The sudden sacking of the MD of one of India?s biggest farmers? cooperatives, Nafed, is the latest in a series of troubles that the country?s premier cooperative institution has been mired in over the last few years. Nafed was formed in 1958 with the objective of promoting cooperative marketing of agricultural produce for the benefit of farmers, but it has not been in the pink of health, largely because of some faulty business decisions.
One of these is the flawed ?business-tie up? arrangement that it entered into in 2004-05, under which the cooperative had provided bank counter guarantee to 29 private companies to the tune of more than Rs 3,900 crore for undertaking exports in agricultural and non-agricultural items like iron ore, dry fruits, etc. But several of these companies defaulted on repayment to the tune of an estimated Rs 1,600 crore. And the onus of interest payment now lies with Nafed. The interest liability to the tune of Rs 130 crore annually is wiping out even the nominal profit made by the federation, over the last 5 years.
The government, for its part, set up a committee headed by retired Allahabad High Court Judge RR Mishra to look into the ?scam?. The committee has found that top officials were responsible for extending counter-guarantees on loans taken by private companies (probably under some sort of political influence). The agriculture ministry has shied away from heeding the cooperative?s request for a one-time settlement to the tune of Rs 1,600 crore to wipe off its bank loans.
Apart from sullying the cooperative?s image, such events have done nothing but divert attention from the primary objective of supporting farmers through its vast network. At a time when the government is trying to bring food inflation down, Nafed should channel all its energies, expertise and logistics to help in this process.
Irrespective of whether Nafed?s current MD is reinstated or not, the incident is a reflection of the state of cooperative institutions in India. Many have failed to serve their purpose, largely because of excessive political meddling.
?sanjeeb.mukherjee@expressindia.com