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Status of Implementation of Vaidyanathan Package in Madhya Pradesh on Short Term Cooperatives Revival and Reforms

Short Term Co-operative Credit Institutions have played a vital role in providing Short Term Credit to the Agricultural Sector .The STCCS, comprising Primary Agricultural Credit Societies (PACS) at the village level, District Central Cooperative Banks (DCCBs) at the intermediate level, and the State Cooperative Bank (SCB) at the apex level,

Over the past many years financial health of these institutions was on down trend. Accumulated losses in the STCCS were on increasing trend. Earlier various committees were set up to enquire into the problems faced by the CCS institutions and to make necessary recommendations for their revival but no concrete action was taken.

Government of India (GOI) had appointed a Task Force under the Chairmanship of Prof. A Vaidyanathan in 2004. The final Report of the Task Force was submitted to the GOI in February 2005. Government of

India

accepted the recommendations of the task force.

The Report submitted by the task force was also thoroughly examined by the State Government in the context of benefits of STCCS of the state and after examining the report, the GOMP had accepted the recommendations of the task force.

The Revival Package also focuses on introducing legal and institutional reforms, which will enable cooperatives to function as an autonomous and member driven institutions. These reforms will enable wider access to financial resources and investment opportunities, remove geographical restrictions in operations as well as mandated affiliations to federal structures, and provide administrative autonomy to co-operatives at all levels.

In addition to providing resources for covering the accumulated losses in the STCCS as on 31 March 2004, the Package also provides for maintaining cooperatives to a minimum level of CRAR and meets the costs of computerization of the accounting and monitoring system and specific human resource development initiatives at all the levels of the ST CCS. The sharing of the accumulated losses between GOI, State Government and the CCS is based on the concept of origin of losses rather than any arbitrary proportions.

The Government of Madhya Pradesh accepted the recommendations of the task force. To implement, recommendations made by the task force. State Govt. had executed an MOU with GOI and NABARD on 7th November, 2006

NABARD was designated as the implementing agency for the implementation of whole Revival Package. For monitoring Revival Package on regular basis at national level a National Level Implementing and Monitoring Committee (NIMC) has been constituted by the GOI to not only monitor the implementation of the Package regularly, but also to take necessary decisions on policy and operational matters. At the state level, State Level Implementing and Monitoring Committee (SLIC) under the chairmanship of Secretary Finance and similarly at DCCB Level District Level Implementing and Monitoring Committees (DLICs) have been constituted under the chairmanship of District Collectors.

To arrive at a true and fair assessment of the amount of accumulated losses required for PACS, DCCB and SCB special audit of these entire three tier institutions had been conducted on the basis of financial position of 31 March 2004. Process of Special audit of all 4520 PACS 38 DCCBs and SCB has been completed. In the first phase, financial assistance to the PACS was provided. Financial assistance for the PACS was provided on the basis of origin of there losses i.e., losses due to Credit Business, Public Distribution (PDS) business or other business etc.

For smooth Implementation of the Revival Package in the State, State Govt. had constituted State Level Implementing and Monitoring Committee (SLIC) under the Chairmanship of Principal Secretary, Finance. Till date 15 meetings of SLIC are being held in which financial assistance for 4520 PACS for Rs. 1814.69 crores had been approved similarly financial claims of Rs. 263.26 Crores for 37 DCCBs out of 38 have also been approved by the SLIC.

Category	No. of PACS	GOI Share	GOMP share	PACS Share	Total Claim
A	2371	655.29	48.91	72.30	776.50
B	1199	459.88	31.95	57.31	549.14
C	950	386.73	33.02	69.30	489.06
Total	4520	1501.90	113.88	198.91	1814.69

No. of DCCB

GOI

Share

GOMP

share

Total Share of GOI & GOMP

146.35

44.17

190.52

Under the Revival Package financial assistance is being provided to the PACS and DCCBs. Till date Rs. 1098.36 crores for PACS and Rs. 31.03 crores for DCCBs have been released .

Total Financial Assistance of Rs.665.22 Crores which is to be received from Govt. of India and Govt. of MP., out of this Rs.652.08 Crores from Govt. of India and Rs.13.14 Crores from Govt. of MP is pending for release.

For Institutional and legal reforms envisaged in the Revival Package, desired amendments in the present State Cooperative Societies Act., 1960 has been passed by the State Assembly and gazette notification has also been published on 13.12.2007.

For functioning of STCCS as autonomous and member driven Institutions State Govt. has withdrawn various administrative orders. wide letter no./credit/report/2006/3336 dt.16.11.2006 and letter no./Law/45(2)/1678 dated 31-07-2009 and Credit/Law/225/2010/128 dated 13-01-2010

Appointments of CEO in most of the DCCBs have been made as per Fit & Proper Criteria suggested by the RBI. Till date appointment of CEO in 35 DCCBs out of 38 has been made as per Fit & Proper Criteria and in remaining 3 DCCBs process is in progress.

Earlier PACS across the country were using different accounting systems which did not present true and fair picture of their financial status, to address this problem a Common Accounting System (CAS) had been designed by NABARD which will ensure transparency and application of prudent accounting methods and this is also emendable to both manual and computerized environments. Common Accounting System (CAS) has been made applicable in the state from the financial year 2007-08 by the RCS.

Under the Revival Package main thrust was given for HRD, for providing training to the elected Directors and Staff of the PACS, 190 District Trainers were trained at the Apex bank Training College , and Institute of Cooperative Management (ICM) Bhopal. These trained District Trainers had further provided training to 15274 PACS functionaries at District Level.

Under the Revival Package, Central Govt. is providing financial assistance for the PACS, for implementation of Computerization, development of MIS and Human Resource Development. In Madhya Pradesh PACS are playing a very important role in providing Short Term Cooperative Credit. PACS are having access to all villages of the state; therefore, State Govt. is planning to develop a complete Information & Technology based cooperative credit networking in the PACS to better serve the common man of the state. Looking to the various aspect of computerization, SLIC of the state has proposed to go for such a solution for PACS, so that the resource provided by the Central Govt. under the Revival Package can be smoothly integrated with the upcoming Cooperative Network. PACS should have all those compability of integration (Backward Integration up to Apex level) with the Apex Bank & DCCB so that they (PACS) may easily bring under the common platform of Information & Technology in due course.