INTRODUCTION OF CO-OPERATIVE MOVEMENT IN INDIA

DEFINITION OF CO-OPERATIVE MOVEMENT: - Co-operative

movement can be define as a “Voluntary movement of the people,
carried out democratically by pooling together their resources or
carrying on the given activity, with the purpose of achieving or securing
certain benefits or advantage which given to people can not get
individually and with the purpose of promoting certain virtue and values
such as self help, mutual help, self reliance and general goods of all.”
Co-operation occupies an important place in the Indian economy.
Perhaps no other country in the world is the co-operative movement as
large and as diverse as it is India. There is almost no sector left
untouched by the co-operative movement. The successive Five-year
plans looked upon the co-operation movement as the balancing sector
between public sector and the private sector. And the success is
evident. Almost 50 percent of the total sugar production in India is
contributed by sugar co-operatives and over 60 percent of the total
fertilizer distribution in the country is handled by the co-operatives. The
consumer co-operatives are slowly becoming the backbone of the public
distribution system and the marketing co-operatives are handling
agricultural produce with an outstanding growth rate.
The National Co-operative Development Corporation (NCDC), a
statutory body was set up in 1963 by the Union ministry of Civil
Supplies and Co-operation, to promote the co-operative movement in
India. Further there is the Indian Farmers Fertilizer Co-operative LTD
(IFFCO), which has been successful in setting up an effective marketing
network in most of the states for selling modern farming technology
instead of fertilizers alone. The operations of IFFCO are handled through
its more than 30,000 member co-operatives.
The National Agricultural Co-operative Marketing Federation (NAFED)
has over 5000 marketing societies. These societies operate at the local
wholesale market level and handle agricultural produce. Thus the
farmers have a market for their produce right at their door-step. A
market which assures them reasonable returns and guaranteed
payments.
In India we find that the states of Maharashtra and Gujarat are well
developed. Whereas the states of Andhra Pradesh, Rajasthan and
Karnataka have shown remarkable progress in the co-operative
movement and there is a vast potential for the development of co-
operative in the remaining states. Co-operatives today are committed
to securing an improvement in the quality of life of a vast majority of
Indian people.

HISTORICAL PROFILE OF COOPERATIVE MOVEMENT IN INDIA

Around the world modern cooperatives have developed for over 200
years. Cooperative institutions exist all over the world providing
essential services which would otherwise be unattainable. In many
Third World countries, cooperatives such as credit unions and
agricultural organizations have been very successful in helping people
to provide for themselves where private and other corporate capitals do
not see high profitability . In 90 countries of the world, over 700 million
individuals are members of Co-operative institutions. Globally,
cooperatives have been able to elevate its position as a powerful
economic model. In some countries they are a sizeable force within the
national economy. During the British rule, Nicholson a British Officer in
India suggested to introduce Raiffersen model of German agricultural
credit Cooperatives in India. As a follow-up of that recommendation, the
first Cooperative Society Act of 1904 was enacted to enable formation
of "agricultural credit cooperatives" in villages in India under
Government sponsorship. With the enactment of 1904 Act,
Cooperatives were to get a direct legal identity as every agricultural
Cooperative was to be registered under that Act only. The 1904
Cooperative Societies Act was repealed by 1912 Cooperative Societies
Act which provided formation of Cooperative societies other than credit.
Under 1919 Administrative Reforms act, Cooperatives was made a
provincial subject making each province responsible for Cooperative
development. The impulses of the Indian freedom movement gave birth
to many initiatives and institutions in the post independence era in
India and armed with an experience of 42 years in the working of Multi
Unit Cooperative Societies and the Multi-Unit Cooperative Societies Act,
1942, the Central Government enacted a comprehensive Act known as
Multi State Cooperative Societies Act, 1984, repealing the Act of 1942.

DEVELOPMENT OF INDIAN CO- OPERATIVE MOVEMENT: -

In 1904 the co-operative act was passes as a part of co-operative

movement in india. The act can be studied as under:-

1] Beginning Period of Co-operative Movement in India (1904-

1912) –

The Indian co-operative movement started on 25 March 1904 with the

passing of an act. The objectives are as under:
1. Establishment of co-operative societies.
2. Legal existence.
3. Control of Registrar.
4. Free audit of accounts by the registrars.
5. Classification of rural and urban societies.
6. Responsibilities of members.
7. Limits on the distribution of dividend.
8. Loans to members.
9. Interest of members in society.

This stage has been termed as the primary stage in the development of
co-operative societies because the promoters had no idea of co-
operation and had very less experience about it.
2] Period of Harried Expansion: (1912 to 1918): –

As the government doubtful about the act passed in 1904, as it was not
sufficient to cop up with the needs of societies, govt. passed another
act in 1912 to curtail the deficiencies in the act of 1904. The main
features of the act were as follows:
1. Permission to start non credit supplying societies.
2. Classification of societies as per their responsibilities.
3. Utilization of profit.
4. Special rights to societies.
5. Concessions to co-operative societies.
6. Restrictions in using co-operative in name.
7. Permission to establish central societies.
8. Shares of society.

The shortcomings of 1904 act were overcome by 1912 act. Permission

was granted to start co-operative societies in other fields. Co-operative
Movement was shooted for expansion.

3] Unplanned Rapid Development: (1919-1929):–

The matter of cooperation was entrusted to the provincial govt. due to

passing of reforms act in 1919. The co-operative movement flourished
thereafter in many provinces. Provincial govt. appointed committees to
study the co-operative movement. Depending upon the situation of the
province various acts were passed by the respective provincial govt. to
develop the co-operative movements in their provinces.

Due to the passing of co-operative act in 1919the co-operative

movement boosted up and there was a tremendous development in the
no. of societies providing credit. At the outset govt. of Bombay first
passed the act in 1925. In 1932, 1935 and 1941 the acts were past by
the govt. of Madras, Bihar, Orissa and Bengal respectively.

During 1919- 1929 only quantitative growth of societies would be seen.

No proper attention was given to qualitative growth. Therefore this co-
operative movement was defined as “Unplanned Development.”

4] Period of Consolidation and Re-organization (1929- 1939): –

There was vigorous blow to the Indian co-operative movement because

of the worldwide financial depression in 1929 and so the development
of co-operative movement stopped. The existing societies have to face
various problems. The co-operative credit societies had invested their
capital in agricultural activities. The price of agricultural produce went
down thus the arrears increase and the existence of co-operative
societies was in danger. It affected the co-operative movement in
Punjab, Haryana, Bihar and Bengal. The ratio of loans to arrears was
20% in 1927-28 which increased to 40% in 1932-32. The percentage of
arrears went up to 93% in Bombay in 1938-39. During this period about
50% of co-operative societies went into liquidation.

In 1935 Reserve Bank of India was established. A separate section for

providing agricultural credit was opened. In 1937 this section studied
various problems of Indian co-operative movement and submitted its
report stating that development of co-operative societies should be
given priority.

5] Period of Recovery (1939-1947): -

During this period the financial depression of Indian co-operative

movement had been removed and this movement was again on the
path of its development. The atmosphere of world war proved to be
beneficial for the co-operative movement. The price of the agricultural
produce started increasing thereby there was an increase in the income
of the agriculturists and their repayment capacity went to a higher level.

The consumer co-operative stores prospered due to the restriction

imposed during war time. The industrial co-operative societies came
into existence for the purpose of providing war materials. Non-profit
supplying societies and multipurpose societies had developed. The
development of co-operative movement during 1929 to 1947 can be
seen from the following table:

Year No. of societies Membership (in Capital (in

(in 000’s) lakhs) crores)
1939 122.00 53.07 106.47
1943 146.00 69.01 121.14
1946 172 91.6 104.00
1947 139.00 90.00 156.00

Due to the bifurcation in 1947 some of the co-operative societies had

been shifted to Pakistan thereby reducing the number of societies, its
membership and capital. During 1939-1946 the field of co-operative
movement was spread over a large scale.

6] The Sixth Stage (1947-1970): -

After attaining independence the government felt that co-operatives

should play an important role in the development of rural areas. The late
prime ministers Jawaharlal Nehru and Lal bahadur shastri stressed on
the importance co-operatives. Co-operatives were included in 5 year
plans.
7] The Seventh Stage (1970- 2000): -

During this period the government laid more importance on the

development of rural banking sectors. Co-operatives were asked to
develop rural banks. The formation of NABARD as an apex bank was
formed for monitoring the co-operative bank. The government also took
the initiative in replicating the Anand pattern Model for dairy co-
operative across the country.

8] The Eighth Stage (2000 onwards): -

The rise of the new millennium has thrown many challenges to the co-
operatives. The WTO restrictions and the threat from global co-operation
have grown. The co-operatives have to face direct competition from
multinationals. The government is providing adequate support and help
to the co-operatives by building brands, distribution network and also in
exporting their products to global market.

TYPES OF CO-OPERATIVES

The Co-operative Movement was introduced into India by the

Government as the only method by which the farmers could overcome
their burden of debt and keep them away from the clutches of the
money-lenders. The Co-operative Credit Societies Act, 1904 was passed
by the Government of India and rural credit societies were formed.

(1)The Primary Agricultural Credit/Service Societies –

The agricultural co-operative credit structure in the Punjab State is

broadly divided into two sectors, one dealing with the short-terms and
medium-terms finance and the other with the long-term credit. In the
State, the short-term and medium-term credit structure is based on a
three-tier system, i.e. the Apex Co-operative Bank at the State level, the
Central Co-operative Bank at the district/tehsile level and the Primary
Agricultural Credit Societies at the village level. The major objectives of
the primary agricultural credit service societies are to supply agricultural
credit to meet the requirements of funds for agricultural production, the
distribution of essential consumer commodities, the provision of storage
and marketing facilities and for light agricultural implements and
machinery.

The first Agricultural Credit Society in the Firozpur District was

registered on 4 October 1911, at the Village of Khalchi Kadim in the
Firozpur Tehsil. Originally, the movement was confined to the credit
societies only and, thus, credit dominated till the partition (1947). After
the partition, the Co-operative Movement began to spread to other field,
viz labour, construction and farming. In 1979-80, the number of
agricultural cooperative credit societies in the District was 309 with a
membership of 1, 21,761. The loan advanced during the same year
amounting to Rs. 2,180.35 lakhs and the deposits to Rs. 26.84 lakhs.

(2) Agricultural Non-Credit Societies - When the non-credit societies

were brought officially under the protection of the Movement. The World
War II came as a God send boon with respect to the development of the
Cooperative Movement. Prices of agricultural goods began to rise and
touched new peaks. The repayment of loans was accelerated and
deposits began to increasing. The number of societies also rose. Another
interesting development in co-operative during the War was the
extension of the Movement to non-credit activities, namely consumer’s
co-operative marketing societies, integration of societies, etc.

(3) Agricultural co-operative Marketing Societies - Marketing has

occupied a far smaller place in the co-operative picture in India than in
many countries. The full utilization of loans advanced depends upon the
arrangements for the marketing of surplus produce. These societies also
provide other agricultural
Facilities and make arrangements for the supply of domestic items in
the rural areas. At the State level, the
Punjab State co-operative Supply and Marketing Federation is playing an
important role in building up an integrated structure for remunerative
marketing and storing of agricultural produce. ithas played an important
role in the Green Revolution in the State by arranging ready supplies of
essential farm inputs needed by the cultivators.

(4) Co-operative Farming Societies - The Royal Commission on

Agriculture in 1928 observed that it co-operation failed, there would fail
the hope of the Indian agriculturist. Under this system, all landowners in
a village form a co-operative society for cultivate the land. The land is
combined, but each farmer retains the right of property. They are
allowed to withdraw from the cooperative farm whenever they desire. In
India, the exceedingly small size of holdings is perhaps the most serious
defect in our agriculture. If agriculture has to be improved, the size of
the holdings must be enlarged. The co-operative farming societies, thus,
enable
the cultivators to enjoy the economies of large-scale farming through
the pooling of land management resources.

CAUSES OF SLOW PROGRESS

Despite rapid growth the overall progress of cooperative movement

during 100 years of
Its existence is not very impressive. It is therefore necessary to know
the causes of poor
Performance of the movement and on that basis take such steps as
would promote a
faster growth of cooperative movement in India.

A. Government Interference:-
The cooperative movement in India was initiated in 1904 under the
auspices of British government. Right from the beginning the govt. has
adopted an attitude of patronizing the movement. Cooperative
institutions were treated as if these were part and parcel of the
administrative set up of the government. The govt. interference thus
became an essential elements in the working of these institutions. As a
result people’s enthusiasm for the movement did not grow.

B. Mismanagement and manipulation:-

The essence of the cooperative movement is that it gives the farmers
the status of shareholder and assures them agricultural, educational and
medical facilities. Under the Maharashtra State Co-operatives Act, a
minimum of 11 farmers is required to form a Co-operative. Today the
shareholder membership averages between 15,000 and 25,000 farmers.
The relationship between the shareholder farmer and the cooperative is
simple - the farmer is committed to contributing a certain amount of
cane per season and the mill is bound to take this cane. The strength of
the movement was the involvement of the farmers who were
shareholders in the sugar mill regardless of the size of their holdings.
Over the years, this truly democratic idea got corrupted and farmers
with larger holdings grew more powerful

C. Lack of Awareness:-
People are not well informed about the objectives of the movement, the
contributions it can make in rebuilding the society and the rules and
regulations of cooperative institutions. Unfortunately, no special efforts
have been made in this direction. People look upon these institutions as
means for obtaining facilities and concessions from the govt.

D. Restricted Coverage:-
The cooperative movement has also suffered on account of two
important limitations on It working. One is that the size of these
societies has been very small. Two, the most of the societies have been
single purpose societies. For this reason these societies are unable to
take a total view of the persons seeking help, nor can they analyze and
solve problems from different angles. Under these circumstances it has
not been possible for these societies to make much progress.

E. Functional Weakness:-
The cooperative movement has suffered from inadequacy of trained
personnel right from its inception. Lack of trained personnel has been
caused by two major factors. In the first place, there has been a lack of
institutions fort this purpose of training personnel. Secondly because of
it unsatisfactory working of cooperative institutions, efficient personnel
did not feel attracted or motivated towards them.

PARTICIPATION OF WOMEN IN CO-OPERATIVES

The need for greater participation of women in cooperatives especially

in areas where they have a natural advantage is accepted by all. It is
known that under the system of adult franchise prevailing in India,
women have equal opportunities for voting and electing their
representatives in Central and State Legislatures as also in local bodies
and panchayats. Central and State Governments are also extending
various concessions for promoting education among girls and women.
However, despite these favorable developments a majority of women in
our country are still illiterate and do not have access to various
resources including credit from banking channels. For the uplift of
women the Self Help Group (SHGs) is in the tune with Co-operatives.
Their conversion to co-operative form of organization will go a long way
in empowering women in view of the vibrant democratic structure of the
Co-operatives. Micro finance through SHGs by involving more and more
women will be important task in the 21st century.

CASE STUDY

Amul (Anand Milk Union Limited), formed in 1946, is a dairy co-

operative movement in India. It is a brand name managed by an apex
cooperative organisation, Gujarat Co-operative Milk Marketing
Federation Ltd. (GCMMF), which today is jointly owned by some 2.6
million milk producers in Gujarat, India.
AMUL is based in Anand, Gujarat and has been a sterling example of a
co-operative organization's success in the long term. It is one of the best
examples of co-operative achievement in the developing economy.
"Anyone who has seen ... the dairy cooperatives in the state of Gujarat,
especially the highly successful one known as AMUL. The Amul Pattern
has established itself as a uniquely appropriate model for rural
development. Amul has spurred the White Revolution of India, which has
made India the largest producer of milk and milk products in the world It
is also the world's biggest vegetarian cheese brand. Amul is the largest
food brand in India and world's Largest Pouched Milk Brand with an
annual turnover of US $1050 million (2006-07). Currently Amul has 2.6
million producer members with milk collection average of 10.16 million
litres per day.
Over five decades ago, the life of an average farmer in Kheda District
was very much like that of his/her counterpart anywhere else in India.
His/her income was derived almost entirely from seasonal crops. The
income from milk buffaloes was undependable. Milk producers had to
travel long distances to deliver milk to the only dairy, the Polson Dairy in
Anand – often milk went sour, especially in the summer season, as
producers had to physically carry milk in individual containers. Private
traders and middlemen controlled the marketing and distribution system
for the milk. These middlemen decided the prices and the off-take from
the farmers by the season. As milk is perishable, farmers were
compelled to sell it for whatever they were offered. Often, they had to
sell cream and ghee at throw-away prices. In this situation, the private
trader made a killing. Moreover, the government at that time had given
monopoly rights to Polson Dairy (around that time Polson was the most
well known butter brand in the country) to collect milk from Anand and
supply to Mumbai city in turn (about 400 kilometers away). Another
problem farmers faced was that in winter the milk output of buffaloes
doubled which caused prices to fall down even further. India ranked
nowhere amongst milk producing countries in the world in 1946. Amul
was the result of the realization that farmers could pool up their milk
and work as a cooperative.
The White Revolution ushered an era of plenty from a measly amount of
milk production and distribution. Aside from the great measurable
success that this project was, it also demonstrated the power of
"collective might". A small set of poor farmers of Kheda district in
Gujarat had the vision and foresight to act in a way that was good for
the society and not for the self alone.

GROWTH OF CO-OPERATIVE SECTOR IN INDIA

India has basically an agrarian economy with 72% of its total population
residing in rural areas . The rural people need lot of services in daily life
which are met by village co-operative societies. Co-operatives have
extended across the entire country and there are many members
nationwide. The cooperative credit system of India has the largest
network in the world and cooperatives have advanced more credit in the
Indian agricultural sector than commercial banks. The village
cooperative societies provide strategic inputs for the agricultural sector,
consumer societies meet their consumption requirements at
concessional rates co-operative societies are helping in building up of
storage go-downs including cold storages, rural roads and in providing
facilities like irrigation, electricity, transport and health. Various
development activities in agriculture, small industry marketing and
processing, distribution and supplies are now carried on through co-
operatives. Dairy cooperatives operating under the leadership of the
National Dairy Development Board and through 15 state cooperative
milk marketing federations has now become the largest producer of milk
in the world. The groundwork for this was laid in the early 1970's when
the largest dairy development programmed in the world - Operation
Flood - was launched. Operation Flood was a national marketing
strategy linked to a dairy infrastructure development programme that
created a chain of dairy processing plants, collection stations and a
national milk transportation grid. With the passage of the Insurance Act,
cooperatives have been allowed to entry into the insurance business.
The Indian Farmers Fertilizer Co-operative has recently teamed up with a
Japanese company and formed a joint venture for undertaking general
insurance business in India. This signifies that Indian co-operatives have
come of age in formulating strategic alliances. An Expert Group
constituted by the Govt. of India in 1990 recommended

➢ To facilitate building up of integrated co-operative structure;

➢ To make the co-operative federation organizations responsive
towards their members;
➢ To minimize government interference and control in the
functioning of co- operatives and
➢ To eliminate politicization from the cooperative sector.

The co-operatives in India have made an all-round progress and their

role in, and contribution agricultural progress has particularly been
significant.

CONCLUSION

The Co-operatives in the 21st Century must remain on vanguard in

providing the required lead to the millions of our producers. This calls for
well managed efficient Co-operative sector and to keep them away from
the fears to draconian laws and unwanted interference. The vision for
the second century is to withstand the challenges of competitive
business environment where excellence, efficiency and high productivity
parameters will be given priority. Emphasis will continue to be laid on an
improvement with Co-operative governance through the process of
restructuring and rejuvenation.