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What are cooperatives & how a new ministry set up amid Modi govt reshuffle will help

The new Ministry of Cooperation, the govt has said, will provide a separate administrative, legal and policy framework to strengthen the cooperative movement in the country.

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New Delhi: Ahead of the cabinet reshuffle, the Modi government Tuesday announced the creation of a new ministry of cooperation for cooperative societies in the country. 

The ministry will provide a separate administrative, legal and policy framework to strengthen the cooperative movement in the country, the government said, adding that it has been created with the vision of ‘Sahakar se Samriddhi’ (prosperity through cooperatives).

According to the government, the ministry will work to streamline processes allowing cooperatives the ease of doing business while also enabling the development of multi-state cooperatives. 

Its creation is being viewed as a fulfilment of the promise made by Finance Minister Nirmala Sitharaman in the Union budget this year. In her budget address, she had said the Modi government was committed to  developing multi-state cooperatives and would provide all support to them. “To further streamline the ease of doing business for cooperatives, I propose to set up a separate administrative structure for them,” she had said.

ThePrint explains the history of cooperatives and the role they have played in the economy of the country. 

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What are cooperatives? 

According to the International Co-operative Alliance, cooperatives are people-centred enterprises owned, controlled and run by and for their members to realise their common economic, social, and cultural needs and aspirations.

In India, a cooperative society can be formed under provisions of the Co-operative Societies Act, 1912. The provisions state that at least 10 people above 18 years, having the capacity to enter into a contract with common economic objectives, such as farming and weaving among others, can form a cooperative society.

As the legislation indicates, the history of cooperatives in India can be divided into two phases — the pre-Independence era and the post-Independence era. 

British India first enacted the Cooperative Credit Societies Act, 1904. In 1919, cooperation became a provincial subject and provinces were authorised to make their own cooperative laws under the Montague-Chelmsford Reforms

In 1942, the British government enacted the Multi-Unit Cooperative Societies Act, intended to cover such societies whose operations extended to more than one province.

Co-operative societies were also championed by India’s first Prime Minister Jawaharlal Nehru. According to the RBI website, Nehru, while opening an international seminar on cooperative leadership in South-East Asia, said, “But my outlook at present is not the outlook of spreading the cooperative movement gradually, progressively, as it has done. My outlook is to convulse India with the cooperative movement or rather with cooperation to make it, broadly speaking, the basic activity of India, in every village as well as elsewhere; and finally, indeed, to make the cooperative approach the common thinking of India.” 

Post Independence in 1958, the National Development Council (NDC) recommended a national policy on cooperatives with the setting up of co-operative marketing societies. In 1984, Parliament enacted the Multi-State Cooperative Societies Act to declutter different laws governing the same types of societies.

In 2002, the then NDA government under Atal Bihari Vajpayee announced a National Policy on Cooperatives to support the promotion and development of cooperatives. 

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Various facets of cooperatives in India

Cooperatives in India have grown exponentially.

In the banking sector, according to the RBI, their contribution to rural credit increased from 3.1 per cent in 1951 to an impressive 27.3 per cent in 2002. 

The data shows that the combined balance sheet of all state cooperative banks, as of 31 March 2015, stood at Rs 1.98 lakh crore and that of district central cooperative banks stood at Rs 4.06 lakh crore, with their net profits being Rs 1,005 crore and Rs 793 crore respectively.

Cooperatives have also evolved into different forms such as the consumers’ cooperative societies like Kendriya Bhandar, a welfare society for central government employees set up in 1963; Apna Bazar, one of the largest and oldest multi-state cooperatives and Sahakari Bhandar, a cooperative chain of retail stores. 

Then there are the producers’ cooperatives such as APCO or the Andhra Pradesh State Handloom Weavers Cooperative Society; and Boyanika, which represents the weavers cooperative societies of Odisha, and Haryana Handloom.

The one cooperative that defines the model and is synonymous with its success is AMUL, the country’s biggest food and dairy company with an annual turnover of over Rs 38,000 crore

The Gujarat Cooperative Milk Marketing Federation that sells AMUL milk products is an example of a co-operative marketing society, which is formed by small producers and manufacturers finding it difficult to sell products individually. The society collects products and takes responsibility for their sale.

Government arms that oversee the sector

The National Cooperative Union of India (NCUI) and the National Cooperative Development Corporation (NCDC) work for promotion of cooperative movement in India. 

The NCDC was initially assigned to planning, promoting and financing programmes for production, processing, marketing, storage, export and import of agricultural produce, foodstuffs, notified commodities. 

Later, however, it was broadened to assist different types of cooperatives and to expand its financial base. It also finances projects in rural industrial cooperative sectors like water conservation, irrigation, agri-insurance, agro-credit, sanitation and animal health.

(Edited by Arun Prashanth)

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