Challenges to Centre's diktat

Santosh Kumar

The ruling Left Front government in Kerala, unlike other state governments, has shown much alacrity in raising the banner of revolt against the Central government's decision to demonetise the old Rs1000 and Rs 500 notes.

Kerala Chief Minister Pinarayi Vijayan delivering the inaugural speech at a dharna against the alleged attempts by the Central Government to destroy the cooperative sector What prompted Chief Minister Pinarayi Vijayan and his entire Cabinet to sit on a day-long dharna in front of Thiruvananthapuram was the crippling of the State's cooperative movement due to what they termed the "myopic and egotistic" decision of Prime Minister Narendra Modi. Cooperative societies are the lifeline of not only the ordinary people of Kerala but also of political parties. That is why the move has got much public support in the state. Cooperative banks are virtually the backbone of Kerala's economy. Statistics on the credit cooperative societies speak for themselves: 1604 banks with over 2500 branches. The banks have a total membership of over 20 lakhs and are worth Rs 1,382 crores. Except for Rs 122 crores deposited by the government, the rest of the money belongs to the public. These banks have a total deposit of Rs 90,000 crores of which about Rs 75,000 crores is dispersed as loans. While the cooperative sector's lending-deposit ratio is about 80 per cent, the major public sector bank in Kerala, the State Bank, has a lendingdeposit ratio of only 52.6 per cent.
Most of this money is deposited in district cooperative banks and various that only a maximum of Rs 24,000 can be withdrawn per week is a body blow to these banks. In a way cooperative banks have been equated with individuals. There lies the crux of the problem. Moreover, the RBI through a directive on November 14 has barred cooperative banks from accepting the Rs 1000 and Rs 500 notes as deposits or exchanging them into the new currency. The people in the state depend more on these cooperative banks which have a wider network than any commercial bank. Hence any move to shackle the working of these state's economy which might lead to large-scale protests from the people. So it was not surprising that the CPMled LF government got the backing of all political parties in its decision to oppose this "draconian" move of the Central government.
Though there are some discordant voices within the opposition Congress-led United Democratic Front which was voted out of power in the May Assembly elections, by and large there is a common understanding that the move will only stifle the state economy. Ironically, a 2013 study by the RBI itself had highlighted the stellar role played by the cooperative sector in rural areas. The study further pointed out that most of the rural poor are dependent on these societies for their immediate financial needs and almost 60 per cent of the rural population holds membership in these societies. Other than Kerala, farmers in states like Mharashtra, Uttar Pradesh, Gujarat and Karnataka mostly rely on cooperative banks for farm loans.
The Reserve Bank and the Income Tax department contend that there is large scale black money stashed in these cooperative banks, The Central government agrees. The state BJP, though it controls a sizeable number of credit societies in north Kerala, has been raising this issue for quite some time and is now insisting that it is those with black money who are behind this agitation. The party demands that these banks be brought under the norms of RBI, which means that these banks cannot lend farmers loans without interest. Nor they will be able to run medical shops and other business establishments and also promote housing projects for the homeless.
It is a known fact that most of these banks accept deposits without strictly following the KYC (know your customer) norms. Many of these banks have been and are under the scanner for money laundering. In a state like Kerala political parties vie with each other in taking control of these societies. Elections to the cooperative banks are as intense as a general election. There is a general belief among the public that political parties misuse these banks to hide their ill-gotten wealth. Most of these are deposited in fake accounts of nonexistent individuals.

No political party is above suspicion. Moreover, the CPM had been singled out in the past for using or misusing the cooperative movement to widen its support base. Critics of the CPM rightly point to the party-owned Rs 30-crore water theme and amusement park at the famous temple town of Parassinikadavu in Kannur district, a known Marxist stronghold.
The park was set up despite strong protests from environmental groups. Kannur district also occupies a prime place in the state having maximum number of cooperative societies and the project is managed by CPM controlled Malabar Tourism Development Cooperative Society Limited. The same is the case with Pariyaram Medical College, again in Kannur.

Ever since CPM took complete control of this first self-financing medical college under the cooperative sector in the country in 2007, it was plagued with corruption charges and was accused of accepting huge amounts as capitation fees. Though CPM has brushed aside all allegations regarding diverting money from its cooperative banks for business purposes, a big question mark hangs over these and a couple of other establishments controlled by the party.
But these faults cannot be cited as reasons to tarnish the role of the cooperative movement as a whole in rural Kerala. Nor is it a reason to put a blanket ban on the activities of cooperative societies. If the Centre, as alleged by all political parties, except the BJP in the state, is trying to clamp down on these societies in the name of flushing out black money it is definitely unwarranted. For people believe that this is just another bid by their corporate friends who had financed his election campaign in 2014.

Even the Supreme Court has criticised the Centre's move to block those who approach high courts for relief against this 'draconian' measure and has even warned of riots in the country. At the same time, it is worthwhile for political parties to cleanse the system of any wrongdoing. The cooperative movement has played a definite and positive role for the betterment of rural poor dating back to preindependence days.

The support given by the people of Kerala for the anti-Centre movement launched by the LDF government is a reflection of the sentiments of those millions who have been queuing up in front of banks and ATMs across the country for days.

It is time Narendra Modi and his ministers realise that every movement against their government cannot be branded as anti-national. Nationalism, after all, is not the birthright of the BJP and the Sangh Parivar alone.



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Kerala Chief Minister Pinarayi Vijayan delivering the inaugural speech at a dharna against the alleged attempts by the Central Government to destroy the cooperative sector What prompted Chief Minister Pinarayi Vijayan and his entire Cabinet to sit on a day-long dharna in front of Thiruvananthapuram was the crippling of the State's cooperative movement due to what they termed the "myopic and egotistic" decision of Prime Minister Narendra Modi. Cooperative societies are the lifeline of not only the ordinary people of Kerala but also of political parties. That is why the move has got much public support in the state. Cooperative banks are virtually the backbone of Kerala's economy. Statistics on the credit cooperative societies speak for themselves: 1604 banks with over 2500 branches. The banks have a total membership of over 20 lakhs and are worth Rs 1,382 crores. Except for Rs 122 crores deposited by the government, the rest of the money belongs to the public. These banks have a total deposit of Rs 90,000 crores of which about Rs 75,000 crores is dispersed as loans. While the cooperative sector's lending-deposit ratio is about 80 per cent, the major public sector bank in Kerala, the State Bank, has a lendingdeposit ratio of only 52.6 per cent. Most of this money is deposited in district cooperative banks and various that only a maximum of Rs 24,000 can be withdrawn per week is a body blow to these banks. In a way cooperative banks have been equated with individuals. There lies the crux of the problem. Moreover, the RBI through a directive on November 14 has barred cooperative banks from accepting the Rs 1000 and Rs 500 notes as deposits or exchanging them into the new currency. The people in the state depend more on these cooperative banks which have a wider network than any commercial bank. Hence any move to shackle the working of these state's economy which might lead to large-scale protests from the people. So it was not surprising that the CPMled LF government got the backing of all political parties in its decision to oppose this "draconian" move of the Central government. Though there are some discordant voices within the opposition Congress-led United Democratic Front which was voted out of power in the May Assembly elections, by and large there is a common understanding that the move will only stifle the state economy. Ironically, a 2013 study by the RBI itself had highlighted the stellar role played by the cooperative sector in rural areas. The study further pointed out that most of the rural poor are dependent on these societies for their immediate financial needs and almost 60 per cent of the rural population holds membership in these societies. Other than Kerala, farmers in states like Mharashtra, Uttar Pradesh, Gujarat and Karnataka mostly rely on cooperative banks for farm loans. The Reserve Bank and the Income Tax department contend that there is large scale black money stashed in these cooperative banks, The Central government agrees. The state BJP, though it controls a sizeable number of credit societies in north Kerala, has been raising this issue for quite some time and is now insisting that it is those with black money who are behind this agitation. The party demands that these banks be brought under the norms of RBI, which means that these banks cannot lend farmers loans without interest. Nor they will be able to run medical shops and other business establishments and also promote housing projects for the homeless. It is a known fact that most of these banks accept deposits without strictly following the KYC (know your customer) norms. Many of these banks have been and are under the scanner for money laundering. In a state like Kerala political parties vie with each other in taking control of these societies. Elections to the cooperative banks are as intense as a general election. There is a general belief among the public that political parties misuse these banks to hide their ill-gotten wealth. Most of these are deposited in fake accounts of nonexistent individuals. No political party is above suspicion. Moreover, the CPM had been singled out in the past for using or misusing the cooperative movement to widen its support base. Critics of the CPM rightly point to the party-owned Rs 30-crore water theme and amusement park at the famous temple town of Parassinikadavu in Kannur district, a known Marxist stronghold. The park was set up despite strong protests from environmental groups. Kannur district also occupies a prime place in the state having maximum number of cooperative societies and the project is managed by CPM controlled Malabar Tourism Development Cooperative Society Limited. The same is the case with Pariyaram Medical College, again in Kannur. Ever since CPM took complete control of this first self-financing medical college under the cooperative sector in the country in 2007, it was plagued with corruption charges and was accused of accepting huge amounts as capitation fees. Though CPM has brushed aside all allegations regarding diverting money from its cooperative banks for business purposes, a big question mark hangs over these and a couple of other establishments controlled by the party. But these faults cannot be cited as reasons to tarnish the role of the cooperative movement as a whole in rural Kerala. Nor is it a reason to put a blanket ban on the activities of cooperative societies. If the Centre, as alleged by all political parties, except the BJP in the state, is trying to clamp down on these societies in the name of flushing out black money it is definitely unwarranted. For people believe that this is just another bid by their corporate friends who had financed his election campaign in 2014. Even the Supreme Court has criticised the Centre's move to block those who approach high courts for relief against this 'draconian' measure and has even warned of riots in the country. At the same time, it is worthwhile for political parties to cleanse the system of any wrongdoing. The cooperative movement has played a definite and positive role for the betterment of rural poor dating back to preindependence days. The support given by the people of Kerala for the anti-Centre movement launched by the LDF government is a reflection of the sentiments of those millions who have been queuing up in front of banks and ATMs across the country for days. It is time Narendra Modi and his ministers realise that every movement against their government cannot be branded as anti-national. Nationalism, after all, is not the birthright of the BJP and the Sangh Parivar alone.