Cooperative spirit (The Hindu, GS-1, Cooperative)

Cooperative spirit (The Hindu, GS-1, Cooperative)

Context:- Cooperatives play a vital role in the country’s development, which can be seen in many areas, but are seldom the focus of policy planning. The creation of a Union Ministry of cooperation to oversee the cooperatives sector will redeem it from negligence, descrimination according to the Government. These Cooperatives are dominant in agriculture, credit and marketing among others but not limited to those. Some are big such as IFFCO which has around a third of the market share in fertilizers.

Cooperative movement a history in India and the world:-

  • What is cooperative?

      • According to ILO, The Cooperative Societies are defined as an autonomous association of people united voluntarily to meet their common goals in economic, social, and cultural areas and aspirations through a jointly-owned and democratically-controlled enterprise. 
  • Characteristics of Cooperative Societies:-

    • Cooperative societies work on democratic principles of equality. People who are not financially stable can become a part of a common economic goal. 
    • Voluntary Formation and Participation:-  Becoming a member of a cooperative is very easy and free and is a voluntary process.
    • One vote per member: Members of cooperatives are elected by common members  and every cooperative is headed by managing committee, 
    • A registered cooperative society is recognized as an independent entity under the indian law. 
    • Cooperatives are always advantageous for people from the middle and low-income brackets who can have economic sustainability through common economic goals. 
    • The surplus produce or profits which are generated in the cooperative sector is distributed amongst its members rightfully according to their shares. 
  • A history of Co-operative Movement in Pre-Independence Era:

      • The Cooperatives were first started in Europe, then the British Government replicated it in India to mitigate the hardship of the poor farmers, particularly harassment by moneylenders who lent money to the poor farmers at exorbitant interest rates.
      • British government came forward and passed three acts which came into existence on the pretest the Pune and Ahmednagar peasant were been harassed by the money lenders:
        • The Deccan Agricultural Relief Act (1879)
        • The Land Improvement Loan Act (1883)
        • The Agriculturists Loan Act (1884)
      • The first credit cooperative society was formed in Banking in 1903 which was supported by the Government of Bengal. It was registered under the Friendly Societies Act .
      • Cooperative Credit Societies Act enacted in 1904 which gave Cooperative a definite structure and shape.
      • In 1919 in Mont-ford reforms cooperation became a provincial subject and the provinces were authorized to make their own cooperative laws.
        • The categorization of cooperation was carried on to the Government of India Act, 1935.
      • The Multi-Unit Cooperative Societies Act was enacted in 1942 which covers Cooperative Societies with membership from more than one province.
  • Co-operative Movement in Post-Independence Era:

    • Cooperatives became an integral part of Five-Year Plans, the idea of cooperatives finding legitimacy from the USSR where cooperatives succeed in making the USSR an economic power.
    • The National Development Council (NDC) in 1958 had recommended a national policy on cooperatives.
      • This council also recommended for training of personnel and setting up of Co-operative Marketing Societies.
    • National Cooperative Development Corporation Act in 1962 formed National Cooperative Development Corporation (NCDC) which is a statutory corporation.
    • Parliament of India enacted the Multi-State Cooperative Societies Act in 1984 which consolidated different laws governing the same types of societies.
    • National Policy on Cooperatives came in 2002.

Committee related to the Cooperative Movements in India

1. All-India Rural Credit Survey Committee Report (1954)

2. Chaudhary Brahm Prakash Committee (which proposed a model law) (1990)

3. Mirdha Committee (1996)

4. Jagdish Kapoor Committee (2000)

5. Vikhe Patil Committee (2001)

6. V. S. Vyas Committee (2001 and 2004)


Constitutional Angle:-

The 97th Constitutional Amendment Act (2011) This amendment gave constitutional status and protection to the co-operative societies.
Fundamental right Article 19 (1) (c) as ‘Right to form cooperatives.’
Directive Principle of State Policy Art. 43-B “The state shall endeavour to promote voluntary formation, democratic control, autonomous functioning and professional management of cooperative societies”.
Part IX-B “The Co-operative Societies” (Articles 243-ZH to 243-ZT).
State List State Subject under entry No.32 (7th schedule) of the of the Constitution of India
  • Part IX B  and form  Art 243ZH – 243ZT talks about Cooperatives

Why do we need cooperatives? :-

  • Cooperatives provide agricultural credits and funds where state and private sectors have not been able to reach the nooks and corners.
  • Cooperatives provide strategic inputs for the agricultural-sector as well as consumer societies that meet their consumption requirements at concessional rates.
  • Cooperatives is an organization for the poor and discriminated against who wish to solve their problems collectively.
  • Cooperatives soften the class conflicts and help in reducing the social cleavages.
  • Cooperatives reduce the bureaucratic hurdles and follies of political factions.
  • Cooperatives overcome the constraints of agricultural development such as lack of resources.
  • Cooperatives provide a conducive environment for small and cottage industries.
  • Cooperatives penetrate down to remote places where state and private sectors could face trouble to do much.
  • Cooperatives remove intermediaries and they help farmers to have a direct interaction with the consumer. e.g. – NAFED
  • Co-operative societies are helping in building up infrastructure such as storage godowns which includes cold storages, rural roads and in providing facilities like irrigation, electricity, transport and health.

Challenges in cooperatives in India:-

  • Co-operative movement lacks spontaneity for example Co-operative has not been emanated from the people themselves. 
  • Co-operative is not able to ensure active membership, speedy exit of non-user members, lack of member communication and awareness building measures.
  • There are Serious inadequacies in governance which includes related to boards’ roles and responsibilities.
  • There is a general lack of efforts for capital formation in cooperatives particularly concerning enhancing member equity and thus member stake.
  • IIndian cooperatives are lacking in cost competitiveness which is arising out of issues such as overstaffing, and overall competitiveness due to the entry of MNCs in Indian market.
  • Increased politicization and excessive role of the government in cooperatives working chiefly arising out of the loopholes and restrictive provisions in the Cooperative Acts.
  • Finance is a vital link in the cooperative system for example cooperative banks itself remains very poor.
  • The NPAs of the cooperative banks are higher in comparison of commercial banks i.e. in NPAs to asset ratios – PMC crisis
  • Regional variations can be seen in cooperative movement in India which is associated with limited success of cooperatives in some of the most fertile and populous regions points towards the link with demographic and cultural factors.

Success of Cooperative movement in India and the World:-

  • Amul is an example of Cooperative success.
  • BHOODAN Movement is a mix of success and failure.
  • USSR success in cooperative farming is a milestone.

Way forward:-

  • To secure the autonomy, independence and progress of the cooperatives we must take the following steps :-
  • There is a need to incorporate provisions in the law which quantify the minimum level of participation required by a member of a cooperative annually.
  • There should be encouraging democratic participation by members, developing effective leadership who can even influence policy formulation by the government favourable to cooperatives.
  • Cooperative must be Infused by professionalism as it is a key requirement for conversion of ideas/policies into tangible outcomes.



Download Plutus IAS Daily Current Affairs of 12th July 2021

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