Cooperative Societies in India

The Central Government informed the Lok Sabha that out of 8.48 lakh cooperative societies in India, only 3.49 lakh are in profit, while a large number are under stress. Around 2.11 lakh societies are running in losses, 1.41 lakh are non-functional, and 47,688 are under liquidation. This highlights the overall weak financial health of the cooperative sector.

State-wise Performance

States with High Defunct Societies

Uttar Pradesh has the highest percentage of defunct cooperatives at 41.8%, followed by Madhya Pradesh, Rajasthan, Andhra Pradesh, and West Bengal.
Among smaller regions, the situation is more severe in Nagaland (72.7%), Delhi (67.1%), Sikkim (55.3%), Manipur (52%), and Chandigarh (46.4%).
Better Performing States

States like Maharashtra, Gujarat, Tamil Nadu, Karnataka, and Telangana have managed to keep most of their societies functional.
Concentration of Liquidation

The states of Maharashtra, Gujarat, Telangana, Karnataka, and Madhya Pradesh together account for 93.44% of societies under liquidation.
Reasons for Poor Performance

Dairy Cooperatives

Dairy cooperatives have been affected after the COVID-19 due to price crashes and rising input costs, despite increased production.
Housing Cooperatives

Housing cooperatives face financial stress due to losses in scam-hit cooperative banks, along with issues like non-payment of dues, fund mismanagement, and redevelopment delays.
Credit & Thrift Societies

These societies suffer from weak regulation and limited financial resources, leading to irregular lending, high interest burdens, and vulnerability to frauds.
Women’s Cooperatives

Women’s cooperatives are constrained by limited access to finance, social barriers, lack of networks, and high work-life stress.
About Cooperatives

Cooperatives are people-centered enterprises that are owned, controlled, and managed by their members to meet common economic, social, and cultural needs. India has one of the world’s largest cooperative networks, with over 8 lakh cooperatives operating in sectors such as agriculture, credit, dairy, housing, and fisheries.

Cooperatives play a major role in the economy, contributing about 20% of agricultural credit, 35% of fertilizer distribution, 31% of sugar production, 13% of wheat procurement, and 20% of paddy procurement.

Evolution of Cooperatives in Pre-Independence Era

Early Legislative Framework

The cooperative movement in India began with the recommendations of the Indian Famine Commission, which led to the enactment of the Cooperative Credit Societies Act, 1904. This was the first law to promote cooperative institutions in India. It was later expanded by the Cooperative Societies Act, 1912, which broadened the scope beyond credit societies.

Institutional Strengthening

In 1915, the Maclagan Committee was appointed to examine whether cooperatives were functioning on sound economic and financial lines. Its recommendations helped improve governance and efficiency.

Decentralisation under Reforms

The Montagu-Chelmsford Reforms made cooperation a provincial subject, giving provinces greater authority to promote and regulate cooperatives.

Impact of Great Depression

After the 1929 economic depression, several committees were set up in provinces like Madras, Bombay, and Punjab to restructure cooperatives and address financial weaknesses.

Gandhian Philosophy

Mahatma Gandhi strongly supported cooperatives as a means to achieve economic equality and decentralisation of power. He viewed cooperation as a tool for empowering people and building a self-reliant society.

He also experimented with cooperative living through initiatives like the Phoenix Settlement and Tolstoy Farm in South Africa.

Evolution of Cooperatives in Post-Independence India

Planned Economic Development

The First Five-Year Plan (1951–56) emphasized the promotion of cooperatives as instruments of rural development and community participation.Cooperatives became central to agricultural credit, marketing, and rural development.

Legal and Institutional Framework

The Multi-State Co-operative Societies Act, 2002 enabled the formation and smooth functioning of cooperatives operating across multiple states.

Its amendment in 2022 introduced a Co-operative Election Authority to ensure transparent and fair elections.

State Cooperatives

Cooperatives operating within a single state are governed by respective State Cooperative Societies Acts under Entry 32 of the State List.

Multi-State Cooperatives

Cooperatives operating across states are governed by the Multi-State Co-operative Societies Act, 2002 under Entry 44 of the Union List.

Regulatory Authorities

• State cooperatives are regulated by the Registrar of Cooperative Societies at the state level.

• Multi-state cooperatives are regulated by the Central Registrar.

Banking Regulation

Cooperative banks are registered under cooperative laws but are regulated by the Reserve Bank of India under the Banking Regulation Act, 1949.

Rural Cooperative

The National Bank for Agriculture and Rural Development supervises and regulates rural cooperative banks, ensuring their proper functioning and financial health.

Constitutional Status

The 97th Constitutional Amendment Act gave constitutional recognition to cooperatives by:

• Making the right to form cooperative societies a fundamental right (Article 19)

• Introducing Article 43B as a Directive Principle promoting cooperatives

• Adding Part IX-B to regulate cooperative societies

Dedicated Ministry

In 2021, the Government established the Ministry of Cooperation to exclusively focus on cooperative development. Earlier, this responsibility was under the Ministry of Agriculture.

International Day of Cooperatives

The International Day of Cooperatives is celebrated every year on 6th July to highlight the role of cooperatives in economic and social development. The theme for 2024 is “Cooperatives Building a Better Future for All.”

This theme aligns with the vision of the UN Summit of the Future, which focuses on “Multilateral solutions for a better tomorrow.” It emphasizes how collective action and cooperation can address global challenges.

The 2023 UN Secretary-General’s Report on Cooperatives in Social Development recognized that cooperatives have consistently contributed to inclusive growth, especially by supporting marginalized and vulnerable communities.

Impact of Cooperatives

Empowering Marginalised Communities

The Amul dairy cooperative in Gujarat has over 3.6 million milk producers, many of whom are small and marginal farmers. It ensures fair prices for milk, promotes rural livelihoods, and empowers women by providing them with stable income opportunities.

Boosting Agricultural Productivity and Marketing

The Indian Farmers Fertiliser Cooperative Limited is one of the world’s largest fertilizer producers. It provides farmers with fertilizers, seeds, and credit at affordable rates, helping improve agricultural productivity and farm incomes.

Facilitating Access to Essential Services

The Kerala State Milk Marketing Federation ensures that milk procured from farmers is supplied to consumers at reasonable prices in Kerala.

Promoting Inclusive Growth and Job Creation

According to a report by NITI Aayog, sugar cooperatives in Maharashtra generate employment for over 5 lakh people, both directly and indirectly.

Legal Framework and Support for Cooperatives in India

Cooperative Societies Act

In India, cooperatives are governed by the Cooperative Societies Act, which is implemented at both the state and national levels. Since cooperatives are a state subject, individual states have their own laws, while the central framework ensures overall guidance.

Multi-State Cooperative Societies Act, 2002

The Multi-State Co-operative Societies Act, 2002 regulates cooperatives that operate across more than one state. It provides a legal framework for their registration, management, and functioning.

National Cooperative Policy (2002)

The National Cooperative Policy, 2002 aims to create an enabling environment for the growth of cooperatives. It focuses on improving:

• Governance

• Member participation

• Financial sustainability

National Cooperation Policy 2025

The proposed National Cooperation Policy 2025 aims to strengthen India’s cooperative movement by promoting economic democratization and uplifting rural economies through collective participation.

Government Initiatives to Strengthen Cooperatives

Umbrella Organization for UCBs

The Reserve Bank of India has approved the National Federation of Urban Co-operative Banks and Credit Societies Ltd. to set up an Umbrella Organization (UO) for Urban Cooperative Banks (UCBs). This body will provide IT infrastructure and operational support to around 1,500 UCBs.

Ensuring Transparency and Sustainability

• Model Bye-Laws for PACS: Designed to make Primary Agricultural Credit Societies more multipurpose, transparent, and efficient.

• World’s Largest Decentralised Grain Storage Plan (2023): Aims to improve food storage infrastructure through cooperatives.

• Expansion of PACS: The government plans to ensure every panchayat has a PACS by 2029, aligned with Narendra Modi’s vision of “Sahkar se Samriddhi” (Prosperity through Cooperation).

Other Key Initiatives

• National Cooperative Database: Creation of an authentic and updated data repository for better policy-making.

• Financial Support: National Cooperative Development Corporation has issued ?2,000 crore bonds to support cooperative welfare.

• GeM Portal Inclusion: Cooperatives are now recognized as ‘buyers’ on the Government e-Marketplace, improving procurement efficiency.

• Expansion of NCDC: To enhance financial assistance and outreach.

• National Cooperative Organic Limited (NCOL): Established to promote organic farming and ensure fair prices for farmers.

• Bharat Organic Atta: Launched to promote cooperative-led organic products.

Challenges Faced by Cooperatives

Governance Challenges

Cooperatives often suffer from lack of transparency, accountability, and democratic decision-making. Limited participation of members, especially marginalized groups, and the concentration of power in a few individuals weaken their inclusive character.

Limited Access to Financial Resources

Many cooperatives, particularly those serving weaker sections, struggle to access finance. They often lack collateral and proper documentation required by formal institutions, making it difficult to secure loans.

Socio-economic Disparities and Exclusion

Cooperatives are sometimes affected by structural inequalities and lack of inclusivity. Marginalized communities may not get equal representation or benefits.

Infrastructural Constraints

Poor infrastructure and lack of connectivity limit the efficiency and outreach of cooperatives, especially in rural areas. This affects their ability to access markets and operate effectively.

Lack of Technical and Managerial Capacity

Many cooperatives lack trained personnel and professional management. Limited access to training and skill development results in outdated practices and inefficiencies.

Social and Cultural Factors

Lack of awareness about the cooperative model and its benefits discourages participation. Additionally, social hierarchies and caste-based divisions can create barriers to equal participation and representation.

Successful Cooperatives in India

Amul

Amul is a globally recognized dairy cooperative that played a key role in India’s White Revolution. It transformed rural livelihoods by ensuring fair prices to farmers and building a strong supply chain for milk and dairy products.

Indian Farmers Fertiliser Cooperative Limited

IFFCO is one of the largest fertilizer cooperatives in the world. It provides farmers with essential inputs like fertilizers at affordable prices, helping improve agricultural productivity and incomes.

Self-Employed Women's Association

SEWA is a pioneering cooperative movement that empowers women workers, especially in the informal sector, by providing them with livelihood opportunities, financial services, and social security.

About the ICA ( International Cooperative Alliance )Global Conference

The ICA Global Conference is organized by the International Cooperative Alliance, founded in 1895 to promote and unite cooperatives worldwide. It serves as a major global platform for discussing challenges, opportunities, and strategies for the cooperative sector.

Objectives of the Conference

• Strengthen the global cooperative movement through collaboration and sharing best practices

• Align cooperative initiatives with global goals like the United Nations Sustainable Development Goals (SDGs)

• Address emerging issues such as climate change, digital transformation, and economic inequality

Membership and Participation

The ICA represents over 315 cooperative organizations from more than 110 countries, covering sectors such as agriculture, banking, housing, and consumer services.

Participants include cooperative leaders, policymakers, academicians, and representatives from international organizations.

News Summary: ICA Global Cooperative Conference 2024

India hosted the ICA Global Cooperative Conference 2024 in New Delhi on November 25. The event was inaugurated by Narendra Modi, along with Bhutan’s Prime Minister Tshering Tobgay, and hosted by Amit Shah.

The five-day conference saw participation from around 3,000 delegates, including 1,000 international representatives from over 100 countries.

National Cooperation Policy (NCP) 2025

The National Cooperation Policy (NCP) 2025 provides a strategic roadmap to revitalize India’s cooperative sector and align it with the vision of becoming a “Viksit Bharat” by 2047. It is rooted in the principle of “Sahkar se Samriddhi” (Prosperity through Cooperation), aiming to promote economic democratization and rural development through collective participation.India has a vast cooperative network with over 8.44 lakh cooperatives, including around 2 lakh credit cooperatives and 6 lakh non-credit cooperatives across sectors like dairy, housing, and fisheries.With more than 30 crore members, cooperatives play a crucial role in rural livelihoods, financial inclusion, and community development. Notably, India accounts for over one-fourth of the world’s cooperatives.

Six Mission Pillars of NCP 2025

1. Strengthening the Foundation

This pillar focuses on legal reforms, better governance, improved access to finance, and digitalization of cooperatives.

2. Promoting Vibrancy

It aims to create a dynamic cooperative ecosystem by expanding business opportunities, exports, and rural clusters.

3. Making Cooperatives Future-Ready

This includes technology integration, professional management, and development of a cooperative digital stack.

4. Promoting Inclusivity and Deepening Reach

The policy emphasizes inclusive development by expanding cooperatives as a people’s movement and ensuring participation from marginalized sections.

5. Entering New and Emerging Sectors

Cooperatives will be encouraged to enter sectors such as biogas, clean energy, warehousing, healthcare, and other sunrise industries.

6. Shaping the Young Generation

This pillar focuses on education, training programs, and employment opportunities to attract youth into the cooperative sector.