Apirl - June 2015

Back in the Reckoning

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Back-in-the-ReckoningThe Cooperative Movement in India has led to the growth of a large number of cooperative bodies, though not all of those met with success. But Gujarat stands out as a state that created an atmosphere conducive to the growth of cooperatives in sectors like dairy, banking, agricultural farming, etc. Sneha Mejari of Elets News Network (ENN) tries to find out whether Gujarat is ‘Proudly Cooperative’ today

After passing through a low phase, the cooperatives in Gujarat are slowly regaining the trust of their people. If the rising deposits in various cooperative banks are anything to go by, the people of Gujarat are ready to forget the scams and controversies and to move ahead with the movement.

But, with the Reserve Bank of India (RBI) spelling out new financial policies, the question arises: are cooperative banks ready to compete with commercial banks? Also, will slower adoption of new-age technology prove to be a hurdle for the cooperatives in Gujarat?

“Sardar Vallabhbhai Patel once came to his village Karapsar in Kheda district. The farmers of the village went to him and said that they did not have good means of living and they didn’t have work as monsoon had caused problems for them, and sought his suggestion. Patel responded by just saying two words, ‘Mandali Karo’, which means ‘form a cooperative’.” This was the example given by Jyotindrabhai Mehta, Chairman, Gujarat Urban Cooperative Banks Federation (GUCBF).

There is no denying the fact that the cooperative movement in Gujarat has played a very important role in the development of the State. The story of AMUL (Anand Milk Producers Union Ltd) can serve as the best example in this context. Formed in 1946, marking the beginning of the dairy cooperative movement in India, AMUL not only turned the fate of crores of dairy farmers for better, but also became irreplaceable ‘Taste of India’. With Narendra Modi’s recent visit to Mangolia, AMUL is also about to tuning the Taste of Mangolia, proving that sky is the limit.

The Gujarat Co-operative Societies Act 1961 proved to be a game changer in the cooperative history of Gujarat. It brought with itself a wide scope of development for farmers, first by helping them get loans for agricultural purposes at a very low rate of interest from the cooperative banks and secondly by way of formation of federations like AMUL, which helped the farmers get better prices for their products.Anand-Milk-Producers

Story so far

Today in Gujarat, there are 62,343 cooperative societies registered under the Gujarat Cooperative Societies Act, 1961, which boasts of more than 1.25 crore membership. Thus, on an average, every fifth person in the State is member of a cooperative body.

However, Gujarat is better known for its milk cooperative societies on Amul pattern. In Gujarat, there are 13 District Milk Unions and 12,402 Primary Milk Cooperatives, and milk procurement is an average 6.7 million kilogram per day. The ‘White Revolution’ has had a big impact on the rural economy.

Similarly, the three-tier cooperative credit structure has helped the farmers get agricultural credit. There are 7,943 Primary Agricultural Credit Co–operative Societies functioning in the rural areas of the State. Till 2008–09, 11,82,759 Kisan Credit Cards were issued to the farmers to provide credit facility through district cooperative banks. Total finance for agriculture through cooperative sector is more than `3,500 crore.

The State of Gujarat is also known as the ‘Motherland of Urban Cooperative Banks’, as the concept of UCBs is said to have seen the light of the day following establishment of ‘Anyonya Sahakari Mandali’ in 1889

‘White Revolution’

Operation Flood (OF) was a unique programme introduced by the Government of India in 1970s. It was not only for the dairy farmers to ensure controlling their resources they created, but also to direct their own development. An investment of `20 billion over 20 years under the Operation Flood Programme in 1970s and 1980s had contributed to tripling of milk production from about 20 MMT (million metric tonnes) in the pre-Operation Flood period to more than 60 MMT at the end of the programme.

The one State to benefit the most from the programme is Gujarat, where cooperative brands like Amul have earned the reputation of being known for quality and value. Today, Amul leads the pack as the largest cooperative milk and milk products brands. Some other food cooperative brands include Vijaya (Andhra Pradesh), Verka (Punjab), Saras (Rajasthan), Nandini (Karnataka), Milma (Kerala) etc. Each of these brands has become market leader in its own state or traditional area of operation and gradually expanding its presence in other states. The success of Amul proves that cooperatives can successfully compete with even multinational companies.

MotherlandMotherland of UCBs

The State of Gujarat is also known as the ‘Motherland of Urban Cooperative Banks’, as the concept of the urban cooperative banks (UCBs) is said to have seen the light of the day here following establishment of the ‘Anyonya Sahakari Mandali’, in the then princely state of Baroda in 1889 under the guidance of Vithal Laxman, popularly known as Bhausaheb Kavthekar. The first registered UCB, the Surat People‘s Cooperative Bank Ltd, was established in Surat city of Gujarat in March 1922.

The success of this bank gave a boost to the formation of UCBs across Gujarat. But at the same time, the development of the UCBs also marked regional imbalance in Gujarat, as out of the 351 UCBs, about 195 are located in four districts and 92 in five districts, while only 64 UCBs are located in remaining districts. The districts where most of the UCBs are located are Ahmedabad, Kheda, Baroda, Mehsana, Surat and Panchmaha.

After the Independence of the country, at the recommendations of the A D Gorwala Committee (1954), one central cooperative bank for each district became a dictum, particularly in the bigger states, with a view to provide stability and facilitate emergence of a strong and powerful cooperative credit structure for the development of all cooperative activities at the district level. The establishment of District Central Cooperative Banks (DCCBs) was meant to serve as a link between the ultimate credit disbursing outlets, viz., Primary Agricultural Credit Societies (PACS) at the base level, DCCB at the intermediate level and the State Cooperative Banks (SCB) at the apex level.

Today, the Gujarat State Cooperative Bank, the apex bank in the State, has not only emerged as the most successful bank, but has also done a great work in leading the way for district cooperative banks as well as urban cooperative banks. Gujarat is the secondlargest state with regard to the success of cooperative banking after Maharashtra.

In all, there are 260 urban cooperative banks in the State, having 621 branches and 26.09 lacs membership. The total deposits of the banks amount to `16,156 crore and advances are `10,436 crore. After the downfall of some of the UCBs, the State Government made stringent provisions in the Gujarat State Cooperatives Act, 1961 for regulation of UCBs and an MoU was also signed for constitution of the Task Force for Urban Cooperative Banks (TAFCUB) with the RBI. Subsequently, as a result of positive actions, 22 weak Banks were merged with stronger banks.

Madhavpura scam

However, the cooperative banking sector in the State also saw a dark phase in the form of Madhavpura Mercantile Cooperative Bank scam. The Credit-Deposit Ratio (CD ratio) of urban cooperative banks slipped due to the lack of proper planning and management of the assets and liabilities of the banks. The Madhavpura bank was liquidated and lots of other banks, affected in the aftermath of the scam, have now been merged with bigger banks to revive them. Thankfully, the various steps taken by the government have regained the confidence of the masses. Increase in deposits after Madhavpura scam shows the positive attitude of the people towards cooperative banks.

Now, a new challenge facing these banks is digitisation of banking services. However, the Gujarat Urban Banking Federation, along with institutions like NCPI and IDRBT, are trying to bring in technology by establishing CDRB centres, through which banks will be provided with the funding and infrastructure required to bring in CBS solutions and adopt technologies. These technologies are largely believed to emerge as the answer for lack in professional administration in cooperative banks.

Emergence of APMCs

The regulation of agriculture markets in Gujarat was first started in the year 1935 during the regime of princely state of Baroda. The then Baroda State had established regulated markets at Bodeli in the year 1937-38. Thereafter, the Bombay State Government established the Bombay Agricultural Produce Market Act 1939. In Saurashtra region, the regulation was introduced after the formation of Saurashtra Union and the legislation in this regard was enacted in the year 1954-55.

With the bifurcation of bigger bilingual Bombay State and the formation of Gujarat, different laws were unified and the Gujarat Agricultural Produce Markets Act was enacted in 1963. Subsequently, in 1985, the Gujarat State Agricultural Marketing Board was established.Agriculture-Produce-Market-Committees

Further, with a view to fetching to the farmers the right price for their produce, the Agriculture Produce Market Committees (APMCs) were set up. These APMCs are regulated through the Gujarat APMC Act 1964. There are 207 APMCs and agricultural products approximately worth Rs 16,989.97 crore are sold through these Committees per annum. It is the policy of the State Government to have one APMC in each Taluka in the State. The State Government has amended the APMC Act on the lines of a model act. Now, the focus is on e–market, private markets, contract farming, etc.

With a view to fetching to the farmers the right price for their produce, the Agriculture Produce Market Committees (APMCs) were set up. These APMCs are regulated through the Gujarat APMC Act 1964

The Gujarat State Agriculture Marketing Board takes care of APMCs and helps them create infrastructural facilities through various Central and State schemes like TMC, Infrastructure Schemes, RKVY etc. Every year the State Government allocates `26 crore for the modernisation of APMCs, of which 50 per cent are allocated for tribal areas and 25 per cent for normal areas of the State under the Kisan Kalpvruksh Scheme. In Gujarat, cooperative societies and APMCs are also working for social causes like charitable activities related to health, education etc.

At present, Gujarat has 210 APMCs having 199 main market yards and 201 sub-market yards. The working area of an APMC generally comprises a Taluka, covering villages within 10-15 km radius of the market yard. On market premises, all the produce (notified commodities) are required to be brought and sold there only. Licence fees for traders, commission agents and other market functionaries, such as brokers, carting agents, weigh men, etc. are selected by the market committees under the by-laws subject to the minimum and maximum prescribed by the Gujarat Agricultural Produce Market Rules, 1965. The Market Committees collect fees on agricultural produce bought or sold in the Market area on ad valorem basis subject to a minimum of 30 paise and maximum of `2 per `100 worth sale, as provided in the Gujarat APMC Act, 1964. In case of cattle, minimum and maximum rates are `0.25 and `4 per animal. The main source of income of the Market Committee is licence fee and market fee (cess).

APMCs in Gujarat are autonomous bodies, consisting of eight representatives of the agriculturists, four representatives of the traders holding general licence, two representatives of the cooperative marketing societies holding general licence situated in the market area, one nominee of local authority and two nominees of the State Government, who are officials. The duty of the market committee is to maintain and manage the market, to prevent adulteration, to promote grading and standardisation and to enforce the provisions of the Act, rules, by-laws and the conditions of the licences under the Act in the market area.

Since a farmer can understand the problems of farmers better, the State Government recently amended the Agricultural Produce Market Act and made some drastic changes to it, providing that only a farmer become Chairman of an APMC. APMC has to take decision on issue of licence within 90 days, market committee also shall allow to trade of non-regulated commodities and APMC may collect user charges for providing facilities. There is a provision for no-confidence motion.

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