97th Constitutional Amendment Act 2011 – Indian Polity Notes
The 97th Constitutional Amendment act gives legal recognition to the cooperative organizations working in India.
It amends Article 19 inserting 19(1)(c) giving right to the people to form cooperative societies taking economic activities as a fundamental right. The idea was these organizations focus on economic and financial development of the people in rural India.
The 97th Constitutional Amendment Act of 2011 gives co-operative societies constitutional status and protection.
- The 97th Constitutional Amendment Act was intended to guarantee democratic and independent functioning of the cooperatives.
- It also aimed at opening up management with members and other stakeholders.
Amendments made by the 97th Constitutional Amendment Act
The 97th Constitutional Amendment Act of 2011 made the following three amendments:
- Right to form cooperative societies (Article 19)
- Directive Principle of State Policy (DPSP) to promote Cooperative Societies (Article 43-B).
- Added a new part – Part IX-B to the Constitution titled “The Co-operative Societies” (Article 243-ZH to 243-ZT).
- Part IX-B to guarantee democratic, independent, professional, and economically sound running of the cooperatives societies in India.
- Authorizes the Parliament to establish relevant laws in case of multi-state cooperative societies, and state legislatures in case of other cooperative societies.
Provisions of Cooperative Societies under various sections of the Indian Constitution
- Cooperative Societies is a state subject under Entry 32 of the State List in the Seventh Schedule.
- Cooperative Societies were inserted in Part III of the Indian Constitution under Article 19(1)(c).
- Article 43-B of the DPSP mentions – “the state shall endeavor to promote voluntary formation, autonomous functioning, democratic control, and professional management of cooperative societies”.
- Part IX-B of the Indian Constitution has some provisions concerning cooperative societies.
Provisions under Part IX-B for Cooperative Societies
- Democratic set up for incorporation, regulation, and dissolution of cooperative societies.
- Maximum numbers of directors in a cooperative society cannot exceed 21.
- A fixed period of 5 years as a tenure of the nominated board members from the day of election.
- Independent audit.
- Periodic reports to be produced before the State Government on the activities and accounts of Cooperative Societies.
- Right to information for the members of the Cooperative Society.
- 1 Reserved Seat for Scheduled Caste/Tribe and 2 reserved seats for women in the board of all cooperative societies.
- Penalties for offenses relating to cooperative societies.
- Election of a board to be held prior to expiration of the board’s term.
- Each cooperative society must file returns with the designated authority within six months of the end of a fiscal year.
Cooperative Societies
Articles Related to Cooperative Societies
| Article | Provision |
| 243ZH | Includes definition of the Cooperative Societies |
| 243ZI | Talks about incorporation of Cooperative Societies |
| 243ZJ | Number and Term of Members of Board and its Office Bearers |
| 243ZK | Election of Members of Board |
| 243ZL | Supersession and Suspension of Board and Interim Management |
| 243ZM | Audit of Accounts of Co-operative Societies |
| 243ZN | Convening of General Body Meetings |
| 243ZO | Right of a Member to Get Information |
| 243ZP | Returns |
| 243ZQ | Offenses and Penalties |
| 243ZR | Application to Multi-state Co-operative Societies |
| 243ZS | Application to Union Territories |
| 243ZT | Continuance of Existing Laws |
Significance of the 97th Constitutional Amendment Act 2011
- Addressed management issues of cooperative societies
- The amendment enacted uniformity to cooperative society management.
- Ensured cooperative societies remained immune to political interference in their functioning.
- Helped give certain sectors more autonomy while emphasizing uniformity across the country.
- Co-operative societies have helped the national economy with contributions to various sectors, the amendment act in turn has helped in a proper accountability of all the members while giving it autonomy, thus, enabling better governance in the functioning of cooperative societies.
Criticism
- More autonomy could further risk precedence of managerial elements in the cooperative societies, suppressing the voice of the members.
- Insufficient room for effective state intervention.
- It has been observed that increased autonomy has led to significant increase in the number of cooperative societies, but the quality of performance of these cooperative societies have been sub-optimal.
- State Level Politicians have been known to form many self-funded cooperative societies to build vote banks, under the garb of development.
- More number of in news NPAs of cooperative societies than commercial banks. Example – PMC Crisis.
- Infrastructural weakness due to less shareholder participation.
- Regional variations in Cooperative Movement with limited success in some most fertile lands due to lack of human resource utilization and its expertise.
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