Cooperative Sector Key to India's Economic Growth, PACS Modernization a Priority: Amit Shah

Union Home Minister and Minister of Cooperation Amit Shah highlighted the critical role of the cooperative sector in India’s rural transformation during the Diamond Jubilee Celebrations of the National Federation of State Co-operative Banks Limited (NAFSCOB). Held at Bharat Mandapam in New Delhi, the event also included a national meeting of Rural Cooperative Banks. Accompanied by Union Ministers of State for Cooperation, Krishan Pal and Muralidhar Mohol, Shah highlighted both the achievements and challenges of the cooperative movement over the past six decades.

In his speech, Shah highlighted the indispensable role of India’s three-tier cooperative structure, comprising Primary Agricultural Credit Societies (PACS), district cooperative banks, and state cooperative banks, in supporting the agricultural sector and rural communities. He lauded these institutions for their seamless provision of short-term agricultural loans to 13 crore farmers, enabling significant progress in agriculture and village development. He remarked, “Without this structure, it would have been impossible for India to achieve its agricultural milestones during 75 years of independence.”

Shah also pointed to the broader vision behind the establishment of the Ministry of Cooperation in 2021. Rooted in the mantra of "Sahkar Se Samriddhi" (Prosperity through Cooperation), the ministry aims to ensure inclusive development, benefiting farmers, women, and marginalized communities. He linked this approach to Mahatma Gandhi’s vision of Gramin Swaraj (rural self-rule) and its modern-day realization under Prime Minister Narendra Modi's leadership. Shah highlighted the government's ambition to make India the world’s third-largest economy by 2027, with the cooperative sector playing a pivotal role in achieving this milestone.

Acknowledging the challenges within the cooperative sector, Shah identified unequal treatment, the absence of a seamless legal framework, and long-standing inefficiencies as critical barriers. He called for greater transparency and modernization, especially at the PACS level, which he described as the backbone of the cooperative ecosystem. “Strengthening PACS is essential for district and state cooperative banks to remain relevant,” he stated, adding that these institutions must adopt advanced technologies to improve transparency and operational efficiency.

The Home Minister outlined several reforms introduced by the Modi government to strengthen PACS. Notably, he highlighted the adoption of new model Bye-Laws, which expand the scope of PACS activities. These now include operating Jan Aushadhi Kendras, managing fishermen's committees, and running dairies. Additionally, PACS have been empowered with fertilizer and drug licenses, and over 39,000 PACS have been converted into Common Service Centers (CSCs), offering more than 300 essential services in villages. Shah emphasized that these measures would enhance the financial viability of PACS and, by extension, strengthen district and state cooperative banks.

Shah also praised NAFSCOB for its pivotal role in the cooperative banking sector. Established in 1964 by Dr. Dhananjayrao Ramchandra Gadgil and Maganbhai Patel, NAFSCOB has been instrumental in guiding cooperative banks and maintaining transparency through accurate data collection. “The transparency of NAFSCOB’s data, with an accuracy rate of 99.72%, has been crucial for drafting agricultural loan strategies across the country,” Shah noted. He urged NAFSCOB to lead efforts in modernizing PACS and achieving their total computerization.

Highlighting the economic potential of cooperatives, Shah cited the success of the White Revolution driven by Amul, whose annual turnover has reached Rs 80,000 crore, largely supported by district cooperative banks. He called on other cooperative banks to adopt similar models to enhance profitability and operational capacity. He further emphasized the importance of fostering cooperation among cooperatives, suggesting that if all cooperative entities channeled their accounts through district cooperative banks, it would result in a 20% increase in low-cost deposits, ultimately boosting profits and lending capacity.

Shah also announced ambitious plans to expand cooperative banking infrastructure. He revealed that district cooperative banks would be established in 80% of the country’s districts within five years. This expansion, coupled with the introduction of long-term financing options through PACS, is expected to drive significant growth in the sector.

Concluding his address, Shah reiterated the transformative potential of the cooperative movement. He asserted that it could serve as a foundation of India’s economic growth, providing employment, respect, and prosperity for the nation’s 140 crore population. He called on state and district cooperative banks to align with the Ministry of Cooperation’s vision to achieve shared prosperity and realize the sector's full potential.