Cooperative societies in agricultural sector

Kinds of Cooperatives operational in Agriculture sector

Rural cooperative credit institutions typically, are part of two distinct structures and alligned as follows in each state.

1. Short Term Cooperative Credit Structure (STCCS) - primarily provides short term crop loans and other working capital loans to farmers and rural artisans, although over the last few y ears, it has also been providing longer duration loans for investments in the rural sector. It consists of the following
   
   • Primary Agricultural Credit Societies (PACS) at the village level
   • Central Cooperative Banks (CCBs) at the intermediate level
   • State cooperative bank (StCB) at the apex level
2. Long Term Cooperative Credit Structure (LTCCS) -  provides typically medium and long term loans for making investments in agriculture, rural industries, and lately housing.
   
   • State Cooperative Agriculture and Rural Development Bank (SCARDB) at the state level
   • Primary Cooperative Agriculture and Rural Development Bank (PCARDBs) or branches of SCARDB at the decentralised district or block level

Large Area Multi-Purpose Societies (LAMPS) and Farmers Services Societies (FSS) are other Cooperative institutions serving the tribals, farmers and the rural population.

As of 2022, there are 1,00,428 Primary Agricultural Credit Societies (PACS)/ Large Area Multi-Purpose Societies (LAMPS)/Farmers Services Societies (FSS) and 619 State Cooperative Agriculture and Rural Development Banks (SCARDB) and Primary Cooperative Agriculture and Rural Development Banks (PCARDBs) in the agriculture sector.   

Ministry of Cooperation

Ministry of Cooperation was created by transferring the existing entries related to cooperation and cooperative in the business of the erstwhile Ministry of Agriculture, Cooperation and Farmers Welfare vide Cabinet Secretariat’s Gazette Notification dated 6th July, 2021.

The Ministry is headed by Hon’ble Minister for Cooperation and is assisted by Hon’ble Minister of State for Cooperation. Secretary, Cooperation is the administrative head of the Ministry. Secretary, Cooperation is assisted by one Additional Secretary, two Joint Secretaries and one Central Registrar of Cooperative Societies.

The Ministry is responsible for provide a separate administrative, legal and policy framework for strengthening the cooperative movement in country. Its aims to deepen co-operatives as a true people-based movement reaching up to the grassroots and develop a cooperative based economic model where each member works with a spirit to responsibility.

The principal activities of the Ministry include streamlining processes for ‘Ease of doing business’ for co-operatives and enabling development of Multi-State Co-operative Societies. It lays emphasis on strengthening, bringing transparency, modernization, computerization, creating competitive cooperatives, working constantly to meet the challenge of accessibility to development for every underprivileged in rural areas and on connecting every village with cooperatives, making every village prosperous with the mantra of “Sahakar se Samriddhi” and through this making the country prosperous.

Initiatives to promote Cooperatives

National Cooperation Policy

Ministry has taken up formulation of New National Cooperation Policy to help in realising the vision of 'Sahakar se Samriddhi', promoting the cooperative based economic development model, strengthening the cooperative movement in the country and deepening its reach up to the grassroots. In this regard, consultations were earlier held with stakeholders and suggestions for formulating the new Policy were invited from the Central Ministries/ Departments, States/UTs, National Cooperative Federations, Institutions and also from the general public. A National level committee has been constituted on 2nd September 2022 under the chairmanship of Shri Suresh Prabhakar Prabhu, consisting of experts of the cooperative sector, representatives from National/ State/ District/ Primary level cooperative societies, Secretaries (Cooperation) and RCSs from States/UTs, officers from Central Ministries/ Departments to analyse the collated feedback, policy suggestions & recommendations to formulate the draft of the new Policy.

To view a background note on National Cooperation Policy, click here.

Computerization of Primary Agricultural Credit Societies (PACS)

A Centrally Sponsored Project on ‘Computerization of PACS’ has been approved by the Cabinet Committee on Economic Affairs (CCEA) 29th June, 2022. This project envisages computerization of about 63,000 functional PACS over a period of 5 years with a total budget outlay of Rs. 2516 Cr with a central share of Rs. 1528 Cr. Out of the total budget for the project, the shares of Government of India, State Governments and NABARD are Rs. 1528 crore, Rs. 736 crore and Rs. 252 crore respectively.

Computerization of PACS, besides serving the purpose of financial inclusion and strengthening service delivery to farmers especially Small & Marginal Farmers, will bring transparency, efficiency, enhance trustworthiness in the working of PACS among farmers. A single ERP based software will be developed at National level which will enable PACS to digitize its services and link them with DCCBs and STCBs. It will ensure speedy disposal of loans, lower transition cost, faster audit and reduction in imbalances in payments and accounting with State Cooperative Banks and District Central Cooperative Banks.

Model byelaws for PACS

Model byelaws prepared and circulated for their adoption as per the respective State Cooperatives Act to enable PACS to undertake more than 25 business activities like dairy, fishery, setting up of godowns, LPG/ Petrol/ Green energy distribution agency, banking correspondents, CSC, etc.

PACS as Common Service Centres (CSC)

MoU signed between Ministry of Cooperation, Ministry of Electronics and Information Technology, NABARD and CSC - SPV to facilitate functioning of PACS as CSCs to improve their viability, provide e-services at village level and generate employment.

National Cooperative Database

Preparation of an authentic and updated data repository of cooperatives in the country started to facilitate stakeholders in policy making and implementation.
Establishment of Multi-Purpose PACS, Dairy and Fisheries Cooperative Societies in every Panchayat/Village: A plan has been approved by the Government to set up 2 lakh new multi-purpose PACS, dairy and fisheries cooperatives covering every Panchayat/Village in the next five years by taking advantage of various existing schemes.

Amendment of MSCS Act, 2002

Bill introduced in the Parliament to amend the centrally administered MSCS Act, 2002 to incorporate provisions of 97th Constitutional Amendment, strengthen governance, enhance transparency, increase accountability and reform electoral process in the Multi State Cooperative Societies.

National Cooperative Development Corporation

New schemes for cooperatives launched by NCDC in various sectors such as ‘Swayamshakti Sahkar’ for SHG; ‘Deerghavadhi Krishak Sahkar’ for long term agricultural credit; ‘Dairy Sahkar’ for dairy and ‘Neel Sahkar’ for fisheries. Total financial assistance of Rs. 34,221 Crores disbursed in FY 2021-22.
Member Lending Institutions in Credit Guarantee Fund Trust: Non-scheduled UCBs, StCBs and DCCBs notified as MLIs in CGTMSE Scheme to increase share of cooperatives in lending.

To view the schemes of NCDC, click here.

Cooperatives as ‘buyers’ on GeM portal

Cooperatives permitted to register as ‘buyer’ on GeM, enabling them to procure goods and services from nearly 40 lakh vendors to facilitate economical purchases and greater transparency.

Tax rebates for cooperative societies

• Reduction in surcharge on cooperative societies -Surcharge reduced from 12 % to 7% for co-operative societies having income between Rs. 1 to 10 Cr.
• Reduction in Minimum Alternate Tax: MAT reduced for cooperatives from 18.5% to 15%.
• Relief under Section 269ST of IT Act: A clarification has been issued to remove difficulties in cash transactions by cooperatives under Section 269ST of IT Act.
• Lowering tax rate for new cooperatives: Announcement made in the Union Budget 2023- 24 to charge flat lower tax rate of 15%, compared with current rate of upto 30% plus surcharge, for new cooperatives commencing manufacturing activities till March 31, 2024.
• Increase in limit of deposits and loans in cash by PACS and PCARDBs: Announcement made in the Union Budget 2023-24 to increase limit from Rs. 20,000 to Rs. 2 lakh per member for deposits and loans in cash by PACS and PCARDBs.
• Increase in limit for TDS: Announcement made in the Union Budget 2023-24 to increase cash withdrawal limit for cooperatives from Rs. 1 Crore to Rs. 3 Crore, per annum, without being subjected to TDS.
• Relief to Sugar Cooperative Mills: Sugar cooperative mills not to be subjected to additional income tax for paying higher sugarcane prices to farmers upto Fair and Remunerative or State Advised Price.

Others

• Resolution of chronic pending issues of Sugar Cooperative Mills: Announcement made in the Union Budget 2023-24 to allow sugar cooperatives to claim as expenditure their payments to sugarcane farmers for the period prior to assessment year 2016–17, giving a relief of nearly Rs. 10,000 crores.
• New National Multi-State Cooperative Seed Society: New apex national multi-state cooperative seed society being established under the MSCS Act, 2002 as umbrella organization for quality seed cultivation, production and distribution under a single brand.
• New National Multi-State Cooperative Organic Society: New apex national multi-state cooperative organic society being established under the MSCS Act, 2002 as umbrella organization to produce, distribute and market certified and authentic organic products.
• New National Multi-State Cooperative Export Society: New apex national multi-state cooperative export society being established under the MSCS Act, 2002 as umbrella organization to give thrust to exports from cooperative sector.

Source : Ministry of Cooperation