The Multi-State Cooperative Societies (Amendment) Bill, 2022 Approved by Cabinet

The Union Cabinet passed an amendment to the Cooperative Societies Act that will make the governance of multi-state cooperative societies more democratic, transparent and accountable. The Multistate Cooperative Societies (Amendment) Bill, 2022, incorporates the provisions of the 97th Amendment to the Constitution, which grants co-operative societies constitutional status and protection, while making the freedom to form co-operative societies a fundamental right (section 19).

Source: MSCS

Multistate Cooperative Societies (Amendment) Bill, 2022

It aims to improve transparency and accountability while making it easier to conduct business. It intends to include provisions of the 97th Constitutional Amendment.

It will improve governance, reform electoral processes, “strengthen” surveillance measures, “improve“Board composition, enhance transparency and accountability, increase financial discipline, and enable multi-state cooperative organizations to raise funds.

Source: Freshers Live

The bill proposes to establish a a cooperative electoral authority, a cooperative information officer and a cooperative ombudsman to make the governance of the multi-state cooperative society more democratic, transparent and accountable.

The electoral authority will ensure that the elections are fair, free and timely, which will reduce complaints and malfeasance.

The proposed bill will impose a three-year ban on violators and increase “voter discipline”. The cooperative ombudsman will provide a “organized” procedure for resolving member issues. The bill proposes to appoint a cooperative information officer to “To improve” transparency by giving members quick access to information.

Provisions relating to representation of women and Scheduled Castes/Scheduled Tribes board members of multi-state cooperative corporations have been inserted to promote equity and encourage inclusion,” the source said. “It is planned to involve co-opted directors with experience in the fields of banking, management, cooperative management and finance, or with a specialization in any field relating to the object and activities carried out by these administrators. multi-state cooperative societyfor promote professional management.

Regional disparities in cooperative development: Cooperative structures have only flourished in a few states such as Maharashtra, Gujarat and Karnataka. Currently, the federal government supports cooperative societies with equity and credit support. As a result, this advantage is concentrated in the new states where cooperatives have emerged. Cooperative development regions are already rather well-to-do states; it is necessary to focus on cooperative development in the poor regions of the country. Membership issues: inability to maintain an active membership, rapid exodus of non-user members, lack of member communication and outreach

Source: Financial Tribune

Governance issues: Serious shortcomings in governance, in particular those relating to the powers and obligations of the councils. Cooperatives are not considered economic institutions: A general lack of recognition cooperatives as economic structures to policy makers and the general public. Inability to attract and retain qualified staff resulting in substandard services and low productivity.

Lack of capital formation activities, in particular those aimed at increasing member equity and therefore member ownership. Lack of cost competitiveness due to factors such as overstaffing and a top-down approach to cooperative training, including multi-level structures.

The politicization and the excessive role of the government are mainly the result of loopholes and restrictive measures in the laws on cooperatives. Irregular elections allow elected officials to remain in office forever, reducing accountability and increasing corruption.

Accordingly, there was a perceived need for major reforms in the operation of cooperatives in order to: revitalize institutions and ensure their contribution to the country’s economy development. To serve the interests of members and the general public. Make sure they have autonomy, democratic functioning and professional management.

Source: Cloudinaire


Previously, Gujarat High Court had stated that as “cooperative organizations” are listed under entry 32 of the state list, the state has the power to enact laws relating to them. According to Article 368(2) of the Constitution, any modification of this statute by the Center would have to be approved by at least half of the state legislatures. Moreover, it went against the fundamental ideals of the federal government and the Constitution. This rendered the 97th Constitutional Amendment ineffective.

The Supreme Court upheld the decision of the Gujarat High Court but did not completely invalidate Part IXB. Using the severability doctrine and excluding Sections 243ZR and 243ZSthe Court declared Articles 243ZI to 243ZQ be unconstitutional.

The Supreme Court upheld the decision of the Gujarat High Court but did not strike down Part IXB in its entirety. Using the doctrine of severability, the Court declared sections 243ZI to 243ZQ invalid, leaving out sections 243ZR and 243ZS. Part IX B of the Constitution relating to Cooperative Societies was declared invalid by the Supreme Court, while Part IX B relating to Multistate Cooperative Societies within Multiple States and Union Territories India was declared legitimate.

Source: Indian Express
The Court also alluded to the Decision Kihoto Hollohan, in which the doctrine of severance was applied to the Tenth Schedule, making paragraph 7 of the Indian Constitution illegal. However, the minority decision called into question the independence of Articles 243ZR and 243ZS from the other provisions of PART IXB and found the whole of PART IXB to be unconstitutional.

Virginia S. Braud