Friday, September 9 2005 16:49 Hrs (IST) - World Time -

New Delhi: The Center and states will arrive at a consensus by October on revamping the cooperative sector through a Rs 15,000 crore financial package and other reform measures, Finance Minister P Chidambaram said today (Sept 9, 2005).

"I am delighted that in a matter of three and half hours we have reached a near consensus and agreed to make it a true consensus in 3-6 weeks," he said, after the meeting with state ministers, chaired by Prime Minister Manmohan Singh.

Though the Vaidyanathan committee, which looked into ways of revamping cooperatives, proposed that the center should provide 53 per cent of the Rs 15,000 crore financial packages, most of the states wanted a higher central contribution.

Chidambaram said the Center and states would soon finalize the package for revamping the cooperatives including the formula for sharing the burden.

"Minutes of the meeting will be drawn up. We have invited Finance Ministers of 6-8 states to finalize a draft, take the responses of states and finalize the package," he said.

While asking Nabard to find ways of increasing refinance to cooperatives and cutting interest rates, he said Reserve Bank should play a 'leading role' in overseeing the financial health of cooperatives.

However, the Registrar of Cooperatives of States (RCS) would continue to regulate the cooperatives.

The Center, he said, would work with states to finalize the eligibility criteria for getting capital infusion and the formula for sharing the financial package.

The Center and states would also fix the minimum capital adequacy ratio limit that would be required to be maintained by cooperatives.

States would also work out a scheme for retiring their share capital to provide greater operational autonomy to cooperatives, as suggested the panel.

Chidambaram also favored 'special audit' on cooperatives to ensure that they do not misuse public money.

"I am confident that we can come to a consensus within 6 weeks," he said.

The Vaidyanathan panel has recommended a financial assistance of Rs 14,839 crore for revamping the cooperatives, of which the Center would have to contribute 53 per cent, while states would have to shell out 31 per cent and cooperatives 16 per cent.

The panel favored a minimum seven per cent CAR initially, which has to be increased to 12 per cent in five years time.

A technical assistance package of Rs 670 crore has been worked out for cooperatives for computerizing their operations and install computer-based sound accounting and monitoring information systems to make them competitive.

The panel asked center to provide the technical package, which would be seggreted into Rs 46 crore for special audits, Rs 516 crore for designing and establishing accounting systems and computerization at all levels and Rs 108 crore for training and capacity building of cooperative institutions.