VII Schedule of the Constitution specifies distribution of powers between State and Union. Cooperatives like Amul, KMF fall in State list.
When South First reported about the brewing concerns in Karnataka on 6 April — a day after Amul announced its launch in Bengaluru retail market with milk and curd — neither political parties nor TV news channels took notice of what it was leading to.
When they finally did wake up to the issue, days later, the noise has largely been around speculation over whether this was another step towards merging Karnataka’s milk cooperative, the KMF, and its brand Nandini, with Gujarat-based milk cooperative Amul.
While on the ground pro-Kannada outfits are protesting against Amul, deeming its entry into Bengaluru’s milk and curd market an attempt to “finish off Nandini”, Opposition party leaders from the Congress and JD(S) have turned it into a matter of Kannada pride and identity ahead of the 10 May Karnataka Assembly election, putting the BJP on the backfoot.
The fact that well-performing state banks like Vijaya Bank were forcefully merged with Bank of Baroda under the garb of “amalgamation” by the Union government adds to speculation over KMF’s survival as an independent cooperative in the long run.
While screechy debates on TV news channels posed questions like “Why protest against Amul when there are other brands in the market”, or justified the Gujarat cooperative’s launch as a “free market” venture, leaders of BJP in Karnataka, including Chief Minister Basavaraj Bommai, were passionately defending Amul’s right to market its products anywhere in the country including Karnataka, much like KMF does in other states
The party has insisted that Amul is no threat to KMF’s Nandini, and some BJP leaders have even gone to the extent of insisting the Gujarat cooperative is bearing the brunt because of the Congress and JD(S)’s dislike of Prime Minister Narendra Modi, who is also from Gujarat.
All of them seem to miss the key point. The row has very little to do with Amul or KMF as individual cooperatives, that are success stories in their own right.
The big picture here is the question of federalism and the clear efforts to undermine it — once again — by the Union government on a subject that is clearly under the state list as per the Indian Constitution.
If you look past the smokescreen of bickering, politicking, and protests pitting Amul against Nandini, with social media trends like #AmulVersusNandini, there is a pattern in the corresponding timeline.
The concerns over state governments losing their successful cooperatives to the Union government is not without reason.
The 7th Schedule of the Indian Constitution specifies distribution of powers and responsibilities between state and Union governments by categorising subjects into State, Union and Concurrent lists.
While some 100 subjects, including banking, railways defense, foreign affairs, aviation, communication, IT, etc, are in the Union list, some 61 subjects, like public law and order (police), public health, agriculture, trade — of which cooperatives is a part — fall in the state list.
About 47 subjects, like forests, wildlife, labour and industrial disputes, criminal law and procedure, marriage laws, etc, are in the concurrent list.
It is amply clear then, that cooperatives is a state subject.
That does not mean that the sector is unregulated or not scrutinised. Each state has its own registrar of cooperatives other than the Reserve Bank of India (RBI) keeping a tab on cooperative societies. This distribution of powers and responsibilities helps uphold principles of federalism in India.
Ever since the Narendra Modi government set up its brand new ministry — Ministry of Cooperation — in July 2021 and made Amit Shah its minister, there have been questions about the Union government’s attempt to take over cooperatives from states — and concerns over the move violating the principle of federalism.
A look at Cooperation Minister Amit Shah’s statements since 2021, until as recently as March 2023, only adds fuel to the speculation. Slowly and steadily, the Union government has moved towards setting up multi-state cooperative societies that bypass state governments and fall directly under the ambit of the Union government.
In Shah’s own words, the Modi government intends for these multi-state societies to become “export houses of products”, including dairy.
The concerns over Union government’s intent to merge state milk cooperatives like Amul and Nandini began after October 2022 when Amit Shah, in Guwahati, declared that Amul would merge with five other dairy cooperatives.
The cooperation minister-cum-home minister said “merger” in as many words. Can you really, then, blame farmers, and other stakeholders in Karnataka, for suspecting that Amul will take over Nandini?
Barely weeks later, Amit Shah pushed for KMF and Amul to “cooperate” in Karnataka, fueling further speculation on a possible merger of the two cooperatives, despite Chief Minister Bommai categorically denying such a posibility.
“Amul and KMF together will work together towards ensuring there is a primary dairy in every village of Karnataka. KMF will get all the technical support and cooperation from Amul, which is a Gujarat state cooperative society,” Amit Shah said in December in Karnataka.
Read this in context of Shah’s statement on 18 March in Gandhinagar of Gujarat where he proposed connecting two lakh rural diaries to multistate cooperative export societies to increase exports of dairy products.
Months after Shah’s push for KMF to “cooperate” with Amul, the Gujarat based cooperative announced its milk and curd launch in Bengaluru retail market, breaking an unwritten rule of cooperatives not to compete in each other’s market in daily consumption products. From “cooperation” to direct competition.
A Union minister pushing two state-owned cooperatives to work with each other, with the assurance of “all its requirements will be addressed by the Ministry of Cooperation”, is a classic example of the Union government overstepping its boundaries to interfere in a state subject by circumventing rules, and bringing in new entities and policies.
This isn’t the first time that the Union government has waded into a state subject. One such example is the implementation of NEET, which has been flagged by Tamil Nadu as a violation of the principles of federalism since it also falls under the ambit of public health — a state subject.
The role of cooperative societies to influence politics and electoral outcomes — from Karnataka’s Belagavi PLD bank to NCP chief Sharad Pawar’s whole political career — is another aspect to consider if one were wondering why multistate cooperative societies would interest the Union government.