Indian Co-operative Movement

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 cooperative 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 (19041912) – 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 cooperation 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 cooperative 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

1939 1943 1946 1947

(in 000’s) 122.00 146.00 172 139.00

societies

Membership (in

Capital

lakhs) 53.07 69.01 91.6 90.00

crores) 106.47 121.14 104.00 156.00

(in

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 cooperative across the country.

8] The Eighth Stage (2000 onwards): The rise of the new millennium has thrown many challenges to the cooperatives. 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 cooperative 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 cooperatives. 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; minimize government interference and control functioning of co- operatives and ➢ To eliminate politicization from the cooperative sector. ➢ To

in

the

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.