Thursday, Nov 18, 2004
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By Our Special Correspondent
NEW DELHI, NOV. 17. The Prime Minister, Manmohan Singh, today said the Centre would soon bring a constitutional amendment to free cooperatives from the `political stranglehold' that would enable them to be autonomous, independent and professional. He said the amendment was necessary to ensure the rights of cooperatives to elections, autonomous management and independent professional audit. "The amendment will incorporate in the Constitution the three keywords essential for empowerment of cooperatives voluntary, democratic and autonomous so that no state law can abrogate them," he said.
Mr. Singh presented Excellence Awards to 34 cooperative societies from different States here at a function organised by the National Cooperative Development Council (NCDC).
He said his Government was committed to restoring full independence to cooperatives so that they worked according to the spirit of the cooperative movement and served as effective institutions for people's participation in development and equitable distribution of income.
A task force set up to recommend an action plan for reviving rural cooperative banking institutions would also recommend an appropriate regulatory framework and measures for improving the efficiency and viability of the cooperative banking sector, he said.
The task force, which was to give in its report by October 31, has sought extension.
Bemoaning the poor state of health of most cooperatives, the Agriculture Minister, Sharad Pawar, said cooperative banks had accumulated estimated losses of Rs. 15,000 crores. The cost of raising capital for cooperative banks was higher than that of commercial banks, which affected their lending. This had resulted in diverting their customers to commercial banks and also affected the textile and sugar sector, which had to borrow for working capital requirements at higher rates of interests from cooperative banks.
Mr. Pawar said they would have to find ways and means to reduce their cost of capital to be competitive in the long run. He said that of the 310 cooperative sugar factories, 111 faced problem of sickness, and out of 159 spinning mills, 77 had closed and 55 were on the verge of closure. Emphasising the need for a better credit flow to cooperatives, especially the smaller ones, he said a Credit Guarantee Fund with contributions from the NCDC and the Central Government would be considered.
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