ndia is home to a unique movement called ‘cooperatives’ which involves
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citizens and their democratic involvement at a grassroot level. A cooperative society is an organization owned and run by the people and for the people using its goods and services. As the name suggests, the peopleor members of the organization work in cooperation to pool resources for their common bene it and progress. Cooperative societies in India were irst formed in late 1890s when farmers in western Maharashtra rebelled against
money lenders’ tyranny for agricultural loans. In 1904, the British government in India enforced the Cooperative Society Act, to safeguard
interests of poor farmers in Maharashtra.
After Independence, this ‘cooperative movement’ in India gained momentum.
The government realised that the cooperative sector plays a signi icant role in boosting the rural economy. It provisioned for plans for this sector in its
series of development plans Five Year Action Plans. Every village was encouraged to have at least one cooperative society. It also helped setting up cooperative farms. From agricultural markets, these Cooperative societies in India expanded to credit sector, and later to other large-scale sectors, housing
and development, ishing markets, banking, etc. This led to formation of different types of co-operative societies.
SUCCESS OF
COOPERATIVES
IN INDIA
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TYPES OF COOPERATIVE SOCIETIES IN INDIA
Based on the members and the kind of business, cooperative societies in India are classi ied mainly as six types. These are explained below:
Farming Cooperative Society: The agriculture sector in India is the largest sector, the country’s farmers need to gain pro it for their produce. Unfortunately, this sector is economically weaker due to several causes, namely indebtedness of farmers, expensive equipment, agents or middlemen, etc. The farmers put in the capital for consolidating farming equipment, seeds, fertilisers, etc. They earn more via cooperative farming as compared to individual farming as the pro it is divided according to their land
shares. The advantages of cooperative farming societies in India are more farming output in terms of agricultural produce and pro it.
Credit Cooperative Society: The cooperatives which provide inancial services to its members like deposits, short term loans, etc. All those who deposit in these societies are their members. These societies raise inance with deposits from its members and provide them with short term loans on a low rate of interest. These schemes bene it the members by protecting them from high-interest rates from commercial banks, which do not always meet farmers’
or economically weaker sections’ needs.
Producer Cooperative Society: These societies play an essential role in the development of medium and small enterprises in India. These cooperatives are for producers like owners of isheries, farmers, handicraft and local artisans, and many more such businesses. The best example is one of the largest cooperatives in India, Amul.
The produce is pooled together distributed by the cooperative itself, without the involvement of any middlemen. This establishes a direct producer-consumer relationship. The buyers of the product can be its members or non-members or the general public as well.
Consumer Cooperative Society: These cooperatives are formed by consumers for obtaining household goods at an
affordable price. The consumers for such cooperatives buy the goods in bulk to reduce the cost and sell them to its members (and non-members also) at lower prices. Buying and selling in bulk also offer discounts on the prices, an added bene it to consumers. These cooperatives set up stores for selling all products under one roof. For example, Apna Bazaar is a consumer cooperative in India.
One vote per member: Cooperatives run on principles of democracy. Every
cooperative has a head managing
committee, members of which are elected by common members.
Independent body: A registered cooperative society is recognized as an independent entity by the government of India. It can make its own decisions for the bene it of its members.
Mutual bene it: Cooperatives are always advantageous for people from the middle and low-income brackets. They help each other achieve higher pro its than their normal incomes and establish mutual trust among them.
No inancial risks: Cooperatives operate mainly on the basis of cash and direct transactions. Credits, except inancial cooperatives, are not provided by others.
This protects them from losses due to bad loans. Hence, cooperatives are a good option to avoid inancial risks.
Objective: The principal aim of cooperative societies is to help people tide through inancial situations and gather support and assistance from nearby communities. This strengthens community relationships.
Distribution of Pro its: The surplus produce or pro its generated in the cooperative sector is distributed amongst its members rightfully according to their shares.
Professional Management: All
cooperatives are supposed to be managed democratically and professionally. Audits must be performed periodically.
Promoting cooperatives for the holistic economic welfare of their members and non-members alike is required. A
cooperative society is highly signi icant in voicing the demands of its members in a broader market and makes the members self-suf icient. It develops social trust, an all-inclusive socio-economic
advancement, and the tendency of helping communities.
Marketing Cooperative Society: Just like farming cooperatives support farmers for pre-farming requirements, marketing cooperatives support them for marketing or selling their produce. These
cooperatives help farmers to sell their produce pro itably. They also make services like a sale platform, cold storage, grading of the produce, etc. accessible to the farmers. Fruits, vegetables, cotton, and sugarcane cooperatives are the largest and most demanded marketing cooperatives.
Housing Cooperative Society: Housing is a big issue for the common man in cities and towns with skyrocketing prices of land. In such a situation, people form cooperatives to buy the land, construct houses, and sell them to the members. To become a part of the cooperative, a
member either must buy a house or buy shares in the cooperative.
CHARACTERISTICS OF COOPERATIVE SOCIETIES
Cooperative societies follow democratic principles of equality. It is made for mutual help in the irst place. People who are not inancially stable can become a part of these cooperatives and head towards a common goal. Some
characteristics of cooperative societies in India are stated below.
Voluntary Formation and
Participation: Becoming a member of a cooperative is very easy and free. Entry into and exit from a cooperative society is a voluntary process.
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every society should contain not less than 10 members above the age of 18 years. If the Registrar is satis ied that a society has satis ied all the rules and regulations, he may register the society. A certi icate of registration signed by the registrar, is provided as evidence of registration. The word
“limited” shall be the last word in the name of every society. Further, any amendment to the by-laws, the governing documents of the society, shall be forwarded to the Registrar by way of a certi ied copy of the same.
Ÿ Rights and Liabilities of Members:
Societies generally follow the principle of ‘one member one vote’, whereby the member will have only vote,
irrespective of the number of shares held by him. The Act states that where the members’ liability is not limited by shares, the principle of ‘one member one vote’ applies. However, where the liability is limited by number of shares, the concept of ‘one share one vote’
applies. Members may exercise their rights only after making payment to the society for acquisition of interest.
Ÿ Duties of Societies: The Act imposes certain rights on registered societies.
Every registered society shall have an address and any change shall be
noti ied to the Registrar. Societies shall keep the copy of this Act, bye-laws and other important documents, open for inspection, free of cost, at all
reasonable times at its address. The Registrar shall audit or cause to be
LAWS GOVERNING
COOPERATIVES IN INDIA
Cooperatives play a vital role in
democracies and the creation of a welfare state. Article 19 of the Indian Constitution mentions that the Right to form
cooperative societies is fundamental to the citizens and recognizes it as a Fundamental Right. The Indian
government has always encouraged the formation of cooperative societies. As a result, the Central and State governments have passed laws to promote and govern the smooth functioning of co-operative societies in India. Some of the key laws are mentioned below:
• The Co-operative Societies Act, 1912
The Co-operative Societies Act, 1912 was passed to amend the existing law on co- operative societies. It also aimed to facilitate the formation of co-operative societies to encourage savings and self- help among agriculturists, artisans and persons of limited means. The Act contains provisions relating to
registration of co-operative societies and requirements for the same, their powers, duties, as well as the powers and duties of its members. It also lays out the
speci ications for audits of the society, utilizations and restrictions on loans, and many more such regulations. Some of the key provisions are explained below:
Ÿ Registration: The Act mandates that
application meets all the rules and regulations. He will then provide the registration certi icate as evidence of registration.
Ÿ Bye-laws: The bye-laws shall include details of the society such as name, address, area of operations, objects, membership details including the procedures for obtaining, transferring and withdrawal, rights, duties and liabilities of members, details of capital contribution, and so on. Like the
previous 1912 Act, any amendments to the bye-laws may be passed by a
minimum two-third majority of members present and voting, and has to be noti ied to the Registrar, who has the power to register the same. The amendment shall be held valid only after registration.
Ÿ Limited Liability: Unlike the 1912 Act, multi-state co-operating societies may be registered only if its members have limited liability. This acts as a
protection to the members.
Ÿ Membership: Individuals may be admitted as members only if they satisfy the prescribed criteria. The member may exercise his rights, only after payment to the society for his membership interest. Societies may accept a person as a nominal or associate member. Further, societies
also must organise education
programmes for its members, directors and employees. Multi-state co-
operative societies must follow the principle of ‘one member one vote’. A society also has the powers to expel a member for acts detrimental to the society by a majority of not less than two-thirds of members present and voting, and he shall not be eligible for audited, the accounts of every
registered society, which will include valuation of assets and liabilities, examination of overdue debts, etc.
Ÿ Privileges of Societies: Registered Societies enjoy privileges such as perpetual succession, power to hold property and enter into contracts and to do all things necessary for the purposes of its constitution. Any pro its may be distributed only after setting aside a portion as reserves.
Further, the government may exempt certain societies from income tax, stamp duty and registration fees.
• The Multi-State Cooperative Societies Act, 2002
An act to regulate such multi-state cooperatives was passed in 2002 by the title of Multi-State Cooperative Society Act, 2002. This Act was introduced by the Ministry of Agriculture in 2002. The Act was passed to amend the laws relating to co-operative societies whose objectives are not con ined to a single state, to encourage formation of such co- operatives, to enable them to their economic and social betterment and to provide functional autonomy. This Act helped reduce the compliance burden on multi-state co-operative societies by reducing the laws and rules they need to comply with. The Act extends to the whole of India. Like The Co-operative Societies Act, 1912, this Act includes provisions on registration of multi-state co-operative societies, conversion of co-operative society to multi-state co-operative society, rights, duties and liabilities of societies and their members, direction,
management, and privileges enjoyed by societies, as well as provisions for amalgamation and liquidation. Some of the key provisions are mentioned below:
Ÿ Registration: Multi-state co-operative societies will consist of not less than 50 members or two co-operative housing societies from two or more states. The Registrar, appointed by the Central Government, may accept the application, within four months, provided he is satis ied that the
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registered under the Multi State
Cooperative Societies Act, 2002, and has over 40,000 member cooperatives. IFFCO is a cooperative society that engages in production and distribution of chemical fertilisers and marketing of agriculture related products. Almost 70% of all fertilisers consumed in India was
distributed by cooperatives in the 1960s, however, it had no production facilities of its own and were dependent on multiple private companies for sourcing these materials. IFFCO was registered in 1967, speci ically to overcome this issue. It was new venture where the farmers created this institution to safeguard the interests of themselves. Founded with just 57 cooperatives, IFFCO, today, is an amalgamation of over 36,000 Indian Cooperatives with diversi ied business interests ranging from general insurance to rural telecom apart from its core business of manufacturing and selling fertilisers. Its vast network reached more the 5.5 crore farmers across all corners on India and the world.
re-admission.
Ÿ Board of Directors: The Board of Directors consists of directors elected by the Members in a general meeting.
The number of directors is mentioned in the bye-laws and shall not exceed 21. The Board has several powers to further the interest of the society such as buying and selling property, raising and investing funds, audit, and so on.
The Board appoints a Chairperson to head the meeting. Further, the Board also appoints a Chief Executive who shall look after the day-to-day management of the society.
Ÿ Meetings: An Annual General Meeting (AGM) of Members is held every year, wherein Members may meet and discuss on certain topics. A Special General Meeting may be called by the Board of the society to discuss any matter which may not wait until the next AGM. The auditor will also have a right to attend general meetings.
Besides this, the Board of Directors must meet every quarter.
SUCCESS STORIES OF COOPERATIVES
Indian Farmers Fertiliser Cooperative Limited
Indian Farmers Fertiliser Cooperative Limited (IFFCO) is the one of the largest cooperatives in the world and the world’s biggest fertiliser cooperative. IFFCO is
of Tribhuvandas Patel and advice of Sardar Vallabhbhai Patel formed their own cooperative societies. In June 1948, the pasteurization of milk began, which meant that a large amount of milk could be stored for longer without perishing.
This changed life for the entire community. This raised their income.
Other district unions formed, and all these functioned separately but under one brand name of Amul. In 1955, KDCMPUL and other district cooperatives were merged to form one larger state
cooperative, namely 'Gujarat Co-operative Milk Marketing Federation Ltd'
(GCMMFL) and the brand of Amul was adopted by GCMMFL.
During the year 2020-21, it produced 89.6 MT of fertiliser material and total sales of 136.6 lakh MT with ₹27,836.9 crores (US$
3.7 billion) in turnover. IFFCO owns and operates ive production facilities across India. Commissioned in 1974, Kalol is one of IFFCO’s oldest running ammonia-urea production facility. With recent expansion plans to the facility, the total output capacity is expected to increase by
manifold. Kandla plant was commissioned for commercial production in 1975 and has a current plant capacity of 2.42
MMTPA of NPK/DAP Production. Another ammonia – urea complex was set up at Phulpur in the state of Uttar Pradesh in 1981. The ammonia – urea unit at Aonla was commissioned in 1988. IFFCO also acquired NPK/DAP and phosphoric acid fertiliser facility at Paradeep in Orissa in 2005 which can produce two million tonnes of fertilisers in a year.
AMUL
Amul was founded in 1946 as Kaira
District cooperative Milk Producers Union Limited (KDCMPUL) in a village called Anand to get rid of middlemen and their exploitative trade practices. Angered by unfair trade practices followed by local traders, the farmers under the leadership
Cooperative Society. These members elect their representatives, and these
representatives together manage District The Amul model has a three-tiered
structure. Every milk producer of the village is a member of the Village Dairy
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Federation then acts as the distributor that sells or facilitates the selling of the products in the market. The revenue gets shared downwards in a similar fashion.
Milk Unions. These district milk unions take care of milk and milk products and their processing. They sell these products to the State Milk Federation. State Milk
product at a competitive price. This provided a stable income for marginal farmers in lean seasons as well because there are no intermediaries to take the chunk. So even when sales are low, they have a steady sum in hand.
Presently, Amul is India’s largest food product marketing organization with annual turnover of Rs. 38,542 crore (US$
5.1 billion). It procures nearly 25 million The dairy is in control of the villagers
themselves. The district unions manage their processing and packaging. These unions employ professionals to manage the dairy, processing, packaging, and other links in the supply chain. Farmer organizations come together under one umbrella of Amul, and they directly sell products to consumers through state milk federation. This elimination of
intermediaries ensured a good quality
initiated other fund-raising activities which helped farmers procure 70-80%
above market prices. This initiative not only helped the farmers through this crisis but also helped them build warehouses for excess harvest, get additional organic farming related certi ications to help sell globally.
REASONS BEHIND THE SUCCESS OF INDIAN COOPERATIVES
Economic growth and the increase in disposable incomes have played an important role in the growth of
cooperatives in India. However, there are reasons on the micro level such as certain decisions, good execution, policies and procedures, among others, which are the key reasons behind the success of
cooperatives. Some of the reasons behind the success of cooperatives are analysed as follows:
• Focus on Quality: “We always test the milk in collection centres. If any
adulteration is found, we add red colour to it so that the farmer cannot sell it anywhere else. Similarly, we use Gas Chromatography to test the purity of ghee.” said Dr. RS Sodhi, the Managing Director of Amul. Initiatives like these at AMUL have created incentives for farmers to improve the quality of the products they supply to Amul. Focus on quality means that the product quality is better.
This helps in building customer litres of milk per day from 18,600 village
milk cooperatives, 18 member unions covering 33 districts, and 3.64 million milk producer members.
Sittilingi Organic Farmers Association (SOFA)
Sittilingi Organic Farmers Association (SOFA) was formed in 2004 with four tribal farmers which grew to 57 in 2008.
SOFA registered as a cooperative society in 2008 with objectives to train tribal farmers in organic farming and to help them market their crops. At present, the society has about 15,000 people out of which 4,000 are farmers and 500 of which are into organic farming. Ragi, bajra, little millet, foxtail and pearl millet are grown here on 1,200 acres of land in and around Sittilingi. Cotton, turmeric, sugarcane, groundnut, and vegetables are also grown here. The association maintains a record of the crops raised by its members, and based on market demand, advises them accordingly. The produce is purchased by the society and farmers are paid the market rate, plus ₹2 to ₹3 (US$ 0.02 to US$ 0.03) more per kg. The rate is determined by a separate committee. In 2018, SOFA generated around one crore rupees which is a signi icantly higher than one lakh rupees generated in 2008-09.
Lockdown Stories: With no access to markets, customers or exports during COVID-19 lockdowns, the farmers of
Sittilingi were looking at a panic sale.
However, SOFA stepped in and helped procure interest free loans from Rang De worth Rs. 27 lakh (US$ 35,918) and
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(Dairy Technology) students and become dairy industry professionals. IFFCO also bene its from a professional and
independent management. A good management can lead an organisation to success.
• Innovation: Innovation plays a crucial role in the success of Indian cooperatives.
Mr. RS Sodhi of Amul says “Innovation is the key to our success.” Amul has added 102 new products in the past four years.
Of these, 48 were launched in the last two years, exceeding the target of launching two new products every month. IFFCO, in collaboration with WOW Go Green, organised a 10-day, rigorous training programme on the usage drones in farming. There were 36 participants who included farmers, entrepreneurs,
cooperatives, etc and the training was con idence and makes customer retention
easier.
• Professional Management:
Cooperatives, being democratic entities in nature, have the opportunity to elect a professional and experienced
management. The most successful cooperatives in India are run by a professional management. Mr. Verghese Kurien, the father of the White Revolution in India, believed that only professional management can bring visible socio- economic changes to underserved
pockets of rural India. He has founded two training institutes namely, the Institute of Rural Management Anand (IRMA) in 1979, which aimed at creating a new generation of professional managers to serve rural India and the Vidya Dairy in 1994, which provides training to B.Tech
forging strong community ties. He added that dairy cooperatives participate in community affairs such as festivals, donate food, contribute monetarily and non-monetarily in cultural and social functions in villages and help farmers in distress through loans.
Many cooperatives participate in the local activities and festivals in the villages and towns, they operate in. They provide help in the form of training and/or education to their stakeholders such as suppliers, workers, or customers, which lead to better quality and cheaper raw materials and higher worker productivity and satisfaction. They may also provide
inancing to the distressed villagers.
IFFCO has organised farmer education programmes which include farmer meetings, soil testing campaigns and so on, to improve farming techniques.
• Government Support: The
Government has initiated various reforms to help the Indian cooperatives. Such reforms include forming the Ministry of Cooperation, reducing compliance burden, providing training, and so on. A press release by PIB stated that “the Ministry of Cooperation will provide a separate administrative legal and policy framework for strengthening the
cooperative movement in the country. It will help deepen Co-operatives as a true people-based movement reaching up to the grassroots. In our country, a Co- operative based economic development model is very relevant where each member works with a spirit of conducted starting from simulators to
small drones to full size agricultural drones. Agricultural drones are highly helpful in making agriculture more ef icient. A 15-minute light can spray fertiliser in an area of 2.5 acres. The increased adoption of drones is expected to help save farmers’ time and energy and increase their income.
• Importance of Branding and Marketing: Branding and effective marketing have played an important role in the success of cooperatives. Amul is famous for its Amul Girl mascot which the company advertises in relation to recent events. The Amul Girl ad was launched in 1947 and has claimed a place in the Guiness Book of World Records as the longest running outdoor advertising campaign. Further, Amul has a vast product portfolio consisting of several dairy products under the same brand.
Thus, newly-launched products bene it from the trust and customer con idence enjoyed by the ‘Amul’ brand name. Many cooperatives have recognised the
importance of branding and marketing and thus, are focusing more on
maintaining a good brand image and carrying out better marketing campaigns.
• Social Relevance: A study by the researchers Verghese Kurien Centre of Excellence (VKCoE) at the IRMA revealed that social relevance played a crucial role in the success of dairy cooperatives.
These cooperatives have remained socially relevant even after ive decades.
According to Prof. Shyam Singh, a social sciences professor who was one of the people who conducted the study, some dairy cooperatives are more than 60-70 years old and have become social entities,
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monitoring and evaluating the
arrangements for cooperative training for the personnel working in cooperatives.
The main objective is to organise need based training programme and facilitate the process of human resource
development for cooperatives in India.
CONCLUSION
The cooperative movement has played a signi icant role in development of the weaker sections of the society. Since its inception in the early 1900s cooperatives in India have grown signi icantly. India has more than eight lakh registered cooperatives. IFFCO and GCMMFL are in the top three positions globally in the list of top 300 cooperatives based on the ratio of turnover over GDP per capita, and in the agriculture and food industries segment. Other cooperatives, too, have grown signi icantly. Cooperatives have succeeded due to factors such as professional management, focus on
branding and innovation, social relevance, and so on.
Cooperatives are known for helping its stakeholders such as its members, suppliers, consumers and workers.
Further, as cooperatives play a key role in rural India, their success has also led to improvement in the standard of life of many villagers. Thus, it is evident that the success of cooperatives in India is also contributing to the growth and
development of Indian economy.
responsibility. The Ministry will work to streamline processes for ‘Ease of doing business’ for co-operatives and enable development of Multi-State Co-operatives (MSCS). The Ministry of Cooperation is headed by Mr. Amit Shah, who also acts as the Home and Union Minister. In
November 2021, he asked the management of Amul to work out a similar model for organic farming and to encourage farmers to adopt the practice.
This will reduce the overuse of fertilisers which is causing soil degradation and chronic diseases such as cancer.
Further, the Government has organised training programmes through various entities, to help cooperatives become more ef icient in conducting their operations. Among such entities are the National Cooperative Development Corporation (NCDC), which was established by an Act of Parliament in 1963 under the Ministry of Cooperation and the National Council for Cooperative Training (NCCT), which is registered as an autonomous society under the Societies Registration Act, 1860 promoted by Ministry of Cooperation, Government of India. NCDC’s functions include planning, promoting and inancing programmes for production, processing, storage,
marketing and so on. The NCDC Act was amended to allow NCDC to assist
cooperatives through inancing various projects directly or indirectly by
advancing loans and grants to the State Governments who will then inance cooperatives. NCCT, on the other hand, is responsible for organizing, directing,
