Recommendations of the Task Force on Revival of the Co-operative Credit Structure: Implementation Issues

The Task Force on Revival of Rural Co-operative Credit Institutions (Vaidyanathan Committee) submitted its final report in February 2005 and there have been a few meetings with the state governments to work out the modalities of the implementation of the report. This paper lists out the issues that are involved in implementing this ambitious financial package of Rs.15,000 crores. It first brings out the historic circumstances under which the co-operative form of organisation came into being, its peculiarities and the principles under which co-operatives operate. The paper then puts the recommendations of the committee in the framework of the principles. Basically we argue that the major issues that would affect the implementation of the recommendation stem out from how in the negotiation between the center and the states some compromises may have to be worked out and the possible implications of the compromises. The observations are based on the recent negotiations and also on the past performance of the sector. The other issues that are raised relate to the logistics of implementation, its endurance over the long run, and concludes with a discussion on the conditions under which the recommendations could effectively work.