Re-positioning the Registrar of Co-op Societies in South Asia (1996)


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    This document has been made available in electronic format
         by the International Co-operative Alliance ICA 
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                         July, 1996

     (Source: Review of International Co-operation, 
     Vol.89,  No.2/1996, p.40-46)
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          Re-positioning the Registrar of Co-op Societies
                         in South Asia
                      by Krishan K. Taimni*
          **********************************************


The institution of the Registrar of Co-operative Societies in
South Asia (Bangladesh, India, Pakistan and Sri Lanka) is over
90 years old; it has passed through several momentous phases
of political, social and economic change, and has survived,
gained strength and made considerable contribution,
particularly to state-induced change processes. What bestowed
a unique role and position on this institution was the
character of the State - its underlying purpose of governance,
its approach to resolving social and economic issues and its
perception of its own place and position vis-a-vis the civil
society.

After the countries in the region attained independence, the
prime concern of the new governments was with national
consolidation, rural reconstruction, and economic development.
Co-operatives, combining as they did some degree of popular
participation and government control under the foreign rulers
were perceived to be ideally suited to become effective
instruments for implementing government development plans and
policies. The role and place of the Registrar of Co-operative
Societies thus came to be redefined; partly through enactments
of new legislation governing co-operatives and partly by
virtually co-opting co-operatives into the new state supported
and sponsored institutional structures of development
ministries, para-statals and co-operatives.

In this milieu, the  effectiveness of the Registrar of Co-
operative Societies was measured in terms of his or her
ability to "harness" co-operatives as instruments of
government policies. And that has remained the case, despite
all talks of de-officialisation and democratic control in co-
operatives and the sanctity of the Co-operative Principles.
The positioning of the Registrar in such a scheme was
politically determined and functionally related to the role
accorded to co-operatives in the overall development plans of
the country. 

The new, emerging context, with its emphasis on privatization,
liberalization and market-orientation, will be vastly
different for co-operatives. It threatens to knock down the
base on which present-day co-operatives stand, but also to
provide new opportunities for co-operatives.  The re-
positioning of the Registrar, which has become inevitable due
to the new, emerging context, should ensure that present-day
state-controlled co-operatives can make the transition to
genuine, member-controlled co-operatives. 

Options in Re-positioning
-------------------------
The following points need to be considered before determining
the new positioning of the Registrar in the countries under
study.

Government Involvement in Co-operatives
---------------------------------------
Governments in the Asian Continent have always been closely
involved with co-operatives, had a policy for their
development and growth and special arrangements to provide
capital and credit to them. A host of unstated nationalistic
and political considerations and compelling social reasons
have positively influenced the governments towards co-
operatives. The support and assistance that governments in
Asia have long provided to co-operatives are deep-rooted,
eclectic and intricately woven into the political fabric of
the countries in the region. 

Accordingly, two aspects of co-operatives in Asia will always
remain valid, irrespective of the trajectory these might take
on in the future: close involvement of the government in the 
"development" of co-operatives; and the assured flow of
capital and assistance from government to at least some types
of co-operatives.

Role of the Apex Co-ops
-----------------------
The one issue in co-operative development on which there has
been near-unanimity is that co-operative federations should
eventually assume the responsibility for performing all
promotional and developmental functions for their affiliated
primaries. The role of registrar could thus be down-scaled;
and an federation of integrated, self-sustaining co-operative
structure developed. Two factors have retarded this process:
reluctance on the part of the registrar to transfer the
supervisory, developmental and promotional role to the
federations; and highly artificial relations, which are devoid
of any mutual stakes in each others' performance between the
federations and their affiliated units; lack of mutual inter-
dependence, and the absence of any real possibility for
primaries to control their apex organisations.

Co-operative integration - achieving integration between the
different tiers in the vertical structure of co-operative -
has been a subject of debate and discussion in the
international circles for a number of years. Yet no clear
framework is available to attain this goal. 

Repositioning of the Registrar
------------------------------
At present, the Registrar plays the following major roles:

-    Statutory ( external to co-operatives)
-    Statutory ( internal to co-operatives)
-    Promotional
-    Developmental
-    Auditing
-    Liaison

Statutory (external to co-operatives)
-------------------------------------
The statutory role can be described on a continuum; of which
one extreme is the position as in the Peoples' Republic of
China. Here there is no specific co-operative law, only some
administrative orders which govern co-operatives. The
Registrar, or his equivalent in the government hierarchy,
virtually  manages agricultural as well as supply and
marketing co-operatives. 

Since China does not have any specific co-operative law, co-
operatives are established,  and in turn, operate according to
rules and regulations drawn up by the respective government
agencies. These agencies draw up bye-laws, internal rules and
regulations, personnel policies, and accounting procedures.
The concerned ministries provide guidance in implementing
government policies. Commenting on the experiences of co-
operatives in China, a Chinese scholar had this remark to
make:

"A co-operative (in China) has no clear identity of its own
vis-a-vis state run enterprises or any other general
enterprises of collective ownership, it is attached to
government administration, operates in the light of
governmental regulations, and has no independence ... In order
to carry out Co-operative Reform, a Co-operative Law must be
enacted as soon as possible, so that the proprietary rights of
co-operatives are recognized and safeguarded".

On the other extreme is the position, as in the Philippines,
where the Co-operative Code specifically forbids staff of the
Co-operative Department from interfering with the internal
affairs of the co-operatives.

The Co-operative Code of the Philippines, which states:

Article 2. Declaration of Policy 
--------------------------------
It is the declared policy of the State to foster the creation
and growth of co-operatives as a practical vehicle for
promoting self-reliance and harnessing people power towards
the attainment of economic development and social justice. The
State shall encourage the private sector to undertake the
actual formation and organization of co-operatives and shall
create an atmosphere that is conducive to the growth and their
development.

Toward this end, the Government and all its branches, ...  ...
shall ensure the provision of technical guidance, financial
assistance and their services to enable said co-operatives to
evolve into viable and responsive economic enterprises and
thereby bring about a strong co-operative movement that is
free from any conditions that might infringe upon the autonomy
or organizational integrity of co-operatives.

Further, the State recognizes the principle of subsidiarity
under which the co-operative sector will initiate and regulate
within its own ranks the promotion and organization, training
and rsearch, audit and support services relating to co-
operatives with government assistance, where necessary.

The conclusions arrived by some co-operators in an ILO
sponsored Colloquium on the Relationship between the State and
Co-operatives in co-operative legislation are worth noting.
While, one school of thought held the view:

"Many consider co-operatives as being private business
organizations of mature citizens, which have to work on their
own with the chance to either succeed or fail. The advocates
of this approach see state control over co-operatives not only
as unnecessary, but as detrimental. They argue that for
decades state control has been misused for administrative or
political purpose, that it is expensive and largely
ineffective and does more harm than good. Accordingly,
extensive government services for supervising co-operatives
(like co-operative departments) should be abolished (as has
been done during the last few years, for instance in Senegal
and Cameroon) and replaced by simple registration services,
leaving promotional and auditing work to co-operative
organizations or NGOs, and disputes to be ultimately settled
in court."

The other school of thought held:

"Some form of state control will be necessary for some time
but such control should be temporary, digressive and self-
liquidating; i.e. it should be transferred to co-operative
organizations after a period of gradual, strategic withdrawal
of government from co-operative affairs. It is argued that an
abrupt change from maximum control to maximum liberty would
have negative effects and that planned and phased transfer of
tasks combined with efforts to build up co-operative
institutions would be better ..."

This latter view approximated the reality of the South-Asian
countries under study. 

Within this continuum, the present position of the Registrar
in  South Asia, is closer to the Chinese than the one in the
Philippines. This position ought now to move and come closer
to the position prevailing in the Philippines. The statutory
role assigned to the Registrar in the draft Multi-State Co-
operative Societies Act of 1991 in India provides a good basis
for crafting a more balanced and desirable role for the
Registrar, keeping in view the needs and expectations of co-
operatives. The draft Law restricts the powers of the
Registrar, besides the general administration of the Co-
operative Law, to the following:

-    Registration,

-    Receiving of Returns/Reports including Audit Reports,
     Annual Reports, Information on election to Boards of
     Directors, etc., 

-    Holding of inquiry,

-    Dissolution on request or on its own violation, and the
     appointment of liquidators.

These powers of the Registrar should prove to be adequate to
ensure public good, and at the same time, provide enough
flexibility to co-operatives to become and remain autonomous
in the new environments. 

Statutory (internal to co-operatives)
-------------------------------------
There were three functions of the Registrar - all pervading,
ubiquitous and bordering on intrusion into the internal
affairs of co-operatives - that vitiated the climate for co-
operatives, particularly at the primary level. These were
supervision, inspection and audit. All were bestowed on the
registrar with noble intent, but all provided opportunities
for the minor field-level co-operative department officials to
play havoc with the co-operatives. At times, un-wary co-
operative leaders, staff and members have been deprived of
their rights by such officials on the pretext of effective
supervision and inspection. These functions had also been
utilized to exploit co-operative staff and leaders and cajole
them to "entertain" inspecting officials. As was brought out
during field studies, most officials of the co-operative
departments were not really that qualified and equipped to
guide, supervise and inspect co-operatives; nor indeed was
there any need for such "help" from the department. Members,
their leaders, federal co-operatives and NGOs (which should
hopefully step in once the space is vacated by the inspectors
of the co-operative department) could be trusted to perform
all such functions with more sincerity and devotion.   

Among the statutory powers of the Registrar of Co-operative
Societies that impinge on the internal working of the co-
operatives in the four countries in South Asia, the following
were generally identified to be those that most violate the
spirit of autonomy and self-governance:

-    Powers to order compulsory amendment of bye-laws,
     amalgamate and divide co-operatives;

-    Powers of veto of government nominee;

-    Powers to rescind/annul resolution of a board of
     directors of a co-operative;

-    Powers to supersede  elected Boards of directors of a co-
     operative;

-    Powers to issue directive to co-operatives;

-    Powers to put restriction on the term of office of the
     office-bearers of a co-operative;

-    Powers to impose restrictions on holding office in a
     number of co-operatives simultaneously; and

-    Powers to resolve internal disputes.

Three major reasons could be discerned for including the above
restrictive features in the relevant co-operative legislation.
These were: curb vested interests; protect government
financial interests in co-operatives; ensure uniformity in the
implementation of public policies/programmes. Underlying these
considerations was the paradigm of the time - co-operatives as
instruments of the government must not be only funded and
supported but also closely controlled and "managed". It is
however widely believed that the above steps taken by
governments proved to be clumsy, misplaced and, in the long
run, completely dysfunctional. 

It would be thus appropriate that in the new environments all
those aspects of the statutory role of the Registrar of Co-
operative Societies that touch ( eg. resolving disputes)
and/or impinge directly or indirectly on the imperatives of
self-governance, management, and internal working and
operations of co-operatives must be eliminated. 

The second step that the governments in the region should
seriously consider is to effectively de-bureaucratize the
position of the Registrar and Co-operative Department. Here
again, some lessons can be derived from the experience of the
Philippines. In fact, the recommendations made by the
Committee on Model Co-operative Law by the Indian Planning
Commission in 1991, already provides a good starting point.
The Committee recommended:

Appointment of the Registrar
----------------------------
1.   The state government may appoint a registrar and other
     officers as it thinks necessary for the registration of
     co-operatives under this Act and for such other functions
     as specified under this Act.

2.   Only such persons may be appointed as registrar as have:

     a.   served as a senior officer of the government for at
          least 3 years in the co-operative department; or

     b.   served as chief executive for at least 3 years in
          any co-operative; or

     c.   held a senior position or faculty position for at
          least 3 years in any co-operative promotional body
          or academic institution dealing with co-operation.  

3.   The term of office of a registrar shall be at least three
     years.

There is a dire and pressing need to turn the widely-perceived
role of the Registrar from that of a regulator to that of a
facilitator. The appointment of a non-official as the
Registrar can help change this perception. The Registrar must
come to be seen in the new environments as an authority that
intervenes, and intervenes with full force, but only when a
serious lapse has occurred, or a real wrong is detected or
gross violation of the law is observed. Otherwise, co-
operatives are free to chart their future in the best
interests of their members as well as their elected
representatives are capable of. This scenario, of course
includes, the possibility that some co-operatives would
collapse and wither away on account of losses, inefficiency or
sheer mismanagement.  

Other Roles
------------
The Registrar plays four types of other roles namely:
promotion; development; auditing of co-operatives; and liaison
with other agencies of the government. In so far as promotion
is concerned, he helps create opportunities for the expansion
of co-operatives by influencing public policies; organizing
new co-operatives; and, preparing, appraising and recommending
projects on behalf of co-operatives. 

The promotional role of the Registrar should be supportive of
and subordinate to the roles of the NGOs, apex co-operative
organisations, district central co-operative banks and other 
financing and development agencies. The district co-operative
banks should take the promotional role in respect of such co-
operatives which still do not have an apex or federation of
their own.

The major developmental roles played by the Registrar in the
four countries under study included: training of staff;
education of members and committee members; provision of
information; and deputing government officers to man senior
managerial positions. Similarly, the registrar liaised with
other departments/agencies of the government in order to seek
support, assistance, concessions and even business for co-
operatives. 

In the new environments, neither the co-operative should not
expect the registrar to play any of the above roles, nor
should the registrar venture in to any of the above areas. The
impact of the registrar's role in the past has been dismal in
many of these areas; and in the new context co-operatives can
not possibly strive for self-reliance while depending on the
registrar for staff training and the education of their
members. Thus no developmental role is envisaged for the
registrar in the new context.

It was stated during the field studies that auditing should be
separated from co-operative administration; it was also
admitted that government auditors were not always fully and
professionally qualified to audit large complicated co-
operative enterprises. It was also conceded that the volume of
work was too large for the government to ensure the regular
auditing of all the co-operatives under their charge.
Privatization was suggested, but given the low paying capacity
of co-operatives, there was serious doubt that any qualified
private auditor would be interested in taking up the audit of
small co-operatives. It was in this context that co-operative
federations and district central co-operative banks should
play a more significant role in ensuring that all co-
operatives are regularly, properly, and timely audited. 

Conclusion
-----------
To sum up the discussions it is suggested that, in the future,
the Registrar should be so positioned that co-operatives can
truly become autonomous, self-governing and peoples' own
institutions. The statutory role of the registrar should be
revised to cover only the main functions such as registration,
dissolution, and administration of the Co-operative Law. The
registrar should be legally barred from having any statutory
powers that might impinge on the autonomy and internal
management and operations of co-operatives. 

Other important roles, such as those relating to the promotion
and development of co-operatives, auditing, holding of
elections to the boards of directors, and liaison with various
government agencies, departments and institutions should be
gradually taken over by the co-operatives themselves, or by
financing and development agencies.

This is how co-operatives could be de-regulated and given a
real chance to prove their mettle in the competitive setting
of a free market.

---------------------
* Mr. Taimni is Regional Coordinator for Asia-Pacific, ILO
COOPREFORM/COOPNET Programmes, based in Pune, India. (This is
an abridged and edited version of the paper presented at the
Co-operative Research Forum in Manchester on 17-18 September,
1995. It is based on a study sponsored by the Food and
Agriculture Organization of the United Nations (FAO), Rome.
The author alone is responsible for the views expressed here.)