The cooperative sector of Kerala, which is considered the locomotive of the economic activities at the grassroot level in the State, is in the throes of an unprecedented crisis with news of corruption and financial mismanagement of considerable proportions surfacing. The reports on the inability of over 100 societies to repay the money deposited by investors have made matters worse.
What was earlier discounted as stray incidents of corruption and mismanagement turned out to be occurring on a much larger scale, even as more and more irregularities were discovered in the CPI(M)-controlled Karuvannur Service Cooperative Bank in Thrissur district two years ago. The police had booked cases against the members of the director board of the bank and its staffers after the alleged financial fraud to the tune of over ₹100 crore was unearthed. The scam, which is arguably one of the biggest to be reported from the State, came to light after borrowers received legal notices for the recovery of loans for higher amounts than what they had borrowed.
The protest by a depositor, who was unable to withdraw his ₹30 lakh fixed deposit, with the dead body of his wife before the bank last week, once again brought the focus back to issues ailing the sector.
A recent reply given by the State Cooperative Minister on the floor of the Assembly that 164 societies in the State were in dire straits and unable to return the deposits to the investors was indicative of the impending crisis. The Minister’s clarification that it was mostly the welfare societies and not banks that have found themselves in trouble has not helped much to ease the situation.
Incidentally, there are no spheres in Kerala society which have been left untouched by the cooperative movement. The nearly 20,000 societies including the Primary Agricultural Credit Cooperative Societies and the urban cooperative banks together have a whopping net worth of over ₹2.5 lakh crore.
Though the Kerala cooperatives together account for only 1.7% of the total number of such institutions in the country, they handle around 70% of the total funds.
Given its potential to influence the lives of people through a host of financial and welfare schemes, both the CPI(M) and the Congress have been paying extra attention to maintain their presence and upper hand in the sector. While the CPI(M) controls nearly 60% of these societies, the Congress-led panels are calling the shots in the remaining ones. The Bharatiya Janata Party (BJP) has only a negligible presence in the sector.
Besides being able to handle the funds and wield significant political influence, the control of the societies also offers the political parties job opportunities for their cadre.
Though the recent scams have resulted in the significant erosion of public confidence in these institutions, both the ruling dispensation and the Opposition are handling the issue with caution, considering the disastrous consequences that a wrong step could cause the sector.
Even while holding the CPI(M) accountable for the scams, the Congress leadership appeared keen not to rock the boat considering the domino effect it would have on Kerala society.
The CPI(M), realising the damage the scams could cause to its political and pecuniary interests, has made every possible attempt to downplay the crisis and to picturise the recent controversies as attempts to destabilise the sector.
Any delay on the part of the State government in restoring public trust in these institutions could culminate in an all-round economic crisis with disastrous consequences and hit the interests of the State hard.
sudhi.ks@thehindu.co.in
