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EXPLAINED: Why Separate Ministry Is A Milestone For India's Cooperative Movement. How It Will Help

Home Minister Amit Shah with PM Narendra Modi. (PTI File)

Home Minister Amit Shah with PM Narendra Modi. (PTI File)

A look at the cooperative movement in India and how the Centre is looking to inject fresh life into it

Fulfilling a long-pending demand, the Centre has now created a separate Ministry of Cooperation to be led by none other than Union Home Minister Amit Shah, indicating the importance that the Narendra Modi government is attaching to this sector. The history of cooperatives in India goes back to more than a hundred years and they continue to stay relevant due to their grassroots reach and ability to bring economic growth to underserved sections.

What’s The History Of The Cooperative Movement In India?

The cooperative movement, which has its roots in 19th century Europe, developed in pre-Independence India in response to agricultural distress and indebtedness. Their growth was fostered, first by India’s erstwhile British rulers and, post Independence, several steps have been taken to put assist in their growth and functioning.

According to the Ministry of Statistics and Programme Implementation (Mospi), the formal launch of the cooperative movement in India occurred with the introduction of the Cooperative Societies Act in 1904. However, it notes that even before the passing of that law, “the practice of the concept of cooperation and cooperative activities were prevalent in several parts of India".

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In 1912, another Cooperative Societies Act was passed to rectify some of the drawbacks of the earlier law. The next landmark came in 1919, when cooperation was made a state subject. That allowed the various states to come up with their own legislation governing cooperatives.

While details on the functioning of the new ministry are awaited — a Department of Agriculture, Cooperation and Farmers’ Welfare has operated under the Ministry of Agriculture at the Centre — Mospi notes that while cooperatives in India “face diverse problems… the situation is further complicated by the fact that cooperatives is a state subject… and state cooperative laws and their implementation have vastly differed".

Which Are The Key Sectors Where Cooperatives Play A Key Role?

Cooperatives are geared towards benefiting the chunk of Indian people — about 65 per cent of the country’s population, according to Mospi — who depend on agriculture and related activities. According to the Co-operative Societies Act, 1912, at least 10 persons aged above 18 years with common economic objectives, like farming, weaving, consuming, etc. can form a cooperative society.

There were 1.48 lakh credit societies in India in 2009-10, up from 1.43 lakh in 2000-01, with a total membership of 18.12 crore. The number of non-credit societies went up from 4.08 lakh in 2000-01 to 4.58 lakh in 2009-10 with 6.82 crore members.

The various kinds of cooperatives in India include consumers’ cooperative societies, which seek to protect the interest of general consumers by making goods available at reasonable rates. These cooperatives, of which Kendriya Bhandar, Apna Bazar and Sahkari Bhandar, are prominent examples, buy goods directly from the producers or manufacturers, thus removing middlemen from the process to deliver lower costs for consumers.

Then there are producers’ cooperative societies that protect the interest of small producers by enabling access to raw materials, tools and equipment, machinery, etc. Handloom societies like APPCO, Bayanika, Haryana Handloom, etc., are examples of producers’ co-operative societies.

Among the most famous cooperative brands in the country, Amul developed out of the Gujarat Co-operative Milk Marketing Federation, which is owned by 36 lakh milk producers in Gujarat. It is an example of a cooperative marketing society, formed by small producers and manufacturers who find it difficult to sell their products individually.

Among other types of cooperatives are cooperative credit societies, which accept deposits from members and grant them loans at reasonable rates, and cooperative farming societies, which are formed by small farmers to work jointly and thereby enjoy the benefits of large-scale farming.

What Will Be The New Cooperation Ministry’s Role?

Describing the launch of the ministry as an ‘historic move‘, the Centre said it will help realise the vision of “Sahkar se Samriddhi", which roughly translates as “Prosperity through Cooperation".

With a focus to help deepen cooperatives as a true people-based movement, the ministry is mandated to “provide a separate administrative, legal and policy framework for strengthening the cooperative movement".

The ministry will streamline processes for ‘ease of doing business’ for cooperatives and enable development of multi-state cooperatives.

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first published:July 08, 2021, 15:25 IST