Cooperative Movement in India: History, Issues Faced

By : Neha Dhyani

Updated : Feb 23, 2022, 9:25

The cooperative societies can be deemed as an autonomous association of people who have voluntarily come together to meet their common economic, social and cultural needs, and aspirations via a jointly-owned and democratically-controlled enterprise.

 It tends to help poor, illiterate and unskilled people. It played a vital role in the agriculture, bank and housing sector. Cooperative societies have helped to increase political participation, particularly in rural areas.

Causes of Cooperative Movement of India

The Cooperative Movement emerged out of the stress felt by India during the last quarter of the nineteenth century. 

  • Industrial Revolution left the hands of a mass population and drove them to agriculture. Agriculture, at that time, was the only source of employment and livelihood.
  • Subdivisions and fragments of holdings made agriculture uneconomic.
  • Many factors such as rigidity in the collection of land revenue and rainfall uncertainty ensure that the farmers approach money lenders for financial help.
  • Moneylenders ensure the humiliation of farmers. They advance them some money either by purchasing their crop at throwaway or charging a high rate on interest.
  • These situations served the need for an alternative agency.

Informal Cooperatives Societies in India

The practice of cooperative activities was already existing even before the formal cooperative structure came into being. These informal cooperatives were named Devarai or Vanarai, Chit Fund, Kuries, Bhishes, Phads, etc. Nidhi and Mutual loans were organised in Madras. These informal cooperatives were purely voluntarily.

History of Cooperative Movements in India

The history of Cooperative Movements in India can be divided into two phases. First, co-operative Movement in the pre- Independence era. Another, cooperative Movement in the post- Independence era.

1.  Co-operative Movement in pre - Independence era

  • Cooperative Movement in India emerged in the initial stage in 1904. In other words, the Cooperative Societies Act was first passed in 1904.
  • This Act was restrictive in some manner as it kept non-credit and other societies out of its field.
  • The 1912 Act cooperative Societies removed some of its shortcomings.
  • Later in 1942, the British Government passed a Multi-Unit Cooperative. The Society Act says that more than one province's member can be a part of a single Cooperative Society.

British Government formed a cooperative rule whose reports were given by Sir Fredric Nicholson, a British officer of the Madras region. And hence, he is known as the pioneer of the Cooperative Movement of India.

2. Co-operative Movement in Post – Independence era

  • After independence, the Cooperatives were officially made a part of the mixed economy of India. The mixed economy comprises three sectors, Public, Private and Cooperatives.
  • It was considered as the balancing element between Public and Private.
  • It was made one integral part of the Five Years Plan (FYP).
  • Jawaharlal Nehru claimed it as one of the pillars of Democracy, along with Panchayat and Schools.
  • Thereafter, in 1958 NDC (National Development Council) had recommended a national policy on cooperative.
  • The government of India made a National Policy of Cooperative in 2002.

Issues faced by Cooperatives

Some of the major challenges faced by cooperative societies in India are listed below.

  • Cooperatives are under state subject in the Indian Constitution. State cooperatives law and its implementation widely differ.
  • The role of the board in cooperatives need strictness in authority and responsibility. Ultimately, inconvenience is faced by the public.
  • Policymakers and the public at large lack the recognition of cooperatives as economic institutes. It results in the inability of retaining professionals.
  • Lack of awareness among people is also considered one of the issues faced by cooperatives. People are not aware of its functions, rules, regulations etc.

Successful Cooperatives Societies in India 

  • Banking Sector – Punjab and Maharashtra Cooperative ( PMC) bank, Bharat Cooperative Bank, Saraswat Cooperative bank.
  • Agriculture Sector – AMUL, National Cooperative Development Cooperation (NCDC), Cooperative Rural Development Trust (CORDET), National Agricultural Cooperative Marketing Federation of India (NAFED), Indian Farmers Fertilisers Cooperative Limited (IFFCO). 

The role of the Cooperative is very essential when it comes to the spirit of collectivism and democracy. It helps in maintaining the social capital base of the country. It aids in generating and utilizing social capital which is directly proportional to the development of a country. This is a quick guide for cooperative society's UPSC preparation.

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FAQs About Cooperative Movement in India

  • Who is the father of the Cooperative Movement in India?

Ans: Sir Frederic Nicholson is the father of the Cooperative Movement in India

  • When was the first cooperative Movement was started?

Ans: The first cooperative Movement was started in 1905 Karnataka

  • Who started the cooperative sector in India?

Ans: Pt. Jawaharlal Nehru started the cooperative sector in India