A damning report from Kerala's Personnel and Administrative Reforms Department has pinpointed a systemic failure to act on critical audit findings as the primary driver behind the rising tide of irregularities and financial misconduct within the state's vast cooperative sector. The study concludes that the problem is not a shortage of inspections, but a critical breakdown in the follow-up process that allows red flags to be ignored until it is too late.
Ignored Warnings and a Crippled Vigilance System
The detailed assessment, accessed by The Times of India, found that in numerous instances, audit reports that identified serious violations were either never sent to the controlling officers or were left unattended for prolonged periods. By the time these issues formally came to light, the damage was often irreversible, pushing many cooperative societies into severe financial distress or even liquidation.
The report strongly argues that if these early warning signals had been heeded and addressed promptly, a significant number of institutions could have been stabilized before reaching a crisis point. Alarmingly, the study highlights a major gap in the vigilance machinery itself. It noted that between 2008 and September 9, 2024, the Cooperative Vigilance Wing took up only 713 complaints for investigation. This translates to a mere 44 cases per year on average across the entire state, or roughly three complaints per district annually—a figure deemed shockingly low given the sector's size.
"Many irregularities flagged during audits never reached the vigilance machinery at all," the report states, underscoring a critical failure in internal reporting channels.
The Fragile Scale of Kerala's Cooperative Network
The scale of the problem becomes starkly evident when viewed against the backdrop of the sector's structure. As per the latest data, Kerala has 15,808 registered cooperatives. A overwhelming majority—12,645 societies—operate with an annual turnover of less than Rs 5 crore, highlighting the inherent financial fragility of most entities.
The concentration of financial power is extreme. Only three cooperatives in the entire state reported a turnover exceeding Rs 1,000 crore, while just 19 fell in the Rs 500-1,000 crore range. Districts like Thiruvananthapuram lead in the number of cooperatives (1,994), followed by Kannur (1,573) and Kozhikode (1,418). However, the high-value institutions are clustered in just three districts: Kannur, Kozhikode, and Ernakulam.
The mid-range segment, with turnovers between Rs 100 crore and Rs 300 crore, comprises 520 cooperatives statewide, with Ernakulam, Thrissur, Thiruvananthapuram, and Kannur accounting for nearly half of them.
Mounting Dormancy and a Call for Accountability
The study also sheds light on the growing number of defunct institutions. As of March 31, 2023, a total of 3,466 cooperatives were classified as dormant, while liquidation proceedings had begun in 645 cases. These include societies that never started operations, those whose membership dipped below legal limits, and those declared non-viable after official inquiries.
The core failure, as identified by the department, is the lack of consequences for inaction. Audit teams frequently uncover serious issues, but without prompt reporting and follow-up, these findings remain mere entries on paper. To remedy this, the report makes a crucial recommendation: officials who fail to report or act upon serious audit findings must be held accountable. Such lapses should be formally recorded and treated as disciplinary violations.
This call for fixing accountability is seen as a vital step to plug the leaks in a system that is vital to Kerala's economy but is currently weakened by administrative paralysis and oversight failures.
