Union Budget; Implications for Cooperatives

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This years’ Union Budget is a definite step towards strengthening the cooperative sector in India. With the formation of Ministry of Cooperation, it was expected that??the cooperatives would get due focus in the Budget considering the fact that??earlier, the cooperatives used to be neglected in the Budget. Just like the last year, this year’s Budget has adequate provisions related to cooperatives. The Budget has tried to provide a level playing field to cooperatives like the private companies.?Over the years, the cooperatives had a major grievance that they were discriminated as compared to the corporates. But, it seems those days are over. The cooperatives have been given preferential treatment and tax exemptions in this year’s Budget.

The provision that the new cooperatives involved in manufacturing will be provided lower tax rate@15%, has brought them on par with the private companies who have a similar tax rate. NCUI has long been advocating for providing a level playing field to cooperatives and providing them concessions like private companies. The opportunity given to the sugar cooperatives to settle their old claims related to the purchase of sugarcane by providing them relief of Rs.10,000 crore will strengthen the cooperative sugar sector. Increasing threshold limit for PACS and PCARDBs to withdraw cash from existing limit of Rs.20,000 to Rs.2 lakh is indeed a welcome step. Earlier TDS was applicable for annual withdrawal by PACS and PCARDBs for an amount more than Rs.1 crore. As per the Budget announcement, TDS shall be applicable on annual withdrawal by PACS and PCARDBs of Rs.3 crore, thereby giving a relief of Rs.2 crore to the societies. As many of the cooperatives have been grappling with TDS issues, this support has come at the most opportune time.

India is lacking in terms of the scientific agricultural infrastructure facilities including cold storage at the village level. The Government’s plan to decentralize the storage capacity in this Budget, will provide the business opportunities to primary agriculture cooperatives and other primaries to establish state-of-the-art infrastructure?in the form of well-equipped godowns, which will?strengthen the value addition of agricultural produce and provide various services to the members of cooperatives. This will well equip the farmers to store their produce and realize remunerative prices through sale at appropriate time. At present, the development of warehouses in PACS is not satisfactory considering its potential in revamping the PACS infrastructure. The budgetary impetus in this regard is indeed welcome.

The cooperatives for weaker sections of the society like fisheries, labour, tribals, etc., need to be strengthened so that there is balanced cooperative development all over the country. A new sub-scheme of PM Matsya Sampada Yojana, in the Budget, with an outlay of Rs.6,000 crore, will help fisheries cooperatives, fish vendors, and micro & small enterprises to enhance and expand their business activities, improve value chain efficiencies, and expand the market. With such an enhanced package, there is a need for fisheries and other cooperative federations to promote and register the fisheries cooperatives in the cooperatively underdeveloped areas with the help of government support. FISCOFED, which is one of the implementing agencies for the Scheme, should be strengthened so that it can play an important lead role in this regard.

As on date, there are 8.54 lakh credit and non-credit cooperatives societies in the country. In comparison to 2.54 lakh gram panchayats in India, ?there?are?approximately ?90,000 primary agricultural credit cooperative societies (PACS), 1,51,956 dairy cooperative societies; and?23,670 fisheries cooperatives. In this year’s Budget, in order to cover more number of farmers under the cooperative fold, the government is aiming to form and promote new primary credit, fisheries, and dairying and multipurpose cooperative societies in the uncovered panchayats and villages in next five years. The task is challenging and requires the multi-stakeholders support in not only promotion and formation of these new cooperatives but also making them self-sustainable. NCUI in coordination with various state cooperative unions can play an important role in this case. Recently, a meeting in this regard was already convened by NCUI, in which the representatives of state cooperative unions were present.

There are many opportunities for the cooperative sector to exemplify its potentialities, and benefit from the budgetary announcements in other areas. For example, the e- launch of Pradhan Mantri Kaushal Vikas Yojana 4.0 to skill lakhs of youth within the next three years. This can be an opportunity for the cooperatives to take benefits from this Scheme, by utilizing their wide network and reach, so that they can connect with the youth and bring them into the cooperative fold. If the cooperatives come up strongly in this field, they can contribute to employment generation in a big way. NCUI’s?newly?built Skill Development Centre at Noida can organize a large number of skill development training programs in association with various skill development organizations.

The Budget mentions that National Rural Livelihood Mission (NLRM) has mobilized women into 81 lakh self-help groups (SHGs), and will enable the next stage of economic empowerment through formation of large producer enterprises/collectives. NCUI along with Ministry of Rural Development, GoI, may work together to convert SHGs and their federations under State Cooperative Acts. The efforts in this direction have already been initiated in the states of Bihar, Andhra Pradesh and other states.

The Budget provision mentions creation of Global Hub for millets ‘Shri Anna’. NCUI with the support of Indian Institute of Millets Research (IIMR) may develop a strategy to achieve the agenda of nutritional security. There is a need for formation and promotion of millets cooperatives in this regard, while at same time the existing cooperatives may diversify their activities by coming up effectively in the field of millets production. In this connection, it is worth mentioning here that NCUI was invited to share its views from a cooperative perspective in a recent meeting organized by Niti Aayog on this issue of vital importance.

The Budget has a provision related to ‘PM Vishwakarma Samman’ package catering to the needs of artisans and craftspersons. There is a need to strengthen handloom cooperatives, which have enormous potentialities to showcase the cultural heritage of India. The role of NCUI in collaboration with state cooperative unions, and handicraft organizations, becomes vital in this regard for providing skill training, brand development and marketing of the artisans’ products.

In a paradigm shift, recognizing the significance of cooperative model, the Budget mentions that the government is promoting ‘cooperative-based economic development model’ for small and marginal farmers, and other marginalized sections of the society. It further mentions the initiatives like computerization of PACS with an outlay of Rs.2,516 crore; formulation of model bylaws for PACS for enabling them to become multipurpose PACS; and preparation of National Cooperative Database for mapping of cooperative societies. The recent setting up of new multistate cooperatives societies ─ in the areas of seed, organic farming and exports ─ are other notable initiatives. With several initiatives, and a definite push to cooperative sector in this year’s Budget provisions, it has to be seen to what extent these are implemented by the cooperatives and various other?stakeholders with workable action-plans, so that their impact is felt at the grassroot levels.

Sanjay Verma, Director, Pub/PR, NCUI and Dr Sagar Wadkar, Advisor( Research and Study), NCUI

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