Cooperative Movement and Cooperative Societies in India

Let us find out what cooperative societies are in India. An autonomous organization of individuals joining voluntarily to satisfy their shared economic, social, and cultural needs and ambitions through a jointly-owned and democratically-controlled company, according to the International Cooperative Alliance (ICA). India is an agricultural nation that aided in the formation of the world's largest cooperative movement. In this article, we will provide a quick overview of the cooperative movement and cooperative societies in India. The year 2012 was declared the International Year of Cooperatives service by the United Nations General Assembly. 

Constitutional Provisions:

• In 2011, the Constitution (97th Amendment) Act inserted a new Part IXB (Cooperatives) following Part IXA (Municipals) to address cooperatives in India.

• In Part III of the Constitution, following the words "unions and associations," the phrase "cooperatives" was inserted.

• By designating cooperatives as a basic right of citizens, all citizens are able to organize them.

• The Directive Principles of State Policy (Part IV) now include a new Article 43B on the "development of cooperative societies."

What Factors Influence the Formation of Cooperative Societies?

According to the Cooperative Societies Act of 1912, cooperative society in India founded entirely on mutual aid and self-help principles require at least ten adult members. Members should work together for a shared good, with a desire to serve one another.

What is the MSCS, or Multi-State Credit Cooperative Society in India?

A multi-state credit cooperative has members from different states. The Multi-State Cooperative Society Act of 2002 was enacted in 2002 to govern these multi-state cooperatives. The Central Registrar of Cooperative Societies office is in charge of it.

History of Cooperative Society in India

In India, effective cooperative movements have a long history. India is an agricultural country that helped to establish the world's largest cooperative movement.

The Cooperative Credit Societies Law, passed by the British government in 1904 to offer relief to Indian peasants from the clutches of money lenders, was the first legal introduction of cooperatives in India. It allowed for the establishment of a government-sponsored ‘agricultural credit cooperative' in India.

In India, there have been several cooperative success stories, the two most notable of which are the: Green Revolution and the White Revolution. Amul India and Lijjat Papad are the two examples of the green and white revolutionary coopeoratives in India.

Importance and Phases of Cooperative Movement

• The necessity for profit is balanced against the needs of the members and the community's overall interest.

• Poor people's organizations work together to address problems.

• It provides an atmosphere that is favourable to small and cottage businesses.

• The group was formed for the benefit of all of the members.

• When people work together, they have more negotiating power.

• There are fewer social divisions and class tensions.

• It provides agricultural credits and money in areas where the public and private sectors have been unable to help.

• It offers agricultural inputs in a strategic way.

• Consumer societies satisfy their consumption needs at a reduced cost.

• Deals with agricultural development restrictions more effectively.

• It lowers political groups' bureaucratic faults and follies.

History of the Cooperative Movement in India

1. Cooperatives were first created in Europe, and the British government replicated them in India to help destitute farmers, particularly those who were harassed by moneylenders.

2. When farmers in Poona (now Pune) and Ahmednagar staged a strike against moneylenders who were charging high interest rates, the term cooperative Societies was coined.

3. The Deccan Agricultural Relief Act (1879), the Land Improvement Loan Act (1883), and the Agriculturists Loan Act were all proposed and approved at this time by the British government (1884):

4. The first credit cooperative association in banking was established in 1903, with the backing of the Government of Bengal. It took shape when the Cooperative Credit Society was established in 1904. It was founded under the Friendly Societies Act of the British government.

Cooperative Movement After Independence

Understanding the history of cooperative movement in India and West Bengal post Independence 

Part of a Mixed Economy 

• Following independence, the country chose a planned economic development strategy to create a mixed economy with three sectors: public, private, and cooperative.

• Cooperatives were envisioned as a balancing force between the public and private cooperative sector in India.

Part of FPYI’s

• Cooperatives were an important element of Five-Year Plans after independence (FYPs).

• Cooperatives, together with the Panchayat and schools, were considered one of the three foundations of democracy by Pandit Jawaharlal Nehru.

National Cooperative Policy

• In 1958, the National Development Council (NDC) advocated a national cooperative policy, as well as staff training and the formation of Cooperative Marketing Societies.

• The Indian government published a National Policy on Cooperatives in 2002.

Establishment of NCDC

• The National Cooperative Development Company (NCDC) was established in 1962 as a statutory corporation under the National Cooperative Development Corporation Act.

Cooperative Committees

• In 1954, the Rural Credit Survey Committee suggested that states participate in cooperatives at all levels.

• The Government of India appointed the S.T. Raja Committee to recommend changes to the Cooperative Law.

• The committee drafted a Model Act that allows states to participate in the management of aided cooperative societies and nominate government nominees.

Cooperative Societies in Gandhian Socialist Philosophy

• Cooperation for a Socialist Society: Gandhiji believed that cooperation was essential for the development of a socialist society and full power decentralization.

• He believed that cooperative societies were one of the essential ways to empower people.

• Mahatma Gandhi established the 'Phoenix Settlement' in South Africa as a cooperative based on a socialist model.

• Its goal was to develop each member's three acres of land and prevent the creation of a new class of absentee landowners.

• Tolstoy Farm: During the period, he founded the Tolstoy Farm as a rehabilitation cooperative community for families who had been impacted by the South African liberation fight.

• He was a firm supporter of Tolstoy's socialist ideology.

Cooperatives for the Peasantry

After returning from South Africa, Gandhiji travelled through India's countryside, where he witnessed the bankruptcy and suffering of the Indian peasantry, who were oppressed by excessive taxation, rack rental, and unlawful exaction, among other things.

• He remarked that the peasants' close collaboration is a fundamental need.

• Cotton, sugar, oilseed, wheat, and other agricultural products should all be cooperatively provided so that the farmers get the highest price for their output.

The Cooperative Sector's Challenges

• Excessive Cooperative Legislation: In India, cooperatives operate in a variety of areas. Under the Indian Constitution, cooperatives are a state issue. Therefore state cooperative statutes and their implementation vary greatly.

• Irresponsibility and Unaccountability: Serious governance flaws, especially those relating to the duties and obligations of boards of directors.

• Many inconveniences are not held accountable by the board of directors.

• Lack of Recognition: There is a general lack of understanding of cooperatives as economic entities among policymakers and the general public.

• Inability to attract and maintain qualified personnel.

• Lack of Capital Formation: There is a dearth of capital formation activities, particularly those aimed at increasing member equity and ownership.

• People are not adequately educated on the Movement's goals, as well as the laws and regulations that govern cooperative entities.

Indian Constitutional Provisions

1. Article 43 of the Directive Principles of State Policy states that employees should be paid a living wage and other benefits. The State shall endeavour to provide work, a living wage, and working conditions that ensure a decent standard of living and full enjoyment of leisure, social, and cultural opportunities to all workers, whether agricultural, industrial, or otherwise, through appropriate legislation, economic organization, or any other means, and, in particular, the State shall endeavour to promote cottage industries on an individual or group basis.

2. Article 14 (Right to Equality) and Article 19(1)(c) (Right to Form Associations or Unions) can both be regarded as Fundamental Rights.

As a result, the cooperatives movement in India may be described as an awakening movement for peasants and farmers and agriculture and related enterprises. It has enormous potential to bring products and services to places, where both the government and the commercial sector have failed.

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Cooperatives play a crucial role in encouraging collectivism and safeguarding the country's social capital foundation. Cooperatives are the most effective means of preserving the spirit of collectivism and democracy. The establishment of a wide network of social groups, such as cooperatives, would help in the production and use of social capital, and ‘the bigger the social capital, the greater the prospect of growth.