The Amul-Nandini controversy that has stirred public conscience in Karnataka during the election has actually been stemmed from the perceived threat to not only the state’s co-operative Nandini, but serves as an example indicating the real intention of the Centre of controlling all cooperative societies of the country through innovative stratagems eroding constitutional federalism in respect of states and turning cooperative societies subservient to private money and Central control.

A cooperative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise, and are based on values of self-help, self-responsibility, democracy, equality, equity and solidarity. It is a State subject under the Constitution of India, and free from the clutches of the Centre and the private money. Obviously, the forces that wants a strong government in the Centre and showing a special love for the private sector have lately been super active.

Nandini, the brand name of the Karnataka Milk Federation (KMF) having 16 vibrant district milk cooperatives giving livelihood opportunity to 16 lakh farmers of the state, is the second largest cooperative enterprise in the country with a turnover of around Rs25,000 crore as per the latest data for 2021-22. The largest one is Amul of Gujarat with turnover of Rs65,000 crore. To better understand the controversy, it should also be taken into account that India has a dairy business of Rs15 lakh crore, of which hardly 10 per cent are in the organized sector.

It should also be noted that the cooperative movement in India traces its origin to the agriculture and allied sector and was originally evolved as a mechanism for pooling the people’s meagre resources. PM Modi have been showing his interest in bringing corporate to farm sector is obvious in his governments enactment of the three controversial farm sector legislation in 2020, which was done without consultation with the stakeholders farmers and the states despite its being in the State list, but had to be withdrawn by him in November 2021 after a year of historic protest by farmers.

Milk production and dairy comes under agriculture, and hence in the state list. Cooperative is also in the State list. However, the Centre did not consult stakeholder farmers, cooperative enterprises, or the states before bringing MSCS Bill in the Lok Sabha on December 7, 2022. The Bill seeks to amend the MSCS Act, 2002, brought during the PM AB Bajpayee led BJP government. The bill was then referred to a Joint Parliamentary Committee on December 20, 2022, that has submitted its report on March 15, 2023.

Under the Constitution (Ninety Seventh Amendment) Act, 2011 all Central and State Cooperative Acts were to be aligned with this amendment, but it fell into legal roadblock. Gujarat High Court had struck it down in 2013, as it required ratification of the majority State Legislatures as per the specific provision of Article 368(2) of the Constitution of India. Subsequently, Supreme Court of India in its majority judgement of 2021 uphold the decision, but allowed setting up of ‘multi-state co-operative societies’.

Union Ministry of Cooperation came into existence in 2021 by carving out the cooperative division of the Union Ministry of Agriculture and put this comparatively insignificant department until then under charge of a cabinet minister Amit Shah, second-in-command in Modi government as Union Minister of Home. This very move shows there is something more than what meets the eyes.

The Union Ministry of Cooperation then said that the MSCS Act 2002 needs to be amended to make it in consistence with the Supreme Court judgement and to plug loopholes in the existing legislation and to strengthen governance in the Multi State Cooperative Societies. It is in this backdrop MSCS Act (Amendment) Bill 2022 was brought in December 2022.

Before going into details into the proposed amendments, certain announcements of Amit Shah are worth mentioning. On March 10, 2023, he announced that the Centre was going to set up independent dairies at two lakh panchayats in the country, to be tied with export oriented MSCS enterprises led by Amul, signaling that either the existing co-operatives become part of Amul empire or cease to exist in competition. Modi government has earlier announced on January 11, 2023 the decision of formation of three MSCSs dedicated to export promotion, and just after the announcement Amul was designated as the promoter of milk export society on January 19, 2023.

On April 5, 2023, Amul announced their intention to enter the fresh milk and curd sector in Karnataka, where the Nandini has been supplying milk and some milk products. Amit Shah had given a call in December 2022 for the merger of AMUL and Nandini. It was for a Multi State Cooperative Milk Society only to be centrally controlled through infusion of big private capital by big corporates, which is clear by the provisions of the MSCS Act amendment bill of December 2022.

It should also be noted that Amit Shah had announced some months back in Sikkim that a Multi State Milk Cooperative had been formed through merger of five milk co-operatives. It has been done without consulting the sates despite cooperatives are their subject. Within weeks of the formation of the new ministry the Centre had announced setting up of a private investment accelerator Dairy Investment Accelerator under its Investment Facilitation Cell. FICCI an CII has also been lobbying for infusion of private capital in dairy sector cooperative enterprises. India had to withdraw from multi nation Regional Comprehensive Economic Partnership (RCEP) negotiations initiated in 2019, in which zero-duty market access in dairy sector was proposed for some global dairy sector giants, after being stiffly opposed by Indian business and industries.

The intentions of Modi government are even more clear by the MSCS amendment bill 2022, which will give the Centre the power to restrict redemption of its shareholding in multi-state co-operative societies. Critique says that such a provision would go against the co-operative principles of autonomy and independence. Secondly, the multi-state cooperative societies will also be financed through contributions by profitable multi-state co-operative societies which would effectively impose a cost on well-functioning societies. Hence, this amendment is seen as an effort of looting cooperative earnings, which has been the chief cause of failures of earlier cooperative movements of the country.

The Joint Parliamentary Committee has suggested several changes in the proposed amendments on objection of several stakeholders including of the Reserve bank of India (RBI). On government’s assurance that their concerns will be taken care of, the Committee has decided to accept several provisions of the Bill, while certain members have given dissent notes. Several members found certain provisions totally unacceptable since those do not justify the cooperative character.

Nevertheless, the usurpation of the cooperative sector by the private corporates and the Centre through legislation in utter disregard to the states and the other stakeholders such as farmers would be against the principle of co-operative federalism of the country.