Syllabus
GS Paper II – Development Processes and the Development Industry — the Role of NGOs, SHGs, various groups and associations, donors, charities, institutional and other stakeholders.
Context
On the 102nd International Day of Cooperatives, the Union Home Minister and Minister of Cooperation spoke at the ‘Sahkar se Samriddhi’ program in Gujarat.
Cooperatives in India
Introduction
Cooperatives, people-centered enterprises owned and operated by their members, address common economic, social, and cultural needs. India boasts one of the world’s largest cooperative networks, spanning sectors such as agriculture, credit, dairy, housing, and fisheries. Notably, cooperatives contribute significantly: 20% in agricultural loans, 35% in fertilizer distribution, 31% in sugar production, 13% in wheat purchase, and 20% in paddy purchase.
Evolution of Cooperatives
Cooperatives in Pre-Independence Era
- First Cooperative Act (1904):
- Enacted after the Indian Famine Commission’s recommendations.
- Followed by the amended Cooperative Societies Act in 1912.
- Maclagan Committee (1915): Investigated the economic and financial soundness of the cooperative movement.
- Montague-Chelmsford Reforms (1919): Made cooperation a provincial subject, boosting the movement.
- Post-Economic Depression (1929): Committees in various regions explored restructuring possibilities for cooperatives.
- Gandhian Philosophy: Gandhi emphasized cooperation for socialistic society and decentralized power.
- South Africa: Gandhi established cooperative settlements like the ‘Phoenix Settlement’ and Tolstoy Farm.
Cooperatives in Post-Independence Era
- First Five-Year Plan (1951-56): Emphasized promoting cooperatives for comprehensive community development.
- Multi-State Co-operative Societies Act, 2002: Governs the formation and functioning of multi-state co-operatives.
- Multi-State Co-operative Societies (Amendment) Act, 2022: Introduced the Co-operative Election Authority for board elections in multi-state co-operative societies.
- 97th Constitutional Amendment Act of 2011:
- Recognized the right to form cooperative societies as a fundamental right (Article 19).
- Introduced a new Directive Principle of State Policy on Cooperative Societies (Article 43-B).
- Added a new Part IX-B to the Constitution titled “The Co-operative Societies” (Articles 243-ZH to 243-ZT).
- Empowered Parliament to enact laws for multi-state cooperative societies (MSCS) and delegated authority to state legislatures for other cooperatives.
- Union Ministry of Cooperation (2021): Assumed responsibility for cooperative affairs, previously overseen by the Ministry of Agriculture.
International Day of Cooperatives
- International Day of Cooperatives: Celebrated annually on July 6th, this day highlights the significance of cooperative enterprises worldwide.
- Theme for 2024: “Cooperatives Building a Better Future for All.” This theme emphasizes the positive impact of cooperatives on economic and social development.
- Alignment with UN Summit of the Future: The theme resonates with the upcoming UN Summit’s focus on “Multilateral solutions for a better tomorrow.”
- UN Secretary-General Report: The 2023 report recognized cooperatives’ role in promoting inclusivity and development, especially for marginalized groups.
- Momentum toward 2025: The celebration contributes to preparations for the 2025 International Year of Cooperatives.
Impacts of cooperatives
- Empowering Marginalised Communities: Amul Dairy Cooperative in Gujarat empowers rural communities by ensuring fair milk prices and economic independence, especially for women.
- Boosting Agricultural Productivity and Marketing: Indian Farmers Fertiliser Cooperative Limited (IFFCO) provides essential inputs like fertilisers, seeds, and credit to farmers, enhancing productivity and incomes.
- Facilitating Access to Essential Services: Kerala State Milk Marketing Federation (Milma) procures milk from farmers and supplies it to consumers at affordable prices, benefiting both producers and consumers.
- Promoting Inclusive Growth and Job Creation: Sugar cooperatives in Maharashtra employ over 5 lakh people, contributing significantly to rural job creation and income generation.
Government initiatives to strengthen cooperatives
- Umbrella Organization for UCBs:
- RBI approves NAFCUB’s formation of an Umbrella Organization (UO) for Urban Co-operative Banks (UCBs).
- UO provides IT infrastructure and operational support to around 1,500 UCBs.
- Transparency and Sustainability:
- Model Bye-Laws for PACS enhance transparency and make them multipurpose and multidimensional.
- World’s Largest Decentralized Grain Storage Plan (2023) in the cooperative sector.
- Goal: Every panchayat to have a PACS by 2029, aligning with Prime Minister Modi’s vision of ‘Sahkar se Samriddhi’ (Prosperity through Cooperation).
- Other Initiatives:
- National Cooperative Database for authentic and updated data.
- NCDC issues Rs 2000 crore bonds for cooperative welfare.
- Cooperatives included as ‘buyers’ on the GeM portal.
- NCDC expansion for broader impact.
- NCOL promotes organic farming and fair pricing.
- Launch of Bharat Organic Atta.
Challenges faced by cooperatives
- Governance Challenges:
- Lack of transparency, accountability, and democratic decision-making processes.
- Limited member participation and inadequate representation of marginalized communities.
- Concentration of power within a few individuals, undermining inclusivity.
- Limited Access to Financial Resources:
- Difficulty accessing loans due to lack of collateral or formal documentation.
- Especially prevalent in cooperatives serving marginalized communities.
- Socio-economic Disparities and Exclusion:
- Issues related to lack of inclusivity and structural inequalities.
- Challenges in promoting equitable participation.
- Infrastructural Constraints:
- Limited efficiency and effectiveness due to infrastructural limitations.
- Connectivity issues leading to restricted outreach.
- Lack of Technical and Managerial Capacities:
- Insufficient training and skill development initiatives.
- Outdated human resources affecting cooperative performance.
- Social and Cultural Factors:
- Limited awareness about cooperative models and their benefits.
- Social hierarchies and caste-based divisions as barriers to participation.
Way forward
- Digital Platforms and Governance:
- Implement digital platforms for financial reporting and conduct regular audits.
- Encourage member participation in decision-making processes.
- Flexible Financing Solutions:
- Establish cooperative development funds with flexible collateral requirements.
- Explore crowdfunding, social impact bonds, and other innovative financing options.
- Community Outreach and Inclusion:
- Design outreach programs to educate and attract members from marginalized communities.
- Address specific needs and challenges faced by these communities.
- Infrastructure Development:
- Advocate for government investment in rural infrastructure.
- Improve connectivity and access to markets for cooperatives.
- Capacity Building and Training:
- Partner with government agencies and training institutions.
- Offer skill-building workshops for cooperative members and managers.
- Awareness Campaigns:
- Launch targeted awareness campaigns in local languages.
- Educate potential members about cooperative benefits and principles.
Conclusion
Cooperatives play a vital role in India’s socio-economic landscape. Despite facing challenges such as governance issues, limited access to financial resources, and infrastructural constraints, they remain resilient. By implementing digital platforms, flexible financing solutions, community outreach, and capacity-building initiatives, cooperatives can continue to empower marginalized communities and contribute to sustainable development. Their inclusive and democratic nature makes them a powerful force for positive change in India.
Source: PIB
Related PYQ
“In the villages itself no form of credit organisation will be suitable except the cooperative society.” – All India Rural Credit Survey. Discuss this statement in the background of agricultural finance in India. What constraints and challenges do financial institutions supplying agricultural finance face? How can technology be used to better reach and serve rural clients? [UPSC Civil Services Exam – 2014 Mains]
Practice Question
What are the challenges faced by the cooperative sector in India, and how can these challenges be addressed to strengthen the cooperative movement? [150 words]