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
(in 000’s)
Membership (in
lakhs)
Capital
(in
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.