QUESTION

Trace the history of the cooperative movements in India, highlighting following major events
in the following time periods

Co-operative Credit Societies Act, 1904

Cooperative Societies Act, 1912

Devolution of Co-operatives- Government of India Act, 1919-

Seventh Schedule, Constitution of India-

Bombay Cooperative Societies Act of 1925 Page 5 of 114 Handling multi-state cooperatives-
Multi-Unit Cooperative Societies Act, 1942

All India Rural Credit Survey Committee (1951)

Model Cooperatives Bill for State Governments 1956

Application of RBI Act 1934 and Banking Regulation Act 1949 to Cooperative Banks
especially deposit protection Agricultural Refinance Corporation, 1962

Committee on cooperation in India, led by Ram Niwas Mirdha, 1965

NABARD Act, 1981

Multi-State Cooperative Societies Act, 1984

Model Cooperatives Act for the states, 1990

Multi-State Cooperative Societies Act, 2002

Producer Companies via the Companies (Amendment) Act, 2002

Union Ministry of Cooperation- 2021

Introduction

The cooperative movement in India has deep roots, drawing inspiration from the ancient
Indian ethos of Vasudhaiva Kutumbakam, which translates to "the world is one family." This
enduring principle of unity and mutual support has fostered the growth of cooperatives as
vital institutions that empower local communities and drive grassroots development.
According to the International Cooperative Alliance (ICA), cooperatives are member-owned
enterprises that prioritize shared economic, social, and cultural objectives, placing people
above profit.

In India, cooperatives have transformed countless lives by enabling marginalized

communities to access resources, secure livelihoods, and participate in the economy.

The establishment of the Ministry of Cooperation on July 6, 2021, underscored India's

commitment to enhancing the cooperative sector. The Ministry envisions an inclusive,
cooperative-driven economic model that reaches every village, strengthening socio-economic
bonds across regions. As India prepares to host the ICA’s Global Conference in November
2024, an event facilitated by the Indian Farmers Fertilizer Cooperative (IFFCO) and
supported by India’s 18 ICA member organizations, the country stands poised to further
elevate the cooperative movement both nationally and globally.
Understanding Cooperative Societies

A cooperative society is a voluntary organization where individuals with shared needs come
together to achieve common economic goals. These societies are founded on principles of
self-help and mutual assistance, aiming primarily to serve the interests of disadvantaged
sections of society rather than to generate profits. Members pool their resources and utilize
them collectively to derive shared benefits, making the cooperative structure distinct in its
emphasis on community welfare.

Some different types of Cooperative Societies in India:

v. Consumers’ Cooperative Society: Formed to provide consumer goods at reasonable

prices, eliminating middlemen by purchasing directly from producers. Examples
include Kendriya Bhandar and Apna Bazar.

v Producers’ Cooperative Society: Supports small producers by providing necessary

production items such as raw materials and equipment. Notable examples are APPCO and
Haryana Handloom.

v. Cooperative Marketing Society: Assists small producers in marketing their products

by collectively selling on their behalf. The Gujarat Cooperative Milk Marketing
Federation (AMUL) is a prominent example.

v. Cooperative Credit Society: Provides financial assistance to members by accepting

deposits and granting loans at reasonable interest rates. Examples include Village
Service Cooperative Society and Urban Cooperative Banks.

v. Cooperative Farming Society: Small farmers form these societies to gain benefits of
large-scale farming. Examples include lift-irrigation cooperatives and pani-
panchayats.

v. Housing Cooperative Society: Offers affordable residential options by purchasing

and developing land for members. Examples include Employees’ Housing Societies
and Metropolitan Housing Cooperative Society.

Evolution of Cooperative Movement in India

Even before the formal establishment of cooperative structures through legislation, the
principles of cooperation were already ingrained in various parts of India. Village
communities often engaged in collective activities, creating permanent assets such as village
tanks or forests known as Devarai or Vanarai. These community efforts were vital to local
survival and prosperity. In different regions, various forms of cooperation emerged, such as
Chit Funds, Kuries, Bhishies, and Phads. In the Madras Presidency, Mutual-Loan
Associations, also called ‘Nidhis’, were organized to provide financial support. In Punjab, a
cooperative society was established in 1891 to manage common village land for the benefit of
all co-sharers. These efforts, however, were voluntary and informal, operating outside the
official framework.

The modern cooperative movement in India began to take shape in response to the distress
and turmoil of the late 19th century. The aftermath of the Industrial Revolution led to
widespread displacement of rural populations, with many turning to agriculture as the sole
means of livelihood. However, agricultural practices were hampered by issues such as land
fragmentation, which rendered farming uneconomic, and the rigid collection of land
revenues. Farmers faced recurring challenges such as erratic rainfall, poor crop yields, and a
growing dependence on moneylenders, who often offered high-interest loans or bought crops
at exploitative prices. These harsh conditions underscored the urgent need for affordable
credit, paving the way for the formalization of the cooperative movement as an alternative
means of financial support for farmers and rural communities.

The history of Cooperative Movement in India can be divided into two phases. First,
cooperative Movement in the Pre-Independence era and second in the Post-Independence era.

Cooperative movement in the Pre-Independence-Era

v. Cooperatives became a legal entity in India in 1904 with the introduction of the
"Cooperative Credit Societies Act," which outlined the norms for constituting
cooperative societies, membership, registration, liabilities of members, disposal of
profits, rulemaking power, and dissolution. However, it was restrictive, excluding
non-credit and other societies from its scope.

v. The Cooperative Societies Act of 1912 addressed the shortcomings of the 1904
Act, expanding the scope to include marketing societies, handloom weavers, and
other artisan societies. In 1914, the Maclagan Committee recommended reforms
for credit societies, proposing a three-tier cooperative banking system at the
Centre, Province, and District levels.

v. The Government of India Act of 1919 empowered provinces to enact laws for
cooperatives, leading to the passage of the Bombay Cooperative Society Act of
1925, the first cooperative legislation by a provincial government.
 v. In 1942, the Government of India enacted the Multi-Unit Cooperative Societies
Act to regulate cooperatives with membership from multiple provinces and
delegated the power of the Central Registrar of Cooperatives to State Registrars
for practical purposes.

Cooperative movement in the Post Independence-Era

v. After Independence, the new government system aimed to decentralize economic

power and promote people’s participation in planning and implementing
economic development programs, with a focus on social justice. Cooperatives
became an integral part of India’s Five-Year Plans, starting with the First Plan,
which emphasized their coordination with village panchayats.

v. The establishment of the National Cooperative Development Corporation (NCDC)

in 1963 and the National Bank for Agriculture and Rural Development
(NABARD) in 1982 were key milestones in supporting rural credit and
cooperative development.

v. In 1984, the Indian Parliament passed the Multi-State Cooperative Organisations

Act to streamline laws governing cooperatives across states. Further consolidation
occurred with the introduction of the National Policy on Cooperatives in 2002,
aiming to harmonize the legal framework.

v. The MSCS Amendment Act 2023 and associated rules seek to enhance
governance, increase transparency, and implement structural changes within
Multi-State Cooperative Societies (MSCS), empowering cooperatives with greater
independence.

Resurgence of the Cooperative Movement in India

The Ministry of Cooperation (MoC), established on 6th July 2021, has played a pivotal role
in revitalizing the cooperative movement in India. It has spearheaded various schemes and
initiatives to create a robust administrative, legal, and policy framework for the sector's
advancement. A key focus of the MoC is the promotion of Multi-State Cooperative Societies
and streamlining procedures to enhance the "Ease of Doing Business" for cooperatives. The
Ministry's efforts are centred on modernizing and strengthening cooperatives, fostering
transparency through computerization, and promoting competitiveness. Additionally, there is
a strong emphasis on ensuring inclusive development, particularly for underserved rural
communities. Through its initiatives, the MoC aims to connect every village to cooperatives,
driving economic prosperity under the banner of 'Sahakar se Samriddhi,' contributing to the
nation's overall growth.

Key Government Initiatives for Upgrading the Cooperative Sector (As of February 6, 2024):

v. Model Bye-Laws for PACS: New Model Bye-Laws enable PACS to undertake 25+
activities, improve governance, and ensure inclusivity, with 32 States/UTs adopting
them.

v. Computerization of PACS: A ₹2,516 Crore project aims to computerize 63,000

PACS, improving efficiency and linking them with NABARD. 62,318 PACS from 28
States/UTs are included, with 15,783 PACS already onboarded.

v. New Multipurpose PACS/Dairy/Fishery Cooperatives: Over 9,000 new

PACS/dairy/fishery cooperatives are being established in uncovered Panchayats with
support from various federations.

v. Decentralized Grain Storage Plan: A plan to create warehouses and agri-

infrastructure at PACS level, reducing food grain waste and transportation costs, with
2,000 PACS identified for the pilot project.

v. PACS as Common Service Centers (CSCs): An MoU with MeitY and NABARD
enables 30,647 PACS to offer 300+ e-services to rural citizens.

v. Formation of Farmer Producer Organizations (FPOs): 1,100 additional FPOs will

be formed by PACS to improve market linkages for farmers.

v. Retail Petrol/Diesel Outlets: 240 PACS have applied for retail petrol/diesel outlets,
with 39 selected so far.
 v. LPG Distributorship for PACS: PACS can now apply for LPG distributorships,
with 9 applications received from 3 States/UTs.

v. PM Bhartiya Jan Aushadhi Kendra: 2,475 PACS have been approved to operate as
Janaushadhi Kendras, improving access to generic medicines.

v. Pradhan Mantri Kisan Samriddhi Kendras (PMKSK): 35,293 PACS are now
functioning as PMKSK to provide fertilizers and related services to farmers.

v. PM-KUSUM Convergence: Farmers associated with PACS can adopt solar water
pumps for irrigation.

v. Operations & Maintenance of Rural Water Supply: 1,630 PACS are selected to
carry out O&M of rural piped water supply schemes in 14 States/UTs.

v. Micro-ATMs for Cooperative Societies: 1,723 Micro-ATMs have been distributed

to Bank Mitra cooperatives for doorstep financial services in Gujarat.

v. RuPay Kisan Credit Cards for Dairy Cooperatives: 1,23,685 RuPay KCCs have
been distributed to dairy cooperative members in Gujarat.

v. Formation of Fish Farmer Producer Organizations (FFPOs): NCDC has

registered 69 FFPOs and is converting 1,000 fisheries cooperatives into FFPOs with
an outlay of ₹225.50 Crore.

Cooperative Sector at a Glance

Cooperative societies in India operate across various sectors such as Agriculture, Credit and
Banking, Housing, and Women’s Welfare. They are instrumental in promoting financial
inclusion by providing credit to farmers and small entrepreneurs who may have difficulty
accessing conventional banking services. These societies play a crucial role in rural
development, empowering local communities and reducing socio-economic disparities.
Conclusion

India's cooperative movement, deeply rooted in its cultural and socio-economic landscape,
has evolved into a powerful vehicle for inclusive growth, community empowerment, and
rural development. Through the establishment of the Ministry of Cooperation and its recent
initiatives, the government has reaffirmed its commitment to fostering a cooperative-driven
model that reaches every corner of the country, facilitating sustainable livelihoods and
financial inclusion for marginalized communities. The upcoming Global Conference of the
International Cooperative Alliance (ICA), hosted by India in November 2024, marks a
significant milestone in this journey, offering a platform to showcase India's innovative
strides in the cooperative sector to a global audience. This event not only highlights India's
dedication to strengthening cooperatives nationally but also its leadership role in advancing
the cooperative model worldwide, reinforcing the vision of 'Sahakar se Samriddhi' as a
guiding principle for prosperity and unity.