Role of State in the

Progress of Indian
Cooperative Movement
Presented By: Naseem Ahmad
History of Cooperative Movement in India

The history of co-operative movement in India is broadly divided into

two phases. That means co-operative movement has passed into two
phases. They are-

1) Co –operative movement in pre-independence era.

2) Co-operative movement in post–independence era.

Co-operative Movement in pre-Independence era
The first recorded activity began in 1904 when this movement was officially set up
by the British government. Before that in the year 1892, Derrick Nicholson, tried to
find out ways and means to establish institutions so as to help the agricultural sector.
He gave the suggestions for setting of co-operative societies. India faced a terrible
famine in 1899. The Government appointed the Second Famine Commission 1901
to suggest measures for the victims. The Government had accepted many of the
recommendations and in 1904 “co operative societies Act” were passed. The aim
was to help the rural farmers and artisans by providing short term and long term
loans. These credit societies were organized on the basis of two models, one for
rural area and other for urban area.
The term cooperative Societies came into existence when the farmers of
Poona and Ahmednagar spearheaded an agitation against the money
lenders who were charging exorbitant rates of interest. Hence, British
government came forward and passed three acts- the Deccan Agriculture
Relief Act (1879), the Land Improvement Loan Act (1883) and the
Agriculturists Loan Act (1884).
Factors which gave the idea of cooperative in India.
1. occasions of famine
2. lack of funds
3. jagirdars and zamindars always exploited the peasants
This prompted the British government to establish credit cooperative
societies in the villages. The first Cooperative Credit Societies Act
was passed in 1904. To remove the weaknesses of this Act, the new
Cooperative Societies Act was passed in 1912.
Govt. appointed Maclagan Committee in 1914 which suggested certain
improvements in its functioning, such as better procedure of audit,
emphasis on teachings to members and to have steady progress of the
movement.
The cooperative movement got a boost during the war period
The second report on recommendation and planning issued by the GOI
gave an imp. place to coop. movmt. As a result, a Cooperative Planning
Committee was appointed by the GOI in 1945.
In 1951 the RBI appointed a committee to survey All India Rural Credit Societies. The report of this committee was submitted
in 1954.

 important suggestions and recommendations

partnership of State govt. in all kinds of societies (e.g cr. societies) and banks like CBs, SBs, coop. marktg; and all other
impt societies e.g dairying, milk supply, transport and industrial societies.

 A central committee for cooperative training should be set up.

 It would the responsibility of the state govt. to implement these programs. Besides, the other 2 main agencies will be the
Ministry of Food and Ag. of GOI and the RBI.
Co-operative Movement in post-Independence era

India's 1st PM Pt. Jawaharlal Nehru had strong faith in the cooperative movement. In his
speech in international seminar on cooperative leadership in South-East Asia he had said
“But my outlook at present is not the outlook of spreading the cooperative movement
gradually, progressively, as it has done. My outlook is to convulse India with the
Cooperative Movement or rather with cooperation to make it, broadly speaking, the basic
activity of India, in every village as well as elsewhere; and finally, indeed, to make the
cooperative approach the common thinking of India....Therefore, the whole future of India
really depends on the success of this approach of ours to these vast numbers, hundreds of
millions of people".
Hence, after independence cooperatives became an integral part of Five-
Year Plans.

1. In 1958, the National Development Council (NDC) had

recommended a national policy on cooperatives and also for training of
personnel's and setting up of Co-operative Marketing Societies.

2. In 1984, Parliament of India enacted the Multi-State Cooperative

Societies Act to remove the plethora of different laws governing the
same types of societies.
3. The most important success stories lays behind the success of White
Revolution which made the country the world's largest producer of milk and
milk products; and Green Revolution and the conversion of villages into
model villages have assumed great importance in the wake of the Green
Revolution.
4. Government of India announced a National Policy on Co- operatives in
2002. The ultimate objective of the National Policy is to-
(a) Provide support for promotion and development of cooperatives
(b) Reduction of regional imbalances
(c)Strengthening of cooperative education, training and human resource
development
Provisions of Indian Constitution

Directive Principles of State Policy enshrines under article 43 that-

Living wage, etc., for workers.
Right to form cooperatives can also be construed as a Fundamental
Right, Article 14– (Right to Equality) and Article 19(1)(c) as ‘Right to
form Associations or Unions.
Committee related to the Cooperative Movements in India

1. All-India Rural Credit Survey Committee Report (1954)

2. Chaudhary Brahm Prakash Committee (which proposed a model
law) (1990)
3. Mirdha Committee (1996)
4. Jagdish Kapoor Committee (2000)
5. Vikhe Patil Committee (2001)
6. V. S. Vyas Committee (2001 and 2004)
State and cooperation
We all know that CM was started in 1904 by the effort made by the
govt. CS act 1904 got the moral and financial support of the govt.
Reason for financial support:
Sir horace plunkett said that in india cooperationm was not a
‘movement’but a ‘policy’ created by the govt. from the beginning in
1904 to this day the cooperative movement has developed largely on
statye aid.
State aid to the cooperative movement in terms of moral, financial,
in legislative aid as stated below.
1. The passing of special legislation for the Org. & working of coop.
institutions.
2. Appointment of expert committees and expert opinions was called
for, when govt. felt so
CAUSES OF SLOW PROGRESS
1. Government Interference.
2. Mismanagement and manipulation.
3. Lack of Awareness.
4. Restricted Coverage.
5. Functional Weakness.
 State Aid
The government has provided aid and assistance to the Cooperative
societies in India in the following manner,
(I) State partnership in the share capital of cooperatives,
(ii) loans to societies
(iii) subsidies and grants,
(iv) Guarantees
(v) contribution to risk fund
Cont…
(vi) Tax concessions
(viii) legal
concessions and sanctions,
(viii) training and education,
(ix) help to the Reserve
Bank and other banking organizations
(x) Supply of government officers on
deputation.
 Cooperative Development Fund

The CDF was set up by NABARD in 1992-93 for providing assist. to the CBs to improve
their functional efficiency. Under the scheme, financial assistance is provided to various
STCBs, SCARDBS, CCBS, PCARDBs for infrastructural development, building up of
Management Information System (MIS), hiring of outside agencies for conducting special
studies/seminars, etc. and meeting the expenses in connection with performance awards
given to cooperative banks based on their performance. Cumulative grants/soft loan
assistance amounting to Rs.28.7 crore was sanctioned from CDF as at the end of

March 1999, while the disbursals amounted to Rs.15.9 crore.

Role of NABARD
• It works as an apex body for cooperative banks.
• It provides long term finances for cooperative banks and monitors the
performance of cooperative banks.
• As the apex bank for agricultural and rural development in the country,
• NABARD provides several lines of production and investment credit
through the financial and banking system for integrated rural
development.
 Main Functions Of NABARD:
1. To act as an apex body to look after the credit requirements of the
rural sector.
2. To oversee the functioning of the Cooperative Sector through its
Agricultural Credit Department.
3. To provide loans to the state Governments for agricultural
development.
4. To look after the performance of Cooperative banks and the RRBs.
5. To maintain and strengthen a research and development fund to be
used for promoting research in agricultural development.
 Conclusion
It is clear from the above discussion that the State has been actively providing assistance
through legislation, administration, planning and participation in finance and management
of Cooperative Sector. In Himachal Pradesh the State government is playing an important
role in the development of cooperative sector. Cooperatives are often seen used for
achieving certain objectives more for the government than for the people More and more
powers are enjoyed by the State government in regard to management, audit, supervision
and control of cooperative organizations. Under the pretext of planning cooperatives are
directed from the top by the government authorities.
 CASE STUDY

AMUL (Anand Milk Union Limited), formed in 1946, is a Dairy co-

operative movement in India. 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 organizations
success in the long term.
THANKYOU