- Executive Summary Since its inception in July 2021, the Ministry of Cooperation has launched 54 major initiatives to realize the vision of “Sahakar-se-Samriddhi” (Prosperity through Cooperation).
- These measures aim to strengthen the cooperative movement from the grassroots to the apex level.
- Key achievements include the computerization of Primary Agricultural Credit Societies (PACS), adoption of model bye-laws to diversify PACS activities, and significant tax relief for cooperatives.
- The Ministry has also established three new national-level multi-state societies for seeds, organic products, and exports, alongside reforms to modernize urban and rural cooperative banks.
- Since its formation on July 6, 2021, the Ministry of Cooperation has aggressively pursued the strengthening of India’s cooperative sector.
Executive Summary
Since its inception in July 2021, the Ministry of Cooperation has launched 54 major initiatives to realize the vision of “Sahakar-se-Samriddhi” (Prosperity through Cooperation). These measures aim to strengthen the cooperative movement from the grassroots to the apex level. Key achievements include the computerization of Primary Agricultural Credit Societies (PACS), adoption of model bye-laws to diversify PACS activities, and significant tax relief for cooperatives. The Ministry has also established three new national-level multi-state societies for seeds, organic products, and exports, alongside reforms to modernize urban and rural cooperative banks.
Since its formation on July 6, 2021, the Ministry of Cooperation has aggressively pursued the strengthening of India’s cooperative sector. With a focus on the mantra “Sahakar-se-Samriddhi,” the Ministry has implemented 54 distinct initiatives designed to modernize processes, enhance transparency, and improve the economic viability of cooperatives across the country. These initiatives span eight broad categories, ranging from grassroots PACS reforms to national-level policy shifts.
A. Revitalizing Primary Cooperatives (PACS)
Primary Agricultural Credit Societies (PACS) are the building blocks of the cooperative structure. The Ministry has taken comprehensive steps to make them economically vibrant and transparent.
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Model Bye-Laws and Diversification: To transform PACS into multipurpose entities, the Government circulated Model Bye-Laws, which have been adopted by 32 States/UTs. These bye-laws enable PACS to undertake over 25 business activities, ensuring inclusive membership with representation for women and SC/ST communities.
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Computerization: A major project with an outlay of ₹2,516 Crore is underway to computerize functional PACS onto a common ERP-based national software. This integrates them with NABARD and State/District Cooperative Banks. Over 25,000 PACS have already been onboarded.
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Decentralized Grain Storage: The “World’s Largest Decentralized Grain Storage Plan” allows PACS to build godowns and processing units. This initiative aims to reduce food grain wastage and transportation costs while ensuring better prices for farmers.
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Expansion of Services: PACS are now authorized to function as Common Service Centers (CSCs) providing banking, legal, and travel services. They have also been prioritized for allocating retail petrol/diesel outlets and LPG distributorships. Furthermore, PACS can now operate Pradhan Mantri Bhartiya Jan Aushadhi Kendras to provide affordable generic medicines.
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New Formations: The government has approved a plan to establish new multipurpose PACS, dairy, and fishery cooperatives in uncovered Panchayats. Over 6,800 new societies have already been registered.
B. Strengthening Urban and Rural Cooperative Banks
The Ministry has introduced several banking reforms to level the playing field for cooperative banks compared to commercial banks.
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Operational Freedom: Urban Cooperative Banks (UCBs) can now open new branches (up to 10% of existing numbers) without prior RBI approval and offer doorstep banking services.
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Credit Flow Improvements: The individual housing loan limits have been doubled for UCBs (to ₹60 lakhs) and increased by 2.5 times for Rural Cooperative Banks (to ₹75 lakhs). Rural banks are now also permitted to lend to the commercial real estate and residential housing sectors.
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Settlements and Targets: Cooperative banks can now execute one-time settlements with borrowers. The timeline to achieve Priority Sector Lending (PSL) targets for UCBs has been extended to March 31, 2026.
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Umbrella Organization: Approval has been granted to NAFCUB to form an Umbrella Organization that will provide IT infrastructure and operational support to approximately 1,500 UCBs.
C. Income Tax Reliefs for Cooperatives
To improve liquidity and financial health, several disparities in tax treatment between cooperatives and companies have been addressed.
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Surcharge and MAT Reduction: The surcharge for cooperatives with income between ₹1 crore and ₹10 crore has been reduced from 12% to 7%. Similarly, the Minimum Alternate Tax (MAT) has been lowered from 18.5% to 15%.
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TDS and Cash Transaction Limits: The limit for cash withdrawals without TDS deduction has been tripled to ₹3 crore per year. Additionally, cash deposit and loan limits for PACS and PCARDBs have been raised to ₹2 lakh per member.
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Manufacturing Tax Cut: New manufacturing cooperatives commencing activities by March 31, 2024, will be taxed at a flat lower rate of 15%.
D. Revival of Cooperative Sugar Mills
The sugar sector has received specific attention to resolve long-standing financial burdens.
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Tax Disputes Resolved: A clarification ensures that sugar mills are not subjected to additional income tax for paying farmers sugarcane prices above the statutory minimum. This retrospective relief (pre-2016-17) is valued at over ₹10,000 crore.
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Loan Schemes and Ethanol: A ₹10,000 crore loan scheme through the NCDC supports ethanol and cogeneration plants. Cooperative mills have also been placed at par with private companies for ethanol procurement under the Ethanol Blending Programme.
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GST Reduction: The GST on molasses has been slashed from 28% to 5% to boost margins for mills selling to distilleries.
E. New National Level Multi-State Societies
To plug gaps in the cooperative ecosystem, the Government has established three new apex bodies under the Multi-State Cooperative Societies (MSCS) Act, 2002:
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Bharatiya Beej Sahakari Samiti Limited (BBSSL): Focuses on the cultivation, production, and distribution of quality seeds under a single brand.
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National Cooperative Organics Limited (NCOL): Acts as an umbrella organization for producing and marketing certified organic products under the “Bharat Organics” brand.
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National Cooperative Export Limited (NCEL): Dedicated to promoting exports from the cooperative sector, having already exported over 8 lakh metric tonnes of commodities.
F. Capacity Building and Training
Recognizing the need for trained manpower, the Ministry is upgrading the National Council for Cooperative Training (NCCT) and has prepared a Cabinet Note for establishing a National Cooperative University.
G. IT and Ease of Doing Business
Digital transformation is a core pillar of the Ministry’s strategy.
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Computerization Projects: Initiatives are underway to computerize the offices of the Registrar of Cooperative Societies (RCS) in all States/UTs and Agriculture and Rural Development Banks (ARDBs) to ensure paperless and transparent regulation.
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GeM Portal: Cooperatives have been permitted to register as ‘buyers’ on the Government e-Marketplace (GeM) portal, facilitating transparent and economical procurement.
H. Strategic Database and Policy
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National Cooperative Database: A comprehensive database now captures data on approximately 8.09 lakh cooperatives to aid in evidence-based policy making.
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New National Cooperative Policy: A committee is currently formulating a new policy to create a vibrant ecosystem for the sector.
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Sahara Refund Portal: A transparent mechanism has been launched to refund genuine depositors of the Sahara Group of Cooperative Societies.
These 54 initiatives collectively represent a systemic overhaul of the cooperative sector, aiming to empower farmers and rural communities through improved infrastructure, financial access, and policy support.