Cooperative Movement in India: Digital Transformation Strengthening Cooperative Institutions and Governance Framework

Recent Developments:

• The Ministry of Cooperation celebrated its 5th Foundation Day on 6 July 2026, highlighting major reforms aimed at modernising India's cooperative sector.
• Key announcements included the launch of 50,000 e-PACS, foundation stones for 47 grain storage godowns, and the Milk Supply Review Dashboard Portal for the National Dairy Development Board.
• The Ministry, established on 6 July 2021, has launched more than 152 initiatives to strengthen governance, digitalisation, infrastructure, agricultural marketing, dairy, fisheries, and cooperative institutions.
• The cooperative movement is guided by the vision of "Sahkar Se Samriddhi" and inspired by "Vasudhaiva Kutumbakam", emphasising inclusive development through collective participation.

Cooperatives in India:

Meaning and Features:

• A Cooperative Society is a voluntary, democratic, and member-owned organisation established to meet the common economic, social, and cultural needs of its members.
• Every cooperative functions on the principle of "One Member, One Vote", ensuring democratic decision-making irrespective of capital contribution.
• The cooperative model promotes collective ownership, mutual assistance, inclusive growth, and community participation rather than profit maximisation.

Constitutional and Legal Framework:

Constitutional Provisions:

• The 97th Constitutional Amendment Act, 2011 granted constitutional recognition to cooperative societies.
• Article 19(1)(c) guarantees citizens the Fundamental Right to form cooperative societies.
• Article 43B, under the Directive Principles of State Policy, directs the State to promote voluntary, democratic, autonomous, and professionally managed cooperative societies.
• Part IXB (Articles 243ZH–243ZT) provides the constitutional framework for governance, elections, auditing, accountability, and management of cooperative societies.

Regulatory Framework:

• State Cooperative Societies are governed by respective State Cooperative Societies Acts and supervised by State Registrars of Cooperative Societies.
• Multi-State Cooperative Societies are regulated under the Multi-State Cooperative Societies Act, 2002 and administered by the Central Registrar of Cooperative Societies.
• The Ministry of Cooperation, established in 2021, functions as the nodal ministry for strengthening the cooperative ecosystem at the national level.

Present Status of Cooperatives in India:

Scale and Significance:

• India possesses one of the world's largest cooperative ecosystems, comprising more than 8.5 lakh cooperative societies with nearly 32 crore members across about 30 sectors.
• Cooperatives collectively cover nearly 98% of rural India, making them important instruments of rural development and financial inclusion.
• The cooperative sector supports farmers, dairy producers, fishers, artisans, labourers, and other rural producers through credit, marketing, storage, processing, and essential services.
• Nearly 10 crore women participate in cooperatives through Self-Help Groups, strengthening women-led development and financial inclusion.

Institutional Presence:

• Primary Agricultural Credit Societies operate in more than 2.55 lakh Gram Panchayats.
• Dairy cooperatives function across over 87,159 Gram Panchayats, while fisheries cooperatives are present in nearly 29,964 Gram Panchayats.
• Cooperatives have expanded beyond agricultural credit into retail, healthcare, warehousing, fuel distribution, digital services, fisheries, exports, seeds, organic products, and mobility services.

Institutional Financing:

• The National Cooperative Development Corporation sanctioned ₹1.55 lakh crore and disbursed ₹1.27 lakh crore during FY 2025–26.
• It also disbursed ₹2,320 crore for Farmer Producer Organisations and Cluster-Based Business Organisations under the scheme for promoting 10,000 Farmer Producer Organisations.

Major Government Initiatives:

Institutional Reforms:

• The Ministry of Cooperation has introduced more than 152 reforms to modernise cooperative governance and improve transparency, accountability, digitalisation, and business diversification.
• Model Bye-laws have enabled Primary Agricultural Credit Societies in 32 States and Union Territories to undertake more than 25 business activities, including healthcare, retail, warehousing, fuel distribution, and digital services.
• A total of 37,454 new multipurpose Primary Agricultural Credit Societies, dairy cooperatives, and fisheries cooperatives have been registered to expand cooperative coverage.

Digital Transformation:

• 50,000 Primary Agricultural Credit Societies are being transformed into e-PACS through end-to-end digitalisation.
• 54,117 Primary Agricultural Credit Societies are functioning as Common Service Centres, while 39,177 operate as Pradhan Mantri Kisan Samriddhi Kendras.
• The National Urban Cooperative Finance and Development Corporation has introduced Sahakar CBS, a centralised Core Banking Solution, and Sahakar Sahyogi, an Artificial Intelligence-enabled customer support platform for Urban Cooperative Banks.

Infrastructure Development:

• India is implementing the world's largest decentralised grain storage programme through cooperatives.
• Grain storage godowns have been completed in 145 Primary Agricultural Credit Societies, creating more than 68,702 metric tonnes of storage capacity.
• Foundation stones for 47 additional grain storage facilities were laid during the 5th Foundation Day celebrations.

Agricultural and Rural Development:

• Primary Agricultural Credit Societies are evolving into integrated rural service centres providing credit, agricultural inputs, storage, healthcare, fuel, digital services, and public service delivery.
• 1,863 Farmer Producer Organisations have been established within the cooperative sector, including 1,117 through Primary Agricultural Credit Societies and 1,070 fisheries Farmer Producer Organisations, supported through financial assistance of ₹98 crore.

Tax and Financial Reforms:

• Surcharge for cooperatives with taxable income between ₹1 crore and ₹10 crore has been reduced from 12% to 7%.
• Minimum Alternate Tax has been reduced from 18.5% to 15%.
• The Tax Deducted at Source threshold for cash withdrawal has been increased from ₹1 crore to ₹3 crore.
• Higher cash transaction limits have also been permitted for Primary Agricultural Credit Societies and Primary Cooperative Agriculture and Rural Development Banks.

White Revolution 2.0:

• The initiative aims to increase milk procurement by 50% by 2028–29 through expansion of dairy cooperatives.
• 25,282 dairy cooperative societies have already been established with special emphasis on women-led dairy cooperatives.

National Cooperative Institutions:

• National Cooperative Exports Limited promotes cooperative exports and has exported 15.4 lakh metric tonnes of products worth ₹6,295 crore to 38 countries.
• National Cooperative Organics Limited promotes certified organic products through 14,286 member cooperatives.
• Bharatiya Beej Sahakari Samiti Limited supplies quality seeds under the "Bharat Beej" brand through 38,665 member cooperatives.

Education and Capacity Building:

• Tribhuvan Sahkari University, India's first dedicated cooperative university, has been established to promote cooperative education, research, leadership, and skill development.
• Capacity building programmes are conducted through the National Council for Cooperative Training and the National Bank for Agriculture and Rural Development.

Mobility Cooperative:

• Bharat Taxi has emerged as India's first cooperative-based mobility platform under Sahakar Taxi Cooperative Limited.
• The platform has 6.37 lakh registered drivers, 35.77 lakh registered customers, and is expanding across major cities.

National Cooperation Policy 2025:

Major Objectives:

• The policy replaces the National Cooperative Policy, 2002, and provides a long-term roadmap up to 2045.
• The policy aims to establish 2 lakh Multipurpose Primary Agricultural Credit Societies across the country.
• The policy promotes convergence with schemes such as the Dairy Infrastructure Development Fund, Pradhan Mantri Matsya Sampada Yojana, and the National Programme for Dairy Development.
• The policy emphasises cooperative education through Tribhuvan Sahkari University and stronger institutional capacity.

Major Challenges:

Institutional and Governance Challenges:

• Overlapping jurisdiction among cooperative registrars, financial regulators, and other authorities creates regulatory fragmentation.
• Weak governance, limited transparency, delayed elections, elite capture, and inadequate accountability reduce institutional efficiency.
• Many cooperatives continue to suffer from inadequate capital, weak market access, poor infrastructure, and insufficient storage and processing facilities.
• Limited digital adoption, poor enterprise resource planning systems, weak logistics, and inadequate e-commerce integration reduce competitiveness.
• Social inequalities, including caste, gender, and local power imbalances, continue to affect inclusive participation.
• Increasing competition from commercial banks, private agribusinesses, fintech firms, and organised retail has intensified market pressures.

Way Forward:

Suggested Reforms:

• A harmonised regulatory framework should improve coordination among the Ministry of Cooperation, State Registrars, the Reserve Bank of India, and the National Bank for Agriculture and Rural Development.
• Democratic governance should be strengthened through regular elections, transparent audits, professional management, social audits, and greater member participation.
• Financial support and infrastructure investment should be expanded by linking cooperatives with government credit guarantee schemes, warehousing, cold chains, processing facilities, and common facility centres.
• Technology adoption should be accelerated through digital accounting, enterprise resource planning systems, digital payments, e-commerce platforms, and online governance.
• Inclusive participation should be promoted through greater representation of women, marginalised communities, and youth in cooperative leadership.
• Professional branding, value addition, diversification, and market integration should improve the competitiveness of cooperatives in domestic and global markets.

Value Addition for UPSC:

Important Constitutional Provisions:

• Article 19(1)(c) – Right to Form Cooperative Societies.
• Article 43B – Promotion of Cooperative Societies under the Directive Principles of State Policy.
• Part IXB (Articles 243ZH–243ZT) – Constitutional Framework for Cooperative Societies.

Important Institutions:

• Ministry of Cooperation
• National Cooperative Development Corporation
• National Cooperative Exports Limited
• National Cooperative Organics Limited
• Bharatiya Beej Sahakari Samiti Limited
• Tribhuvan Sahkari University
• National Council for Cooperative Training
• National Bank for Agriculture and Rural Development

Notable Cooperatives in India:

• AMUL
• IFFCO
• Shri Mahila Griha Udyog Lijjat Papad