Context

In a historic move, a separate ‘Ministry of Co-operation’ has been created by the government for realizing the vision of ‘Sahkar se Samriddhi’. This ministry will provide a separate administrative, legal and policy framework for strengthening the cooperative movement in the country.

Background

• The co-operative movement of India is the largest in the world. It has given birth to different kinds of co-operative societies in different spheres like producer’s co-operatives, consumer’s cooperatives, tribal co-operatives etc
• The Central Government has signalled its deep commitment to community based developmental partnership.
• Creation of a separate Ministry for Co-operation also fulfils the budget announcement made by the Finance Minister.

Analysis

What is Cooperative Society? 

• It is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspiration through jointly owned and democratically controlled enterprises.
• Co-operative societies are service enterprises aiming at rendering service to its members. In one sentence the philosophy of cooperation can be summed up as “each for all and all for each”.

Historical Developments for Cooperatives

• Cooperative Credit Societies Act, 1904: As its name suggests, the Cooperative Credit Societies Act was restricted to credit cooperatives. By 1911, there were 5,300 societies in existence with a membership of over 3 lakhs
• Cooperative Societies Act, 1912: The Act also provided for Federations of cooperatives.
• Maclagen Committee on Cooperation (1914): It recommended building up a strong three-tier structure in every province to provide short-term and medium-term finance.
• Government of India Act, 1919: Cooperation as a subject was transferred to the provinces. Societies were organized, but most faced difficulties in operation as a result of opposition by private marketing agencies
• Multi-Unit Cooperative Societies Act, 1942: delegated the power of the Central Registrar of Cooperatives to the State Registrars for all practical purposes.
• Model Cooperatives Act, 1990: The Eighth Five Year Plan (1992-1997) laid emphasis on building up the cooperative movement as a self-managed, self-regulated and self-reliant institutional set-up, by giving it more autonomy and democratizing the movement.
• Multi-State Cooperative Societies Act, 2002: The Multi-State Cooperative Societies (MSCS)Act, enacted in 1984, was modified in 2002, in keeping with the spirit of the Model Cooperatives Act, 1990
• National Cooperative Policy, 2002:
  • The objective of the Policy is to facilitate an all round development of cooperatives in the country.
  • The policy promises to provide cooperatives with the necessary support, encouragement and assistance, to ensure their functioning as autonomous, self-reliant and democratically managed institutions and accountable to their members.

Challenges Faced By the Cooperative Sector

• Membership
  • Ensuring ‘Active’ member participation and enabling speedy exit of non-user members has remained a daunting task for cooperatives
• Governance
  • governance issues are primarily focused on the structure of the Board and its relationship with members, managers and the State
• Lack of Recognition of Cooperatives as Economic Institutions
  • The lack of recognition of cooperatives as economic institutions meant to serve the needs of its members.
  • The general perception has been that cooperatives are instruments of government meant for public good and therefore need to be supported by the government.
• Board and Management Interface and Accountability
  • cooperative Boards suffer from lack of long-term perspective, market and business orientation, understanding of the cooperative way of business and how it differs from other enterprises, awareness about the environment
  • In a large number of cooperatives, Board and executive functions are not clearly demarcated, often leading to identity conflicts
• Operations
  • Professionalization and Accountability
  • Capital
  • Linkages and Competitiveness
• Other challenges
  • Accessibility to Finance/Credit Services by Members
  • Accessibility to Finance/Credit Services by Members
  • Politicization of Cooperatives and Control/Interference by Government

Importance of Cooperatives

• Voluntary organization
  • The membership of a cooperative society is open to all. Any person with common interest can become a member.
  • The membership fee is kept low so that everyone would be able to join and benefit from cooperative societies.
• Ease of formation
  • Cooperatives can be formed much easily when compared to a company.
• Democracy
  • A co-operative society is run on the principle of ‘one man one vote‘. It implies that all members have equal rights in managing the affairs of the enterprise.
• Each for all and all for each
  • Co-operative societies are formed on the basis of self help and mutual help. Therefore members contribute their efforts to promote their common welfare.
• Government support
  • The government with a view to promote the growth of cooperative societies extends all support to them. It provides loans at cheap interest rates, provides subsidies etc.
• Elimination of middlemen
  • Cooperatives societies can deal directly with the producers and with the ultimate consumers. Therefore they are not dependent on middlemen and can save the profits.
• Rural credit
  • Co-operative societies have contributed significantly in freeing villagers from money lenders. Earlier, money lenders used to charge high rates of interest and the earnings of the villagers were spent on payment on interest alone.
• Role in agricultural progress
  • They serve as a link between the government and agriculturists. High yielding seeds, fertilizers, etc. are distributed by the government through the cooperatives.
• Encourages thrift
  • Cooperative societies encourage the habit of savings and thrift among their members. They provide loans only for productive purposes and not for wasteful expenditure.
• Fair price and good quality
  • Co-operative societies buy and sell in bulk quantities directly from the producers or to the consumers. Products are processed and graded before they are sold. Bulk purchases and sales ensure fair prices and good quality.
• Social benefit
  • Co-operative societies have played an important role in changing social customs and curbing unnecessary expenditure. The profits earned by the co-operatives have been used for providing basic amenities to the society.

Conclusion

In our country, a Co-operative based economic development model is very relevant where each member works with a spirit of responsibility. The formation of new ministry will give a massive boost to co-operative movement and create a true people’s momentum for development