Cooperative Societies in India, list, types, History and Importance

Table of Contents

Introduction to Cooperative Societies

Cooperative societies represent a distinctive and collaborative form of organization where individuals voluntarily come together to address shared economic, social, and cultural needs. Rooted in the principles of mutual assistance and democratic control, cooperative societies are owned and managed collectively by their members, distinguishing them from traditional business models. These societies exist across various sectors, ranging from agriculture and finance to consumer goods and housing.

Through a combination of pooled resources, equitable decision-making, and shared benefits, cooperative societies foster community empowerment, reduce economic inequalities, and promote sustainable development. By prioritizing the well-being of their members over profit maximization, cooperative societies exemplify the potential of collective action to achieve common goals while fostering a sense of ownership, solidarity, and mutual support among participants.

Cooperative Societies Act

The Cooperative Societies Act is a legal framework designed to regulate and govern the establishment, functioning, and management of cooperative societies. Cooperative societies are unique forms of organizations that are owned and operated by their members, who come together voluntarily to address common economic, social, and cultural needs and aspirations through a jointly owned and democratically controlled enterprise.

The main objectives of the Cooperative Societies Act are to promote and support the development of cooperative societies as a means to achieve economic self-sufficiency, improve the living standards of their members, and contribute to the overall socio-economic development of a country or region. The act provides a legal structure that enables individuals to pool their resources and efforts to achieve common goals while maintaining a strong sense of collective ownership and control. Key provisions commonly found in Cooperative Societies Acts include:

Registration: The act outlines the procedure and requirements for registering a cooperative society. This process ensures that society adheres to the legal standards and principles of cooperation.
Membership: It defines the eligibility criteria for membership, the rights and responsibilities of members, and the conditions for admission and withdrawal from society.
Democratic Control: The act emphasizes the democratic nature of cooperative societies, typically requiring regular general meetings where members can participate in decision-making, elect representatives, and approve financial matters.
Limited Liability: Members of a cooperative society usually enjoy limited liability, meaning their personal assets are protected in case of the society’s financial issues or debts.
Profit Distribution: Cooperative societies often distribute any surplus generated among their members in proportion to their participation or patronage. A portion of the surplus is usually allocated to reserves for society’s future needs and growth.
Common Purpose: The act clarifies the permissible objectives of cooperative societies, which can span various sectors such as agriculture, finance, housing, consumer goods, and more.
Auditing and Reporting: Cooperative societies are often required to maintain proper financial records, undergo regular audits, and submit reports to relevant regulatory authorities.
Government Oversight: The act may establish regulatory bodies or government departments responsible for overseeing the functioning of cooperative societies, ensuring compliance with the law, and providing guidance when needed.
Amalgamation and Dissolution: The act typically outlines procedures for merging or amalgamating multiple cooperative societies and the conditions under which a society can be dissolved.
Dispute Resolution: Mechanisms for resolving disputes among members or between the society and its members are often provided within the act.
Cooperative societies have been recognized as powerful tools for grassroots economic development, poverty reduction, and social empowerment. They can enable marginalized and economically weaker sections of society to access resources, markets, and services that they might not have been able to attain individually.

The specifics of the Cooperative Societies Act can vary from one jurisdiction to another, as different countries might tailor their legislation to suit their unique socio-economic contexts and development priorities. Nonetheless, the fundamental principles of voluntary participation, democratic control, and shared benefits remain at the core of cooperative societies worldwide.

Cooperative Societies in India

Cooperative societies in India play a significant role in fostering economic development, rural empowerment, and social welfare. They are guided by the Cooperative Societies Act of 1912 and are regulated by the respective state governments. Over the years, cooperative societies have emerged as crucial instruments for addressing the challenges of agricultural and rural development, financial inclusion, and improving the livelihoods of marginalized communities. Here are some key aspects of cooperative societies in India:

Types of Cooperative Societies: India has a diverse range of cooperative societies that cater to different sectors such as agriculture, credit and finance, dairy, fisheries, handloom and handicrafts, housing, consumer goods, and more. Some notable examples include agricultural credit societies, dairy cooperatives (like Amul), and urban consumer cooperative stores.
Agricultural Credit Cooperatives: One of the earliest and most significant forms of cooperatives in India is agricultural credit societies. These societies provide farmers with access to affordable credit and financial services, reducing their dependency on moneylenders and improving agricultural productivity.
Dairy Cooperatives: India’s dairy cooperative movement is particularly noteworthy. The most famous example is the Amul cooperative model, which has transformed the dairy industry by ensuring fair returns to farmers and delivering quality dairy products to consumers.
Urban Consumer Cooperatives: These cooperatives focus on providing essential goods and services to consumers at reasonable prices. They enable bulk purchasing, thus reducing costs, and ensuring that consumers have access to quality products.
Credit and Banking Cooperatives: Cooperative banks operate at various levels, from rural cooperative credit societies to state and district cooperative banks. They offer financial services, including savings and credit facilities, to people in both urban and rural areas, promoting financial inclusion.
Primary Agricultural Credit Societies (PACS): PACS are the smallest cooperative credit institutions in rural areas. They provide short-term loans to farmers for agricultural and related purposes. PACS are instrumental in disbursing credit at the grassroots level.
National Cooperative Development Corporation (NCDC): NCDC is a central government agency that provides financial assistance and resources to support cooperative development projects across various sectors.
Challenges and Reforms: While cooperative societies have played a crucial role in India’s development, they have also faced challenges such as mismanagement, political interference, lack of professionalism, and inadequate resources. In recent years, there has been a push for reforms to modernize cooperative governance, enhance transparency, and improve financial viability.
Digital Transformation: To enhance efficiency and outreach, many cooperative societies are adopting digital technologies. This includes online banking, mobile applications for accessing services, and using data analytics for better decision-making.
Government Support: The government of India and state governments provide support in terms of funding, training, and policy initiatives to strengthen cooperative societies and ensure their continued contribution to rural and agricultural development.

In conclusion, cooperative societies in India have a rich history and have evolved to address a wide range of socio-economic needs. They continue to be a vital component of rural development, poverty alleviation, and economic empowerment, contributing significantly to the nation’s overall progress.

History of Cooperative Movement in India

Read here about the Pre-History and Post-History of the Cooperative Movement in India.

Pre-Independence History of Cooperative Movement in India:

The roots of the cooperative movement in India can be traced back to the pre-independence era, characterized by colonial rule and widespread socio-economic challenges. The exploitative practices of moneylenders, coupled with the agrarian distress faced by farmers, prompted the emergence of cooperative initiatives.

Late 19th Century: The initial impetus for cooperative efforts came from the efforts of individuals like Vithalrao Krishnaji Vandekar and G.G. Agarkar in Maharashtra. They established the Poona Cooperative Credit Society in 1896, which served as a precursor to the formal cooperative movement.
Early 20th Century: The Cooperative Societies Act of 1904 passed in Madras Presidency and the establishment of the first cooperative credit society in Kanjivaram, Tamil Nadu, marked significant steps. These developments laid the groundwork for the formal institutionalization of cooperatives.
1910s-1940s: The enactment of the Cooperative Societies Act in 1912 by the British colonial government provided a legal framework for cooperative societies. Cooperative credit societies aimed at providing affordable credit to farmers gained prominence. The Kheda District Milk Producers’ Cooperative Union in Gujarat (1917) and the Kaira District Cooperative Milk Producers’ Union Limited (Amul) in 1946 exemplified successful cooperative models, emphasizing dairy production and marketing.

Post-Independence History of Cooperative Movement in India:

Following India’s independence in 1947, the cooperative movement gained further traction as a means to promote economic self-sufficiency, alleviate rural poverty, and empower marginalized sections of society.

1950s-1960s: The establishment of the National Cooperative Development Corporation (NCDC) in 1963 marked a significant development. It aimed to provide financial resources and support for cooperative initiatives across various sectors. The “Cooperatives for Development” strategy emerged during this period, focusing on agricultural and rural development.
1970s-1980s: The cooperative movement expanded into sectors beyond agriculture. Various state-level cooperative banks were set up to provide financial services to rural areas. The emergence of urban cooperative banks aimed to cater to the financial needs of urban areas.
1990s-2000s: The 1990s brought challenges as economic liberalization led to changes in the Indian economy. Cooperative societies faced issues such as mismanagement, political interference, and lack of modernization. However, efforts to reform and modernize cooperative governance were initiated during this period.
Recent Developments and Challenges: In recent years, cooperative societies have continued to play a crucial role in financial inclusion, rural development, and empowerment. Government initiatives like the National Cooperative Policy (2002) and the Saansad Adarsh Gram Yojana (SAGY) have aimed at promoting cooperatives for comprehensive rural development.

Despite their historical significance, cooperative movements have faced challenges related to governance, professionalism, and adaptability to modern economic dynamics. Reforms to enhance transparency, professional management, and technological integration have been ongoing.

In conclusion, the cooperative movement in India has a rich history spanning both pre-independence and post-independence periods. From its early origins as a response to colonial exploitation to its contemporary role in addressing socio-economic challenges, cooperatives continue to be vehicles for community empowerment, economic growth, and inclusive development.