the constitution, after words “or unions” the words “Cooperative Societies” was added.
• In Part IVa new Article 43B was inserted, which says: The state shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of the co-operative societies”.
• After Part IXAof the constitution, a Part IXB was inserted to accommodate state vs centre roles.

Salient features Part IXB

• It makes Right to form cooperatives is a fundamental right.
• Reservation of one seat for SC/ST and two seats for women on the board of every co-operative society.
• Cooperatives could set up agencywhich would oversee election.
• Uniformity in the tenureof Cooperative Board of Directors.
• Provisions for incorporation, regulationand winding up of co-operative societies based on the principles of democratic process and specifying the maximum number of directors as twenty-one.
• Providing for a fixed termof five years from the date of election in respect of the elected members of the board and its office bearers;
• Providing for a maximum time limit of six monthsduring which a board of directors of co-operative society could be kept under suspension;
• Providing for independent professional audit;
• Providing for right of information to the membersof the co-operative societies;
• Empowering the State Governmentsto obtain periodic reports of activities and accounts of co-operative societies; which have individuals as members from such categories;
• Providing for offences relating to co-operative societies and penaltiesin respect of such offences.

Implications

The amendment of the Constitution to make it obligatory for the states to ensure autonomy of cooperatives makes it binding for the state governments to facilitate voluntary formation, independent decision-making and democratic control and functioning of the cooperatives.

It also ensures holding regular elections under the supervision of autonomous authorities, five-year term for functionaries and independent audit. Significantly, it also mandates that in case the board is dissolved, the new one is constituted within six months. Such a constitutional provision was urgently required as the woes of the cooperative sector are far too many, long-lasting and deep-rooted to be addressed under the present lax legal framework

However, it fails to establish what constitutional amendments can’t do in reviving institutions and may be victim of rival political institutions at the state level as happened in case of 73rd amendments.  It is feared that state-level politicians will do to this amendment on cooperatives what they did to the one on panchayats. Barring exceptions in a few sectors and states, the cooperative sector, particularly cooperative credit societies numbering over 120 million, has for a long time been in a shambles with all kinds of vested interests using them as personal fiefdoms and ladders to political power and means of personal aggrandisement.