NCDC Amendment Bill passed in Lok Sabha amid din
The National Cooperative Development Corporation (Amendment) Bill was passed by the Lok Sabha through a voice vote amid sloganeering from Opposition members
The Bill enables the National Cooperative Development Corporation (NCDC) to extend loans and grants directly to any entity engaged in cooperative development, subject to furnishing security as required
The amendment broadens NCDC's statutory mandate from financing programmes "through cooperative societies" to financing programmes "for cooperative development" more broadly, and permits NCDC, with central government approval, to invest in the share capital of cooperative organisations
The Bill amends the National Cooperative Development Corporation Act, 1962, and was introduced on behalf of the Ministry of Cooperation
National Cooperative Development Corporation (NCDC) Act, 1962
The NCDC is a statutory corporation created to plan, promote, and finance programmes for the production, processing, marketing, storage, and export/import of goods and services through cooperative principles. Understanding its statutory basis is essential to evaluating what this amendment changes.
Key Details
- Enacted as Act No. 26 of 1962 on 31 August 1962; NCDC itself was established as a body corporate on 14 March 1963
- Section 3 of the Act incorporates NCDC as a body corporate with perpetual succession, capable of acquiring property, entering contracts, and suing or being sued
- Historically, NCDC could finance cooperative programmes only by routing funds through cooperative societies — a structural limitation the current amendment removes by allowing direct financing of "any entity" engaged in cooperative development
- NCDC now falls administratively under the Ministry of Cooperation
The amendment is a direct legislative change to this 1962 Act, expanding NCDC's financing channel beyond cooperative societies alone.
Ministry of Cooperation and Article 43B
The bill's passage reflects the institutional push, since the creation of a dedicated Ministry of Cooperation, to strengthen and streamline the cooperative sector's legal and financial architecture.
Key Details
- The Ministry of Cooperation was created on 6 July 2021 by transferring cooperation-related functions from the erstwhile Ministry of Agriculture and Farmers Welfare
- Article 43B, a Directive Principle of State Policy inserted by the 97th Constitutional Amendment Act, 2011, directs the State to "endeavour to promote voluntary formation, autonomous functioning, democratic control, and professional management of co-operative societies"
- Article 43B was unaffected by subsequent litigation over the 97th Amendment, since it is a Directive Principle and does not curtail state legislative competence
The NCDC Amendment Bill operationalises the Article 43B objective of professionalising and empowering cooperative societies by giving NCDC more flexible financing tools.
The 97th Constitutional Amendment and Union of India v. Rajendra N. Shah (2021)
This landmark case defines the constitutional boundary between Union and State legislative competence over cooperative societies — a boundary any NCDC-related legislation must respect.
Key Details
- The 97th Constitutional Amendment Act, 2011 (in force from 15 February 2012) inserted Part IXB (Articles 243ZH–243ZT) dealing with cooperative societies, along with Article 43B
- In Union of India v. Rajendra N. Shah (20 July 2021), the Supreme Court held that Part IXB's provisions applicable to cooperative societies "within a state" were unconstitutional because the 97th Amendment was not ratified by at least one-half of state legislatures, as required under Article 368(2) for changes affecting a State List entry (cooperative societies fall under Entry 32, State List)
- The Court, however, upheld provisions relating to multi-state cooperative societies, since legislative competence over them rests with the Union under Entry 44 of the Union List
NCDC, a Union statutory body financing cooperative development nationally, operates within the multi-state/Union competence upheld in the Rajendra Shah ruling, which is why Parliament — not state legislatures — can amend the NCDC Act.
- NCDC Act enacted: 31 August 1962 (Act No. 26 of 1962); NCDC established: 14 March 1963
- Ministry of Cooperation created: 6 July 2021
- Article 43B and Part IXB inserted by the 97th Constitutional Amendment Act, 2011 (effective 15 February 2012)
- Union of India v. Rajendra N. Shah (2021): Part IXB struck down for state-level cooperative societies (lack of state ratification under Article 368(2)); upheld for multi-state cooperative societies
- Cooperative societies: State List Entry 32; multi-state cooperative societies: Union List Entry 44