The Cooperative Movement in India (GS Paper 2, Polity)
Introduction:
- India’s cooperative movement has long been an essential element of its economic and social development.
- It plays a critical role in promoting inclusive growth, supporting rural development, and ensuring financial inclusion for millions of Indians.
- The movement is marked by over 800,000 societies across 29 sectors, making it a significant player in India’s socio-economic landscape.
- As India prepares to host the 2024 International Cooperative Alliance (ICA) Global Conference, it serves as an opportunity to highlight the achievements and challenges of this model.
What is a Cooperative Society?
- A cooperative society is a member-owned, voluntary organization that operates to fulfill the common economic, social, and cultural needs of its members.
- Unlike profit-driven businesses, cooperatives focus on mutual assistance, collective welfare, and self-help.
- Members of a cooperative share both the benefits and responsibilities of the organization, promoting democratic decision-making and equality.
Historical Evolution of the Cooperative Movement:
The origins of cooperatives in India can be traced to informal community practices, such as mutual-loan associations, chit funds, and community resource management (e.g., Devarai or Vanarai). However, formal cooperative legislation began in the early 20th century.
Pre-Independence Period:
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- In 1891, a cooperative society was established in Punjab to manage common village land.
- The 1904 Cooperative Credit Societies Act legalized cooperatives, primarily focusing on credit facilities but excluded non-credit cooperatives.
- The Government of India Act, 1919, empowered provinces to regulate cooperatives, resulting in several provincial cooperative laws, including the Bombay Cooperative Society Act of 1925.
Post-Independence:
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- After independence, cooperatives became vital tools in decentralizing economic power and ensuring equitable development.
- The establishment of the National Cooperative Development Corporation (NCDC) in 1963 and NABARD in 1982 helped foster rural credit and cooperative growth.
- The 97th Constitutional Amendment (2011) granted the right to form cooperatives as a fundamental right under Article 19 and introduced Article 43-B to promote cooperatives.
- The establishment of the Ministry of Cooperation in 2021 further emphasizes the government's commitment to this sector.
Types of Cooperatives in India:
India’s cooperative movement covers a wide range of sectors, ensuring its presence across various aspects of daily life.
- Consumer Cooperatives: These provide goods directly from producers to consumers, eliminating intermediaries. An example is Kendriya Bhandar.
- Producer Cooperatives: These support small-scale producers with production materials and equipment.
- Cooperative Marketing Societies: They assist farmers and producers in marketing their products, such as AMUL.
- Cooperative Credit Societies: These provide financial services to underserved communities, including Urban Cooperative Banks and Rural Service Cooperatives.
- Cooperative Farming Societies: These support small farmers by enabling access to large-scale farming benefits, such as irrigation cooperatives.
- Housing Cooperatives: These enable affordable housing through collective land development efforts, like Metropolitan Housing Cooperative Society.
Recent Developments in the Cooperative Sector:
The Indian government has launched several initiatives to further strengthen the cooperative sector.
- Sahakar Se Samriddhi Scheme: Launched by the Ministry of Cooperation to connect rural villages to cooperative societies, promoting inclusivity and prosperity.
- Model Bye-Laws for PACS: This initiative aims to improve governance and inclusivity in Primary Agricultural Credit Societies (PACS).
- Digitalization of PACS: The government is investing Rs 2,516 crore to modernize and integrate over 63,000 PACS with NABARD, improving efficiency.
- Multipurpose PACS: The creation of new multipurpose PACS in rural areas aims to provide a range of services like dairy, fisheries, and grain storage.
- Farmer Producer Organizations (FPOs): These groups empower farmers by linking them directly to markets and enhancing their bargaining power.
- PM-KUSUM Scheme: This program promotes solar pumps for irrigation through PACS, fostering sustainable agriculture practices.
Impact on Rural Development:
Cooperatives have played a significant role in addressing rural challenges, offering financial inclusion and economic opportunities to marginalized communities.
- Financial Inclusion: Cooperatives, especially credit societies like Urban and Rural Cooperative Banks, offer affordable credit to small farmers and entrepreneurs, facilitating their participation in the economy.
- Women Empowerment: Women's cooperatives, such as Lijjat Papad, have been instrumental in creating economic opportunities for women in rural areas.
- Rural Development: Cooperatives improve living standards by providing access to affordable goods, housing, and credit, contributing to overall rural development.
Challenges Faced by Cooperatives:
While cooperatives in India have made significant strides, they still face a range of challenges:
- Governance Issues: Lack of transparency, accountability, and democratic management often hinders cooperative effectiveness.
- Limited Financial Resources: Cooperatives, especially those serving marginalized groups, struggle to access the capital needed for expansion.
- Exclusion and Inequality: Socio-economic disparities within cooperatives can limit their inclusivity and reach.
- Infrastructure and Technical Constraints: Limited infrastructure and outdated technological capacities hamper the growth and efficiency of cooperatives.
- Political Interference: Political influence often undermines the autonomy of cooperatives, affecting their ability to serve members effectively.
Way Forward:
To ensure the sustainable growth of cooperatives, several strategies can be adopted:
- Infrastructure Development: More investment in cold storage facilities, warehouses, and processing units can help strengthen value chains and improve market access.
- Innovation and Diversification: Cooperatives should be encouraged to diversify their activities and become hubs for innovation, moving beyond traditional rural sectors.
- Cooperative-led Tourism: Rural cooperatives can tap into the growing tourism sector by promoting eco-tourism and community-based tourism initiatives.
- Expansion of Services: Financial cooperatives can broaden their service offerings to include insurance products, investment opportunities, and financial education, helping to build a more financially inclusive society.
Conclusion:
- India's cooperative movement is pivotal to its strategy for inclusive and sustainable growth.
- By fostering financial inclusion, economic opportunities, and rural development, cooperatives have helped bridge gaps in India’s socio-economic landscape.
- While challenges persist, the movement's potential for positive change remains immense, particularly when supported by sound policies, infrastructure, and innovative initiatives.
- Through cooperatives, India can continue to progress toward a more equitable and prosperous future for all.
