Cooperative Society

‘Cooperative Society’ is intended to help each other. Thus, cooperatives are those institutions which are formed for mutual assistance of its members. The cooperative movement is mainly the movement of the poor. Cooperative organisations are formed to serve their members. The weaker sections of the society can create such organisations to protect themselves from exploitation through modern means of production and distributions.

A cooperative society is a voluntary organisation of individuals who are mostly workers and small producers. They are organised under joint management on democratic methods to improve their domestic and business conditions and capital collection.

Importance of Cooperative Society

Cooperative institutions that started mainly for the provision of debt have taken many forms today. There are many cooperative institutions in the country with different sects of people as members. Cooperative Institutions arrange loans and provide funds to their members at reasonable interest. Cooperative organisations sell their offerings in Mandis at reasonable prices, thereby avoiding exploitation by middlemen. Cooperative milk laboratories collect milk from the villages and sell it in cities and provide the members with the right price for their milk.

Cooperative stores save people’s money by providing them with the right kind of goods at a reasonable price and curb arbitrary price collection by traders. Similarly, Cooperative Housing Societies provide cheap houses to the people. Today, in almost every sphere of life, cooperative institutions are engaged in the welfare of their members.

Benefits of Cooperative Societies

The cooperative movement has contributed significantly to the development of rural areas. The feeling of brotherhood and a tendency to work together has grown among the members of these societies. Moreover, a sense of real democracy is communicated among the people. Cooperative marketing institutions have helped many get out of the clutches of money lenders and protect them from the exploitation of middlemen. Through these committees, farmers get help in saving money from moneylenders; as a result, they get into the habit of saving. It, in turn, helps them to face their problem on their own.

Types of Cooperative societies

A committee is formed by the organisation of people for the manufacturing of goods. This is appropriate at a place where neither more capital is required nor more technical knowledge. The profit in it avoids going to the capitalists. Although it is a democratic arrangement of industrial production, it has unfortunately not been successful in India.

Following are the Types of Cooperative Societies:

  1. Consumer Cooperative Society: This committee is more popular. Its purpose is to purchase goods directly from the manufacturer and deliver it to the consumers at a reasonable price. In this way, the middlemen are eliminated through this committee, benefiting the members of the society. Super-mount cooperative markets have been opened in the cities to provide goods at reasonable and low prices by the cooperative society. They were initially successful, but later, due to mismanagement, corruption and lack of experience, these types of markets could not work satisfactorily in most cities.

  2. Housing Cooperative Society: This committee is formed to help the members who need lands and houses. The society has provided many facilities for these works.

  3. Lander Cooperative Society: Its purpose is to provide financial assistance to poor and middle-class people in the form of loans. They can invest that amount in some work which is beneficial for them. This loan is given at the rate of interest.

  4. Cooperative Agriculture: Its objective is to increase the size of arable land by forming a cooperative society by a group of farmers. In this way, the yield can be increased by using modern equipment in agriculture.

History of Cooperative Societies

Robert Owen, a social reformer of England, worked to improve the lives of the working class. The wealthier class of that time was putting a lot of pressure on the less privileged class. Distressed by the plight of workers, Owen began to work for the benefit of the community by making cooperation the basis. Gradually, his idea became popular and cooperative societies were developed as a useful tool to get out of the exploitation of the wealthy class.

History of Cooperatives in India

Cooperative Society in India was developed to improve the condition of farmers working in agriculture. When cooperatives started in India, the farmers of the country were trapped in the web of moneylenders. Even after working hard, they were not getting the full results of their hard work. Also, the country’s cottage industry businesses were in bad shape at that time. People associated with traditional handicrafts companies were not getting fair prices and markets.

During British rule in India, there was no one to listen to the farmers and craftsmen of India. In 1892, Sir Frederick Nicholson, an Englishman, met the Governor of Madras and requested to set up an agricultural bank for the workers of India. In 1904, his efforts passed the Cooperative Credit Act. According to this act, cooperative credit societies were born in each province. The government also worked to encourage these credit committees. There were many shortcomings in this act. The biggest drawback was that only credit cooperative societies could be formed based on this act, and there were no provisions for the cooperation of another nature. This act was amended in 1912 to address these deficiencies. According to this new act, a proposal for the formation of three types of committees was accepted. New cooperative banks were opened at the union, central and regional levels.

In 1919, once again, changes were made in this and handed over to cooperatives instead of the centre. The cooperatives came under regional government. By 1930, the cooperative movement spread rapidly throughout India, and the number of cooperatives at that time was 30.

Cooperative societies changed the appearance of agriculture credits, and the impact of traditional moneylenders was reduced. India’s cooperative movement also benefited from the increase in the price of agricultural products due to the second world war. They became stronger than before. During this period, the number of purchase-sale cooperatives and useful cooperatives stores increased rapidly.

Cooperatives Movement in India

After India became independent, cooperatives were placed under the influence of both the centre and the state. Large public sector cooperatives like NAFED, KRIBHCO, IFFCO, etc. started functioning in the country. Each state also created public committees on a large scale. Despite large scale government support, the cooperative movement in independent India could not achieve the success which the cooperative movement achieved in European countries like Denmark and Sweden. 

Advantages of Cooperative Societies

  • They sell cheap products because there is no advertisement cost.

  • The expenses for the maintenance of accounts and management is minimal as members work on their own without being paid.

  • It offers a decent salary and position to its employees.

  • As it is for community service, it does not black marketing and hoarding.

  • Procurement is done directly from the producers, hence the profit of middlemen is reduced.

  • It works to improve the problems of Indian farmers so that they can get facilities for storage, loans, etc.

  • The share of profit is distributed equally at a fixed rate, and the rest is put into social development works.

  • Benefits of the general public.

  • Members can get easy loans from the government.

  • This generates a feeling of cooperation among the members.

Disadvantages of Cooperative Societies

  • Since its members are mostly of low-income groups, capital can be raised in limited quantities.

  • Due to limited financial resources, it is not possible to hire highly qualified people.

  • It requires rigorous and proper care.

  • Although business is done for the members, it is not possible to refuse the members.

  • Management is mostly inefficient.

  • Members usually try to take unnecessary benefits.

Most of the problems are related to the framework of cooperatives. The cooperative movement was able to reach only 20 percent of the population of such a populated country. Most of the committees were limited to giving loans only. Lack of supervision and management of the committees, as well as of the training programs, limited the movement. Too much dependence on the government also led to its failure. The concept of cooperation with the government has reduced the benefit of the cooperative movement in India.

FAQ (Frequently Asked Questions)

Q1. What do You Mean by a Cooperative Society?

Ans: Cooperatives are institutions that are formed for mutual assistance of members. The cooperative movement is mainly the movement of the poor. Cooperative organisations are formed to serve their members.

Q2. Mention Three Advantages of Cooperative Society.

Ans: The three advantages of a cooperative society are:

  • It provides a good salary and position to its employees.

  • As it is for community service, it does not black marketing and hoarding.

  • Procurement is done directly from the producers, hence the profit of middlemen is reduced.

Q3. What are the Types of Cooperative Societies?

Ans: Given below are the types of cooperative societies:

  1. Consumer Cooperative Society: Its purpose is to purchase goods directly from the manufacturer and deliver it to the consumers at a reasonable price.

  2. Housing Cooperative Society: This committee is formed to help the members who need lands and houses. 

  3. Lander Cooperative Society: Its purpose is to provide financial assistance to poor and middle-class people in the form of loans.

  4. Cooperative Agriculture: Its objective is to increase the size of arable land by forming a cooperative society by a group of farmers. 

Q4. What are Some Disadvantages of a Cooperative Society?

Ans: Following are some of the disadvantages of a cooperative society:

  • Not many qualified employees.

  • Management is mostly inefficient.

  • Members usually try to take unnecessary benefits.