A number of measures to boost the cooperative sector in the country, including a concessional tax of 15% to promote new societies focusing on manufacturing, a higher limit of Rs 3 crore for TDS on cash withdrawal, and the creation of decentralised storage capacities, were announced in Budget FY24. Finance minister Nirmala Sitharaman said in her Budget speech that a new cooperative society (formed after April 1, 2023) which commences manufacturing by March 31, 2024, and does not avail of any specified incentive or deduction, will be allowed to pay tax at a concessional rate of 15%, similar to what is available to new manufacturing units.
The budget has also provided an opportunity to the sugar cooperatives to claim the payments made to cane farmers for the period prior to the assessment year 2016-17 as expenditure. This is expected to provide sugar cooperatives a relief of almost Rs 10,000 crore.
The government will amend the relevant section of the Companies Act to ensure cash-loans or transactions in cash, amounting to less than Rs 2 lakh, don’t attract penalties for primary co-operatives.
“For farmers, especially small and marginal farmers, and other marginalised sections, the government is promoting cooperative-based economic development model,” finance minister Nirmala Sitharaman said in her speech.
She also announced a plan to set up ‘massive’ decentralised storage capacity, which will help farmers store their produce and realise remunerative prices by selling the commodity at an appropriate time.
“Decentralisation of warehousing capacity will play an important role in rationalising the balance between demand and supply,” Arun Raste, MD & CEO, NCDEX (the commodities exchange), said.
The FM also announced that the government will facilitate setting up of a large number of multipurpose cooperative societies, primary fishery societies and dairy cooperative societies in uncovered panchayats and villages over the next five years.
The government has already initiated computerisation of 63,000 Primary Agricultural Credit Societies (PACS) with an investment of Rs 2,516 crore.
“In consultation with all stakeholders and states, model bye-laws were formulated enabling them to become multipurpose PACS,” Sitharaman said, adding that a national cooperative database is being prepared for country-wide mapping of cooperative societies.
“The decision to computerise PACS will enable inclusive, farmer-centric solutions and help improve access to farm inputs and credit,” Sanjay Gupta, MD and CEO, National Commodities Management Services Limited, said.
As per ministry of cooperation data, co-operatives account for a fifth of agricultural loans disbursed, 35% of fertiliser distribution, 25% of soil nutrients production, and a fifth of the fisheries business.
According to the Economic Survey 2022-23, there are 0.85 million cooperatives in the country, with a membership of 290 million—mostly from marginalised and lower-income groups in the rural areas. At present, 98% of the villages in the country are covered by PACS.
To harness the potential of cooperatives, the Survey says, a new national cooperation policy is being formulated involving the relevant stakeholders such as experts, representatives from national, state, district, and primary level cooperative societies, officials from the Union ministry of cooperation, and the state governments.
