Maharashtra votes 2024: How cooperatives, RDBs became twin lynchpins of state politics

The state has nearly 22,000 agricultural credit societies, which are the bedrock of the cooperatives network, offering short-term agricultural credit to farmers

In January 2022, with more than two years left for the next Lok Sabha election, Union Home Minister and Cooperation Minister Amit Shah spoke at a public event about the Centre’s plan to introduce a new cooperative policy and sent out a not-so-subtle warning to Maharashtra, then governed by his political rivals, that he would not sit by as injustices and mismanagement piled up in Maharashtra’s cooperatives sector. The bugle had been sounded for Maharashtra’s cooperatives; they were on the radar of not only the ministry but also the Bharatiya Janata Party.

Swabhimani Shetkari Sanghatana activists pour milk at the memorial of Maharashtra's first chief minister late YB Chavan during a protest to demand direct ₹5 subsidy per litre.(PTI Photo)

Pugnacious, the party had wanted not a toehold but control over this socio-economic base of the Congress and Nationalist Congress Party in rural Maharashtra. In August 2023, Shah was in Pune to launch of the digital portal of the office of the Central Registrar of Cooperative Societies. From the dais, Shah held forth like an expert on the cooperatives movement that had started back in the 20th century with Maharashtra’s first cooperative sugar unit in Pravara Nagar, in Ahmednagar, by the Vikhe Patil family. The cooperatives movement “cannot move forward without modernity, transparency and accountability,” Shah said.

Standing next to him were some of stalwarts and barons of cooperatives in the state, including Radhakrishna Vikhe Patil and Ajit Pawar, two cooperative barons and scions formerly with the Congress and NCP respectively. Shah had targeted not only the cooperatives of sugar, dairy and agricultural credit but also their lynchpin leaders, particularly of cooperatives with dodgy financials or over-powering clout. On the face of it, Shah could not be faulted for taking on the all-powerful cooperatives to rid them of their issues but the unspoken game was clear to all: the BJP wanted control of and, perhaps, eventual domination in the sector that controlled sugar, dairy and textiles through agricultural and credit, small or micro banking, marketing, and storage.

The irony of BJP lording over cooperatives was not lost on anyone.

Maharashtra has nearly 22,000 Primary Agricultural Credit Societies, which are the bedrock of the cooperatives network, offering short-term agricultural credit to over 8 lakh member-farmers. These societies are controlled by politicians – local, state and national-level politicians. Government data shows nearly 13,750 dairy societies and 21,030 non-agricultural credit societies including cooperative banks. Of the over 200 sugar mills at one time, only half continue to operate now while the private sugar mills have increased from about 20 to 95 in the past decade. In 2022, only 28 sugar factories registered a profit and one in every four credit society was in loss.

Ajit Pawar, along with nearly 70 directors of the Maharashtra State Cooperative Bank faced intense scrutiny and cases by the Enforcement Directorate in 2019; the ED even tried to snare Sharad Pawar in the case under the Prevention of Money Laundering Act for embezzling funds from MSC Bank allegedly to the tune of ₹25,000 crore. The MSC Bank was charged for, among other violations, lending money to sugar cooperatives and spinning mills without adequate collaterals, sanctioning loans to factories whose promoters were connected with the bank, driving down the price of a cooperative by posting repeated losses and then using the bank’s loans to buy it cheap.

A NABARD report and the Bombay High Court’s 2019 verdict confirmed this modus operandi of sugar barons. Important from a political perspective, such financial influence and social power made for political strongholds – if a village did not vote for the boss, its sugarcane would not be bought by the factory or credit line not extended to it. What the Centre’s increasing control over the entire network and Shah’s agenda in replacing the hegemony of the Congress-NCP with that of the BJP will eventually mean is anybody’s guess at this time but it is clear that the character and count of Maharashtra’s famed cooperatives are changing. This is bound to have political – specifically electoral – repercussions in 2024.

Given these islands of affluence in western Maharashtra, a region virtually controlled by cooperatives, the state’s development was naturally imbalanced. Poorer and less-endowed regions or those without the political-economic-social architecture provided by the cooperatives showed, in the 1980s, development indices far behind the state average. Debates in the state Assembly and deliberations outside it led to the state government recommending to the President of India to set up Statutory Regional Development Boards for Vidarbha and Marathwada – two backward regions compared to western Maharashtra – and Rest of Maharashtra.

With the Governor chairing them, the Boards were constituted on May 1, 1994, to “correct the regional imbalance in the allocation of funds” for development, analyse development on certain parameters relative to that of the state average, assist in removing the “development backlog” and suggest expenditure plans. Some called it a parallel government but the RDBs, with a joint Indicators and Backlog Committee computing development backlog on 15 parameters, did succeed in foregrounding the less-visible or neglected parts of the state in Mantralaya, state headquarters, in Mumbai.

Their term last expired in April 2020 but the then Uddhav Thackeray-led government did not give an extension – a fallout of its running battle with the then Governor BS Koshiyari. The Eknath Shinde-led government did remedy this. However, the intent to make the RDBs count and reduce the development backlog needs more than political one-upmanship. With BJP’s Devendra Fadnavis heading the government from 2014-2019, people in Vidarbha – he hails and is elected from Nagpur, Vidarbha – believed development miracles would follow.

Both Vidarbha and Marathwada have had powerful politicians of all parties, including the late Gopinath Munde of BJP who adopted the cooperatives model in his command area in Beed, Marathwada, but they seem to have fallen short of making good the development backlog. The role of the RDBs became important. The Marathwada RDB, for example, had repeatedly pointed to the inequitable distribution of water from Tapi Valley, Krishna and Godavari River basins to the drought-prone districts of the region.

Four of Maharashtra’s 36 districts, falling in these regions, were among India’s 106 most backward districts in 2016. As much as 70 percent of all farmers’ suicides in the state have been in Vidarbha. The role of RDBs is relevant even today though they are heard less of and have all but disappeared from the public and media discourse. Development was a campaign issue, even in Vidarbha and Marathwada, in 2014. Continued non-development is not a poll issue in 2024. Cooperatives are not either given that so many cooperative barons now share stage with Shah and other BJP leaders. The decades-old Maharashtra’s socio-economic architecture itself is changing.

Smruti Koppikar is a Mumbai-based independent journalist, essayist and city chronicler. This article is part of an 8-segment series about issues that are crucial to Maharashtra’s development.