Ministry of Cooperation

Topic: Civil Society, Pressure Groups, NGOs and Self-help Groups · NCERT: Beyond NCERT

Meaning

The Ministry of Cooperation is a Union ministry. It was created in July 2021 by taking the subject of cooperation out of the Ministry of Agriculture. Its job is to strengthen cooperatives across India and to run the Multi-State Cooperative Societies (MSCS) Act, 2002.

It matters because "cooperative societies" is a State subject. A separate Union ministry for it raises a key question of federalism (power shared between the Centre and the states). It also drives the biggest set of cooperative reforms since 2021.

Explanation

What the ministry is

• Created: July 2021. It was carved out of the Ministry of Agriculture.
• Minister: the Union Home Minister also holds this ministry.
• Slogan: "Sahakar se Samriddhi" ("prosperity through cooperation").
• Core work:
• It strengthens the cooperative movement across the country.
• It runs the MSCS Act, 2002. This law covers multi-state cooperatives, meaning cooperatives whose members and work spread over more than one state, such as IFFCO or KRIBHCO.
• The Central Registrar of Cooperative Societies comes under it. This officer registers and supervises multi-state societies.

How it works when cooperation is a State subject

• The limit: the Centre cannot directly make laws for cooperatives inside one state.
• So the ministry uses indirect tools:
• the MSCS Act for multi-state societies
• model bye-laws (a sample internal rule-book) that states choose to adopt
• centrally funded schemes and incentives

Main reforms run by the ministry

• PACS reforms. A Primary Agricultural Credit Society (PACS) is a village cooperative that gives farmers short-term crop loans.
• Model bye-laws for PACS (2023): a PACS can now do more than 25 kinds of business. Examples are dairy, fisheries, godowns, fertiliser and fuel outlets, Jan Aushadhi Kendras (low-cost medicine shops) and Common Service Centres (village counters for digital government services).
• By late 2025, 32 States/UTs had adopted the model bye-laws or brought their laws in line with them [5].
• Computerisation of PACS: total cost of ₹2,925.39 crore. All working PACS go onto one national ERP software (common accounting software), linked to NABARD [3].
• Progress (20 January 2026): 79,630 PACS sanctioned and 61,478 onboarded on the ERP [3].
• 2 lakh new multipurpose PACS, dairy and fishery cooperatives: the plan was approved in February 2023. 23,173 new societies were registered by 22 July 2025 [3].
• "World's largest grain storage plan" (2023): godowns at PACS level. In the pilot, 11 godowns in 11 PACS gave 9,750 MT of storage [3].

• National Cooperative Database: one digital record of all cooperatives. It shows which villages still have no cooperative.

• MSCS (Amendment) Act, 2023: notified on 3 August 2023 [1]. It created:

• a Cooperative Election Authority, which holds free, fair and timely board elections
• a Cooperative Ombudsman, which hears members' complaints

• a Rehabilitation Fund, which revives sick (loss-making) societies

• Three new national multi-state cooperatives (2023):

• NCEL for exports
• NCOL for organic produce

• BBSSL for seeds

• Tribhuvan Sahkari University Act, 2025:

• Presidential assent on 3 April 2025 [6].

• The university is in Anand (Gujarat). It was formed by converting IRMA [6].

• National Cooperation Policy 2025:

• Launched by the Union Minister of Cooperation on 24 July 2025 [4]. It replaced the 2002 policy.
• It aims to bring 50 crore people into cooperatives and to triple the sector's share in the economy [4].

In the Constitution and practice

• Seventh Schedule:
• State List, Entry 32: "cooperative societies" is a State subject.

• Union List, Entry 44: corporations working in more than one state belong to the Union. Parliament makes laws for multi-state cooperatives under this entry. This entry is the legal base for most of the ministry's direct work.

• 97th Constitutional Amendment (2011):

• Article 19(1)(c): the right to form cooperative societies became a Fundamental Right.
• Article 43B: a Directive Principle (a goal for the state that no court can enforce). It asks the state to promote cooperatives that are voluntary, autonomous, democratically controlled and professionally managed.

• Part IXB (Articles 243ZH–243ZT): rules for cooperative boards. A board can have at most 21 directors and serves a 5-year term. It must reserve 1 seat for an SC/ST member and 2 for women.

• Union of India v. Rajendra N. Shah (2021): this case sets the limit on what the ministry can do.

• Part IXB changed a State List subject. So under the proviso to Article 368(2), at least half of the state legislatures had to ratify it. They never did.
• The Supreme Court struck down Part IXB as it applies to state cooperatives.
• Part IXB still applies only to multi-state cooperatives.

• Effect: the Centre cannot use the Constitution to control state cooperatives. It has to work through incentives and model rules.

• In practice:

• Some states and opposition parties say the Centre is slowly taking over a state domain through money and model rules.
• The ministry's main legal tool is the MSCS Act, 2002, as changed in 2023.

Don't confuse with

• Ministry of Agriculture: cooperation was taken out of this ministry in July 2021. Cooperation is no longer an Agriculture Ministry subject.
• State Registrar of Cooperative Societies: a state official who controls state cooperatives. The Central Registrar works under the Ministry of Cooperation and deals only with multi-state societies.
• RBI's role over cooperative banks: the RBI regulates the banking work of cooperative banks. The Banking Regulation (Amendment) Act, 2020 gave it more power. This is separate from the ministry's work.
• Article 43B vs Article 19(1)(c): 43B is a Directive Principle that no court can enforce. 19(1)(c) is a Fundamental Right that courts can enforce. Both came from the 97th Amendment (2011).

Prelims Hooks

• Ministry of Cooperation: created in July 2021, carved out of the Agriculture Ministry. Slogan: "Sahakar se Samriddhi". The Union Home Minister also holds it.
• Law it runs: the Multi-State Cooperative Societies Act, 2002. Its constitutional base is Union List Entry 44. "Cooperative societies" itself is in State List Entry 32.
• Rajendra N. Shah (2021): Part IXB was struck down for state cooperatives because half the states had not ratified it under the proviso to Article 368(2). It still applies to multi-state cooperatives.
• MSCS (Amendment) Act 2023: Election Authority = Chairperson + Vice-Chairperson + up to 3 members. The Ombudsman must decide complaints within 3 months [1][2].
• National Cooperation Policy 2025: launched on 24 July 2025. It was drafted by the Suresh Prabhu committee and has 6 pillars, 16 objectives and 83 recommendations [4].
• Trap: NCEL = exports, NCOL = organics, BBSSL = seeds. All three are multi-state societies set up in 2023.

Mains Points

• Cooperative federalism or centralisation?
• Cooperation is a State subject, and Rajendra Shah (2021) stops the Centre from controlling state cooperatives through a constitutional amendment.
• Yet the ministry's model bye-laws, ERP computerisation and funded schemes push states towards uniform rules.

• Answer frame: the ministry should work through incentives and agreement with states, not central control.

• Governance reform vs autonomy:

• The Election Authority, the Ombudsman and concurrent audit (a continuous audit through the year) tackle delayed elections, fraud and capture by a few people.

• But the Centre appoints these bodies. This may weaken the member control that Article 43B promises.

• Can the ministry make PACS viable?

• Allowing PACS to run many kinds of business deals with the long-standing problem of weak PACS noted by the Vaidyanathan Committee (2004).
• Risks: weak PACS may take on too much, and cooperatives may become para-state bodies (bodies that work like arms of the government) when state money and party politics take over.
• Needs: professional staff (the role of Tribhuvan Sahkari University), timely audits and an end to the RBI–registrar dual control of cooperative banks.

Related concepts

• Primary Agricultural Credit Society
• Multi-State Cooperative Societies (Amendment) Act 2023
• National Cooperation Policy 2025

Read more

• Cooperative reforms since 2021