Kara Sears
India's cooperative movement is a network of cooperatives at the local, regional, state, and national levels that assist in agricultural marketing, with commodities including food grains, jute, cotton, sugar, milk, fruit, and nuts. The country's largest self-sustaining industry is dairy farming based on the Amul Pattern, with a single marketing cooperative. The legal framework for cooperatives in India is provided by the Co-operative Societies Act of 1912, with Part IX B of the Constitution of India (1950) specifically addressing cooperative societies through the 97th Constitutional Amendment Act of 2011. The Union Ministry of Cooperation, formed in July 2021, is responsible for strengthening the cooperative movement by providing an administrative, legal, and policy framework.
| Characteristics | Values |
|---|---|
| Definition | "Co-operative society" means a society registered or deemed to be registered under any law relating to co-operative societies |
| Cooperative Societies Act | Passed in 1912 |
| Union Ministry of Cooperation | Formed in July 2021 to strengthen the cooperative movement in the country |
| National Policy on Cooperatives | Formulated in 2002 to develop the cooperative societies sector |
| Cooperative Banking | Cooperative banks in India serve both rural and urban societies |
| Dairy Farming | Dairy farming based on the Amul Pattern is India's largest self-sustaining industry and its largest rural employment provider |
| Sugar Production | Most sugar production in India takes place at mills owned by local cooperative societies |
| Constitution of Cooperative Society | The board shall have the directors as prescribed by state legislature by law, with a maximum limit of 21 directors |
| Political Participation | Local sugar mills have played a crucial part in encouraging political participation, especially in the state of Maharashtra |
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What You'll Learn
The Co-Operative Societies Act, 1912
One key provision in the Act relates to the recovery of sums due from a registered society to the government. It establishes a hierarchy for such recovery, firstly from the society's property, secondly from members of societies with limited liability, and thirdly from members of other societies. The Act also specifies that the word "limited" must be included in the name of societies with limited liability.
Additionally, the Act addresses the ratification of investments or deposits made before its commencement, allowing for the distribution of profits among members under certain conditions. It mandates that officers and members of the society provide necessary information regarding its affairs to the Registrar or authorised personnel.
The cooperative movement in India has a significant presence in the agricultural sector, banking, and housing. It plays a crucial role in sugar production, with local cooperative societies owning mills and including all farmers supplying sugarcane. Cooperative societies also facilitate political participation, especially in rural areas, and have influenced the development of cities like Mumbai, Chennai, New Delhi, Thiruvananthapuram, and Kolkata. The National Policy on Cooperatives formulated in 2002 further bolstered the sector, leading to a vast network of cooperatives at various levels across the country.
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The Union Ministry of Cooperation
The ministry's vision statement is "Sahkar se samriddhi", which translates to "prosperity through cooperation". It works to strengthen cooperatives at the grassroots level, streamline processes for 'Ease of doing business' for cooperatives, and enable the development of Multi-State Cooperatives (MSCS). Before the creation of this ministry, the objectives that it now oversees were looked after by the Ministry of Agriculture.
Sugar production in India is also largely facilitated by local cooperative societies, which include all farmers, small and large, supplying sugarcane to the mill. Cooperatives also play a significant role in banking, with cooperative banks serving both rural and urban societies.
The creation of the Union Ministry of Cooperation has been met with some concerns by experts, who argue that cooperative societies are a subject of the State List under the Seventh Schedule of the Constitution. As such, a central ministry may increase the power of the union government and potentially infringe upon the rights of state governments to govern cooperative organisations.
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The role of co-operatives in the Indian economy
The cooperative movement in India is governed by the Union Ministry of Cooperation, which was formed in July 2021 to strengthen the cooperative movement in the country. The ministry provides an administrative, legal, and policy framework to support cooperatives at the grassroots level and enable the development of multi-state cooperatives. India has a network of cooperatives at the local, regional, state, and national levels, with a history dating back to the Co-operative Societies Act of 1912. This Act provided the legal framework for the formation of cooperative credit societies to promote thrift and self-help among agriculturists, artisans, and persons of limited means.
Cooperatives have played a significant role in various sectors of the Indian economy, with dairy farming, sugar production, and banking being notable examples. Dairy farming based on the Amul Pattern has made India the world's largest milk producer, providing rural employment and empowering small dairy farmers. Small, marginal farmers sell their milk to village union collection points, and after processing at district unions, the milk is marketed nationally by the state cooperative federation under the Amul brand name. This model ensures that three-fourths of the price paid by consumers goes directly to the farmers, who own the brand and the cooperative.
Sugar production in India is largely facilitated by mills owned by local cooperative societies, which include all farmers, regardless of scale. These sugar cooperatives have had a notable impact on local politics, particularly in the state of Maharashtra, where they have fostered a symbiotic relationship with aspiring politicians.
Cooperative banks in India serve both rural and urban societies, catering to the financial needs of diverse communities. The country has witnessed the establishment of over 25,000 cooperatives by the 1990s in Maharashtra, showcasing the widespread adoption of this model.
The role of cooperatives in the Indian economy is significant, promoting self-reliance, economic participation, and democratic member-control. They contribute to the country's prosperity by empowering individuals at the grassroots level, particularly in the agricultural and dairy sectors. Cooperatives have also played a role in political engagement and continue to be a vital aspect of India's economic landscape.
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The 97th Constitutional Amendment Act, 2011
The 97th Constitutional Amendment Act of 2011, also known as the Constitution (Ninety-Seventh Amendment) Act, made significant changes to the Indian Constitution regarding cooperative societies. Cooperative societies are vital organisations in India, offering economic, social, and political benefits to their members. The amendment aimed to strengthen these societies by granting them constitutional status and protection, recognising their right to exist and operate independently.
One of the key provisions of the 97th Amendment Act was the addition of the words "cooperative societies" to Part III of Article 19(1)(c) of the Constitution, making the right to form cooperative societies a fundamental right. This amendment ensured the democratic, independent, and professional operation of cooperatives, promoting voluntary formation, autonomous functioning, democratic control, and professional management. It also established standards for management and accountability, enhancing the effectiveness of the cooperative movement across India.
The 97th Amendment Act also addressed key cooperative empowerment issues. It emphasised the importance of holding professional audits, general body meetings, and elections consistently and on time. Additionally, the amendment promoted cooperative economic activities that advanced rural development in India. Cooperative societies provided substantial credit to farmers at affordable rates, reducing their dependence on money lenders and fostering thrift and self-help habits in rural communities.
However, the 97th Amendment Act was not without controversy. There were legal contentions regarding the use of Article 368 of the Constitution, as the amendment limited the exclusive authority of state legislatures to create laws about cooperative societies. The Gujarat High Court ruled that the Act was unconstitutional, and the Supreme Court upheld this decision, invalidating certain provisions related to the efficient management of cooperative societies. Despite this, the Supreme Court maintained the validity of the amendment concerning multi-state cooperative societies, which exist in multiple states or union territories.
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The National Policy on Cooperatives
Cooperatives in India play a significant role in various sectors, including dairy farming, sugar production, and banking. The Amul Pattern of dairy farming, with a single marketing cooperative, has made India the world's largest milk producer and provided rural employment. Similarly, local cooperative societies own most sugar mills in India, and cooperative banks serve both rural and urban societies.
In addition to these economic contributions, cooperatives also have political implications in India. Local sugar mills have served as a stepping stone for aspiring politicians, particularly in Maharashtra, creating a symbiotic relationship between sugar factories and local politics. However, the policy of "profits for the company but losses to be borne by the government" has led to inefficiencies in some of these operations.
Housing cooperatives, approved by each state through the Cooperative Societies Act, also play a role in providing affordable housing alternatives for people with limited incomes. These cooperatives can be classified as tenure, finance, or building cooperatives, depending on their objectives and functionality.
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Frequently asked questions
The Cooperative Movement in India refers to the country's networks of cooperatives at the local, regional, state and national levels that assist in agricultural marketing. The commodities that are mostly handled are food grains, jute, cotton, sugar, milk, fruit and nuts.
The Cooperative Societies Act was passed in 1912 to provide the legal framework for cooperative societies in India. Part IX B of the Constitution of India, 1950 (COI) specifically deals with the provisions related to cooperative societies, which were introduced through the 97th Constitutional Amendment Act in 2011.
The Union Ministry of Cooperation is a ministry under the Government of India formed in July 2021. The ministry provides a separate administrative, legal and policy framework to strengthen the cooperative movement in the country.
Dairy farming based on the Amul Pattern, with a single marketing cooperative, is India's largest self-sustaining industry and its largest rural employment provider. India is now the world's largest milk producer. Cooperatives also play a great part in banking, with cooperative banks serving both rural and urban societies. Most sugar production in India also takes place at mills owned by local cooperative societies.
Cooperative law in India is based on the principles of voluntary formation, democratic member-control, member-economic participation and autonomous functioning. The maximum number of directors on the board of a cooperative society is 21, with a requirement for the reservation of seats for the Scheduled Castes or Tribes, and women.
