Komal Gupta
Director-Strategy and Policy, Coop Talks & Founder, Konsult Komal
In conversation with K.K. Ravindran, Managing Director, National Cooperative Agriculture & Rural Development Banks’ Federation Ltd.
Q1. How has the Union Budget’s approach to cooperatives evolved since the formation of the Ministry of Cooperation?
In the first Union Budget after the formation of the Ministry of Cooperation, the Government affirmed its resolve to provide a level playing field for cooperatives and improve ease of doing business through reforms and restructuring. Since then, successive Union Budgets have announced fiscal and policy reforms, infrastructural support, including technology, and human resource development measures.
Over this period, the Ministry of Cooperation has undertaken more than 50 major initiatives to enable cooperatives to contribute meaningfully to the vision of Sahakar Se Samriddhi and to the national goal of Viksit Bharat by 2047.
Q2. What are the core expectations from the Union Budget 2026 27 for the cooperative sector?
Expectations from the forthcoming Union Budget include further measures to accelerate and strengthen the sector’s growth. These include continued focus on ease of doing business, deeper governance reforms, support for meeting growing financial requirements, and systematic upgrading of technology and human resources across cooperatives.
Q3. Why is access to long-term finance critical for cooperatives, and what reforms are required?
Access to capital markets is essential for raising long-term finance. As cooperatives cannot raise equity through public issues, they should be permitted to raise long-term funds through bonds or debentures by securitising receivables, with access to underwriting services.
In addition, while cooperatives receive income tax exemption under Section 80P based on the doctrine of mutuality, extending that doctrine to the GST exemption for transactions between cooperatives would help them augment internal resources for expansion.
Q4. What are the key challenges around NPAs in cooperative rural credit institutions, and how can they be addressed?
NPA resolution remains a major challenge in the rural credit sector. About 40 per cent of Primary Agricultural Credit Societies (PACS) and 70 per cent of Agricultural and Rural Development Banks (ARDBs) are operating at a loss, largely due to provisioning against NPAs.
Unlike commercial banks, cooperative rural credit institutions such as PACS and ARDBs lack access to dedicated Debt Recovery Tribunals and government-sponsored Asset Reconstruction Agencies. The Government should therefore consider setting up a national-level Credit Risk Fund for cooperative rural credit institutions, as recommended in the NABCONS study on reforms and restructuring of ARDBs. A separate Asset Reconstruction Agency exclusively for cooperative rural credit institutions that are not covered under the SARFAESI Act 2002 is also required.
Q5. How should the Union Budget align with the National Cooperation Policy 2025?
The Union Budget should clearly reflect the National Cooperation Policy 2025 through appropriate programmes and allocation of funds. This is essential to achieve the objective of developing cooperatives as a leading sector of the Indian economy over the next ten years.
