Move seen as BJP’s bid to make inroads into a sector that was traditionally dominated by Congress, NCP

The Centre’s decision to set up a Ministry-of-Co-operation to be headed by Home-Minister Amit Shah has stirred Maharashtra’s co-operative sector.

Co-operative-barons-in the State have also objected to the recent amendments in the Banking Regulation Act to enhance RBI’s regulatory powers.

Data available with the State government show what is at stake; and why the Congress-Nationalist Congress Party (NCP) alliance and the BJP have locked horns to control Maharashtra’s co-operative sector.

Rural economy

With ₹87,998 crore of deposits and working capital of ₹1,10, 501 crore; the District Central Co-operative Banks (DCC) in Maharashtra are the pivot of the rural economy. At the helm of the three-tier co-operative credit structure in the State is Maharashtra State Co-operative Bank (MSCB). It has deposits of ₹20,849 crore and working capital of ₹33,454 and controls 31 DCCs which; in turn, provide finance to 20,744 Primary Agricultural Credit Societies (PACS). The PACS have a working capital of ₹20,000 crore and provide agricultural credit mainly for seasonal farm operations.

Maharashtra has a huge network of 2.13 lakh co-operative societies; of which about 52 per cent are co-operative housing societies with working capital of ₹3,97,466 crore. It has deposits of ₹2,10,404 crore. Of the total sugar factories in India; a maximum 33 per cent are located in the State and 21 per cent in Uttar Pradesh. The co-operative marketing societies in the State have a share capital of ₹93,000 crore.

Lifeline of politics

During 2020-21, the annual target for agriculture and allied activities sector in annual credit plan was ₹93,626 crore and up to December; crop loans worth ₹40,515 crore were disbursed through financial institutions.

More than 50 per cent of the State population depends on agriculture and allied sector for livelihood. Control over co-operative institutions essentially means control over the rural economy of the State.

State co-operatives are the lifeline of Maharashtra’s politics. Traditionally, the Congress and, in the last two decades, Sharad Pawar’s Nationalist Congress Party (NCP), have dominated the co-operative sector in the State. Co-operative societies, non-agricultural co-operative societies, dairy co-operative and sugar mills have helped co-operative barons control financial resources and, consequently, vote bank.

Not surprisingly, a cursory look at the Maharashtra politicos will show that majority of them have fuelled their political ambitions through co-operative sector.

The co-operative movement, which was once mainly confined to agricultural credit, extended to finance, agro-processing, marketing, housing, dairy, storage, textile, fisheries and various other industries. Recently, the BJP has made inroads into the co-operative sector and with support from the Centre is trying to lock horns with the NCP-Congress leaders to take over State co-operatives. State BJP leaders have alleged massive corruption in the sector and are seeking the Centre’s intervention.

With the new Ministry and Amit Shah as its head, the Maharashtra co-operative sector might be on a roller-coaster. It might also have an impact on political realignment in the State, taking BJP closer to the power corridors in Maharashtra.

Source : The Business line July 20,2021