Introduction to Cooperatives
Cooperatives represent a unique form of organization where individuals voluntarily come together to collectively own and democratically control an enterprise, aiming to meet their common economic, social, and cultural needs. Rooted in principles of self-help and mutual aid, the cooperative movement in India has played a significant role, particularly in agriculture, dairy, credit, and housing, with success stories like Amul demonstrating their transformative potential. Governed by constitutional provisions (97th Amendment) and a multi-tiered legal framework, cooperatives, despite facing challenges like politicization and financial mismanagement, are gaining renewed focus with recent initiatives like the establishment of a dedicated Ministry of Cooperation.
6.4.1: Principles and Types of Cooperatives
Definition
A cooperative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.
Cooperative Principles (International Cooperative Alliance - ICA)
1. Voluntary and Open Membership
Open to all persons able to use their services and willing to accept responsibilities, without discrimination.
2. Democratic Member Control
Controlled by members, who actively participate. "One member, one vote."
3. Member Economic Participation
Members contribute equitably to capital. Surplus often allocated for development or benefits.
4. Autonomy and Independence
Self-help organizations controlled by members, maintaining autonomy in agreements.
5. Education, Training, and Information
Provide education and training for members, reps, managers, and employees.
6. Cooperation among Cooperatives
Work together through local, national, regional, and international structures.
7. Concern for Community
Work for the sustainable development of their communities through member-approved policies.
Types of Cooperatives (Based on Function)
Consumer Cooperatives
Owned by consumers, providing goods/services at fair prices (e.g., Super Bazars).
Producer/Marketing Cooperatives
Owned by producers, for processing/marketing products (e.g., AMUL, Handloom).
Credit Cooperatives
Provide financial services (savings, loans) to members (e.g., UCBs, Rural Credit Societies).
Housing Cooperatives
Facilitate affordable housing for members by jointly purchasing land and constructing.
Farming/Agricultural Cooperatives
Farmers pool resources for inputs, farming, processing, or marketing produce.
Workers' Cooperatives
Owned and democratically controlled by their employees.
6.4.2: Constitutional Provisions (97th Amendment) and Legal Framework
Cooperatives were primarily governed by state-level cooperative societies acts. This led to varied laws, often with excessive government interference.
Genesis: Recognized the importance of the cooperative movement and aimed to provide a constitutional status and protection to cooperative societies, ensuring their democratic, autonomous, and professional functioning.
Key Provisions:
- Right to form Cooperatives: Made the right to form cooperative societies a Fundamental Right under Article 19(1)(c).
- Directive Principle of State Policy (DPSP): Inserted Article 43-B in Part IV, directing the State to endeavor to promote voluntary formation, autonomous functioning, democratic control, and professional management of cooperative societies.
- New Part IXB (The Co-operative Societies): Inserted a new Part IXB (Articles 243ZH to 243ZT) in the Constitution, laying down various provisions to ensure democratic, autonomous, and professional management. Mandates regular elections, limits directors (21), reservation for women/SC/ST, auditing, etc.
- Multi-State Cooperative Societies Act, 2002: Governs cooperatives whose objects are not confined to one state, administered by the Ministry of Cooperation.
- State Cooperative Societies Acts: Each state has its own act governing cooperatives operating within that state.
6.4.3: Role in Various Sectors & Amul Case Study
Sectoral Impact
Agriculture
Provide inputs (IFFCO, KRIBHCO), facilitate marketing, processing, and storage, ensuring better price realization for farmers.
Credit
Rural (PACS, DCCBs, StCBs) and Urban (UCBs) credit cooperatives offer affordable and accessible financial services, reducing dependence on moneylenders.
Housing
Facilitate affordable housing for members by pooling resources for land purchase, construction, and management of residential complexes.
Other Sectors
Consumer cooperatives, handloom, handicrafts, fisheries, and labour cooperatives also play vital roles in their respective sectors.
Amul: The White Revolution Success Story
Amul (Anand Milk Union Limited) is a prime example of a successful cooperative model, particularly in the dairy sector. Founded in 1946 in Anand, Gujarat, by Tribhuvandas Patel with the support of Sardar Vallabhbhai Patel, and inspired by Dr. Verghese Kurien's leadership, it transformed rural economies.
Its success led to India becoming the world's largest milk producer (Operation Flood / White Revolution), showcasing the power of producer cooperatives in empowering small and marginal dairy farmers, many of whom are women.
The Anand Pattern (Amul's Three-Tiered Structure)
Village Dairy Cooperative Societies (DCS)
Farmers (members) pool milk, receive payment, and basic services.
District Milk Unions (DMMU)
Collects milk from DCS, processes it, and manufactures products.
State Milk Federations (e.g., GCMMF)
Markets products under the 'Amul' brand across the country.
6.4.4: Challenges Facing Cooperatives
Politicization
Excessive government control, political interference in elections, appointments, leading to factionalism and undermining autonomy.
Financial Mismanagement
Weak financial health, high NPAs, misappropriation of funds, irregular audits, and poor loan recovery mechanisms.
Lack of Professionalism
Amateur management, insufficient skill development, poor governance, and absence of succession planning hinder efficiency.
Limited Technology & Market Linkages
Technological backwardness, struggle to compete with organized private sector due to lack of branding, quality control, and modern supply chains.
Small Size & Fragmentation
Many cooperatives are small, fragmented, and lack economies of scale to compete effectively or provide diverse services.
Member Apathy
Lack of active participation by members, leading to control by a few individuals or vested interests and low awareness of rights/responsibilities.
6.4.5: Recent Initiatives for Cooperative Revitalization
Ministry of Cooperation (July 2021)
A historic decision by the Union Government to create a separate Ministry of Cooperation, signaling a renewed political commitment. Its mandate is to provide a separate administrative, legal, and policy framework for strengthening the cooperative movement and realizing the vision of 'Sahakar Se Samriddhi' (Prosperity through Cooperation).
Key Objectives:
- Strengthen cooperative societies at the grassroots level.
- Promote ease of doing business for cooperatives.
- Enable multi-state cooperatives to become vibrant economic entities.
- Streamline regulatory processes and promote professionalism.
Other Key Initiatives
Computerization of PACS
Union Cabinet approved the computerization of all 63,000 functional Primary Agricultural Credit Societies (PACS) in 2022 to improve efficiency, transparency, and integration.
National Cooperative Database
Development of a comprehensive national database of cooperatives to enable better policy planning and monitoring.
New Multi-State Cooperatives
Initiatives to form new multi-state cooperative societies focusing on organic products (National Cooperative Organic Ltd.), seed production, and exports.
Review of MSCS Act, 2002
Steps are being taken to amend the Multi-State Cooperative Societies Act, 2002, for more facilitative, transparent, and autonomous functioning.
Way Forward: Realizing Cooperative Potential
Cooperatives represent a unique democratic and inclusive model of economic organization, vital for grassroots development and empowering marginalized sections. Despite their transformative potential, challenges like politicization, financial mismanagement, and lack of professionalism have hindered their optimal performance. The creation of a dedicated Ministry of Cooperation and other recent initiatives signal a renewed impetus to revitalize this sector.
Key Areas for Progress:
- Strengthening Autonomy and Democratic Control: Strict adherence to 97th Amendment principles, depoliticizing elections, and minimizing government interference.
- Professionalization: Investing in management training, auditing, and adopting modern business practices.
- Financial Prudence: Improving internal controls, governance, and loan recovery mechanisms.
- Market Linkages and Value Addition: Facilitating access to modern markets, technology, branding, and processing units.
- Capacity Building: Training members and staff in financial literacy, digital skills, and entrepreneurial competencies.
- Digitalization: Computerization of PACS and other cooperatives for efficiency and transparency.
By addressing these areas, cooperatives can truly realize the vision of Sahakar Se Samriddhi
(Prosperity through Cooperation) and serve as robust non-state actors contributing to India's inclusive and sustainable growth.