The heated political battle over two dairy cooperatives in Karnataka may seem absurd. But it involves very real concerns about the BJP’s master plan to control the country’s largest cooperatives—which wield great political power in their state.
Researched by: Rachel John
First, a quick intro to co-ops
Unlike companies, co-ops are controlled and run by their members—and power is distributed equally among them: each member has one vote. In India, ten or more people above the age of 18 can form a cooperative. Co-ops were championed by PM Nehru as a vital engine of people power.
How they work: Amul offers a good example. There are 18,600 dairy cooperative societies (DCS) in Gujarat’s villages. They procure 35 million litres of milk per day from its members—i.e the dairy farmers. The DCS process and manufacture commercial-grade milk—which is sold by the Gujarat Cooperative Milk Marketing Federation Limited (GCMMF) under the brand name Amul. This allows a farmer in Gujarat to sell his milk to customers in Delhi or Gujarat.
The vast web of co-ops: There are 850,000 co-ops in almost every sector with 13 million members in villages across the country—and they dominate key industries like sugar, milk and banking. And their operations involve vast amounts of money. For instance, in 2022, the dairy cooperatives were valued at about Rs 13 trillion (13 lakh crore).
The font of political power: Co-operatives are incubators of political fortunes in India. They give parties access to funds—which they can distribute as patronage. For instance, NCP chief Sharad Pawar built his political career running the powerful sugar cooperatives in Maharashtra. And—as political analyst M Rajshekhar points out—they are the real backbone of the Gujarat Model.
The BJP began its campaign against Congress by first capturing the credit and milk cooperatives: “Anyone who wants long-term power has to control people and institutions. And dairy is the biggest in Gujarat. Of the 17,000 villages in Gujarat, 16,500 are covered by dairies.” Once CM Modi came to power, the BJP’s control of the state’s co-ops was complete. As a senior dairy manager puts it: “Amul is now a Congress-mukt federation.” And FWIW: Amit Shah had headed the Ahmedabad District Central Cooperative Bank for a long time.
Meet Amit Shah, the Cooperation Minister
Most people know Shah as the Home Minister. But in 2021, he was given another portfolio—minister of the newly created—and Orwellian sounding—Ministry of Cooperation. The ministry’s sole goal is to empower co-operatives:
It will help deepen Co-operatives as a true people based movement reaching upto the grassroots. In our country, a Co-operative based economic development model is very relevant where each member works with a spirit of responsibility. The Ministry will work to streamline processes for ‘Ease of doing business’ for co-operatives and enable development of Multi-State Co-operatives (MSCS).
The ‘multi-state’ devil: Opposition leaders were immediately up in arms—declaring the entire thing as a BJP conspiracy to hijack state co-operatives. The appointment of Shah only increased their paranoia. They are not entirely wrong.
Under the Constitution, cooperatives fall in the state list—which means each government can frame its own laws to regulate the co-ops in their state. But, but, but, in 2002, the Vajpayee-led NDA government amended the Multi-State Co-operative Societies Act, which covered co-ops that operated across a number of states. Their regulation was placed in the hands of a Central Registrar. And the Ministry of Cooperation will “basically oversee the Central Registrar of cooperative societies that regulate and govern all multi-state cooperative societies.” Wait, there is more.
A new MSCS bill: In December 2022, the government introduced a bill to amend the 2002 multi-state co-op law. The aim is to improve transparency, increase ease of doing business and ensure better governance. But, but, but, the real question is who will carry out these weighty responsibilities?
The Bill provides for the creation of a central Co-operative Election Authority to supervise the electoral functions of the MSCSs. The Authority will have a chairperson, vice-chairperson, and up to three members appointed by the Centre. Another provision makes it possible to override the board of directors of the society and the appointment of an administrator, not necessarily a member of the collective.
Also key: The bill allows any state co-op to merge with an existing multi-state co-op.
Enter Amul: In October, 2022, Amit Shah announced the merger of Amul with five other co-ops to form a multistate co-op. And in December, during a visit to Karnataka, he unveiled plans for Amul to enter into a close collaboration with the Karnataka dairy co-operative—which set off all the alarm bells:
“I want to assure farmers that Nandini and Amul will work together to ensure that there is a primary dairy in every village. And in three years, there won’t be any village in the state where there is no primary dairy.” Shah also said that a primary dairy will be established by the National Dairy Development Board and the Ministry of Cooperation in every panchayat in the country over the next three years and that an action plan was ready in this regard.
The importance of Nandini: That’s the dairy brand of Karnataka Milk Federation (KMF). Parties like JD(S) and Congress are rightly worried about losing control over it. KMF is the second largest dairy co-op after Amul. It is spread across 22,000 villages—has 2.4 million dairy farmers as members, and controls 14,000 cooperative societies that procure approximately 8.4 million litres of milk a day. More importantly, these farmers are spread across 120-130 Assembly seats (out of a total of 224)—and account for 50 lakh votes.
These regions are home to two of the most important voting blocs in Karnataka: The Vokkaligas and Lingayats:
While old Mysuru is a Vokkaliga belt where the Janata Dal (Secular) and the Congress hold sway, central Karnataka is part of the Lingayat belt. The Lingayats, who are electorally dominant, are the BJP’s biggest support base in the state.
Hence, all the heated political rhetoric—just weeks before the state election due to be held on May 10. Our fave is this one from JD(S) leader and former chief minister HD Kumaraswamy: “Shah has hatched a ploy to turn Kannadigas into slaves of Gujaratis.”
The bigger game plan
In sum, the game plan is to create and nurture multi-state co-ops that are controlled by the union government—which spells disaster for opposition parties:
“If the BJP manages to get a grip on the milk, sugar, silk, agriculture, and other such cooperative societies across the country, the political output of controlling over 15 cr people will be possible,” a BJP leader told TNM. He added that this will also be instrumental in breaking the funding cycles for many regional parties like the JD(S) and NCP.
The co-operatives will also give the party formidable reach into rural India:
“Farm protests have weakened the government’s grip over farming communities,” agreed the Gujarat-based observer. “How do they re-enter those? They cannot use the mandis. They have been delegitimised there. The cooperatives are another beach-head. The idea is clearly to control the entire cooperative structure.” Cooperatives will be important, he said, for “both local body elections as well as for generating largesse for other elections.”
But, but, but: The political storm over Nandini in Karnataka shows that it is easier to make a grand plan than to execute it. All of Shah’s shenanigans have left the state party in disarray.
The bottomline: The tug-of-war between the states and the centre is far more likely to shape the fortunes of the BJP—than anything a united opposition may achieve at the national level. Regional pride cannot be easily bought or bullied—unlike our great netas.
The Week lays out why India Inc likes the idea of more centralised cooperatives. Scroll has an excellent piece on how the BJP took over Amul. Indian Express and The Hindu lay out the concerns about how the Nandini brouhaha will affect votes—while The Quint offers a more general overview. The News Minute explains the importance of dairy cooperatives in Karnataka. And for all the fuss, Mint explains why Amul is very unlikely to best Nandini in the state.