COOPERATIVES SECTOR -THE GROWING IMPORTANCE AND THE ECONOMIC POTENTIAL IT HOLDS:

NEWS: Union Minister calls for transformation of India’s cooperative sector, Cooperatives must be India’s economic backbone, says UNION MINISTER shah.

COOPERATIVE SECTOR:

DEF: A cooperative is avoluntary groupof individuals withcommon needswho unite to achieveshared economic goals.

Aim:Supports members, with focus onthe interest of the poorer sections of society, throughself-helpandmutual aid.

Memberspool resourcesand use them effectivelyfor mutual benefit.

The global rise of cooperatives is partially due to the work of theInternational Co-operative Alliance (ICA).

Constitutional Status

• Part IXB of the ICgrantsconstitutional status to cooperative societiesand contains provisions for theirdemocraticfunctioning. It was inserted by theConstitution (97^thAmendment) Act,2011.
• The SC, in 2021, held thatPart IXB of IC would only apply to MSCS, asstates have the jurisdiction to legislate overstate cooperative societies (SCS).

Governance Structure

Multi-State Cooperatives: Falls underEntry 44 of Union List of the Constitution. Governed by theMulti-State Cooperative Societies Act, 2002.

State Cooperatives:Falls underEntry 32 of State List of the Constitution. Governed by respectiveState Cooperative Societies Acts.

In November 2024,India hosted ICA's Global Cooperative Conferencefor the first time.

The Theme was"Cooperatives Build Prosperity for All",aligning with India's"Sahkar Se Samriddhi"vision.

TYPES OF COOPERATIVE SOCIETY:

• Consumers’ Cooperative Society:Offers goods at reasonable prices (e.g., Kendriya Bhandar).
• Producers’ Cooperative Society:Supports production (e.g., Haryana Handloom).
• Cooperative Marketing Society:Aids in marketing member products (e.g., AMUL).
• Credit Cooperative Society:Provides fair-interest loans (e.g.,Urban Cooperative Banks).
• Farming Cooperative Society:Facilitates benefits of large-scale farming.
• Housing Cooperative Society:Ensures affordable housing (Metropolitan Housing Cooperative Society).

Significance of Cooperatives in Socioeconomic Development:

• Empowering Society
• Equal Rights: The"one-person-one-vote"system ensuresequality.
• Bargaining Power: Enablescollective actionfor better opportunities.
• Leadership Development: Cooperatives elect leaders democratically, helping develop leadership skills in many states (e.g., InMaharashtra many legislators are associated with cooperatives movement).
• Promoting Financial Inclusion:Affordable credit for farmers, reducing reliance on moneylenders. Extensiverural networkboosts financial accessibility.
• Strengthening Social Cohesion: Cooperatives fosternatural and privatesocial bondswithout third-party involvement.
• Example: Housing cooperatives bridge the gap betweenresidents and urban policies, encouraging grassroots participation.
• Reducing Wealth Inequality:Loans at low interest ratessupport marginalized communities. Encouragesself-employment and fair competition.
• Instilling Moral Values: Promotesunity, trust, honesty, and cooperation, ensuringsocial stability.

Challenges Faced by Cooperatives in India:

§Government Interference: Regulations on borrowing, transactions, and investments limit efficiency.

§Politicization: Powerful local figures influence cooperative management.

§Weak Audit System: Audits are irregular, delayed, and ineffective.

§Lack of Coordination: Cooperatives at different levels fail to work together.

§Functional Weaknesses

oLack of Scale: Cooperatives struggle with financial, managerial, and technical limitations.

oSkilled Workforce Shortage: Training institutions and professional opportunities are lacking.

oPoor Management: Limited career development affects leadership and efficiency.

oLack of Familiarity with Digital Tools:The data indicates that only45% of cooperative membersare familiar with digital tools, suggesting a significant gap intechnological literacy.

Government Initiatives to Strengthen Cooperatives

• RBI Umbrella Support:An RBI-approved Umbrella Organization(Registrar of Co-operative Societies in each state)aids urban cooperative banks (UCBs), enhancing their financial resilience.
• Rural Storage Expansion:Under theDecentralized Grain Storage Plan, 2,000Primary Agricultural Credit Societies (PACS)now provide rural storage facilities.
• PACS Digitization:A ₹2,516 crore project digitized over 15,000 PACS, improving transparency and functionality, supported by a National Cooperative Database for record-keeping.
• PACS Retail Expansion:PACS are expanding into fuel and LPG distribution, further diversifying services available to rural areas.
• NCDC Bonds and E-Services:TheNational Cooperative Development Corporationissued ₹2,000 crore in bonds, while PACS as Common Service Centers now offer 300+ e-services for rural communities.
• Organic Agriculture Support:National Cooperative Organic Limited (NCOL)was set up to promoteorganic farming, reinforcing sustainable agriculture practices.
• Multi-State Cooperative Societies Amendment Act 2023

NEED OF THE HOUR:

• Implementdigital platforms for financial reporting, conduct regular audits, and encourage member participation in decision-making processes.
• Establish cooperative development funds with flexible collateral requirements to cater to the needs of marginalised communities. Encourage cooperatives to explorecrowdfunding, social impact bonds,and other innovative financing solutions.
• Design outreach programs toeducate and attract members from marginalised communities,addressing specific needs and challenges.
• Advocate for government investment in rural infrastructure development, improving connectivity and access to markets for cooperatives