Federalism upheld, and cooperation – Economic Times

With its verdict overturning a good part of the Constitution (97th Amendment) Act of 2011, the Supreme Court has done two things: one, strengthened the quasi-federal nature of the Indian polity, stopping any abridgement of the rights of the states, and, two, clarified the ambit of the working of the new Union ministry of cooperation. To the extent the court struck down the 97th Amendment based on procedural deficiency, it is still open to the Centre to initiate action to mend that defect and restore the force of the 97th Amendment.

The 97th Amendment to the Constitution, brought in by the UPA government during the days of policy paralysis in 2011-12, made the right to form cooperatives a fundamental right, on par with the right to assemble and form associations, and incorporated a mandate to encourage cooperatives in the chapter on Direct Principles. Further, it added Part IXB to the Constitution, laying down a set of norms for state legislation on cooperatives. It was challenged in the Gujarat High Court and, in 2013, the court rendered the 97th Amendment invalid on the ground that it had not been ratified by at least 50% of state legislatures, a precondition for a constitutional amendment on subjects that figure on the State List. The Supreme Court endorsed this view, in its verdict, and reinforced the judicial defence possible in Indias scheme of governance against additional degrees of centralisation of the polity. Of the three judges who heard the case and delivered the verdict, all concurred on the illegality of the amendment with regard to the states right to formulate laws on cooperatives as they deem fit, rather than as laid down in a legal change made only at the level of Parliament, and two held that the amendment would still hold with regard to multi-state cooperatives, such as Amul, Iffco and Kribhco.

The central government can initiate a process of getting the amendment ratified by at least 15 states, and, in the meantime, focus on multi-state cooperatives. RBIs right to regulate large cooperative banks remains intact.

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Federalism upheld, and cooperation - Economic Times