DR. D.Y .

PATIL PRATISTHAN’S

DR.D.Y.PATIL COLLEGE OF AGRICULTURE BUSINESS

MANAGEMENT AKURDI, PUNE-411044

(AFFILIATED TO MAHATMA PHULE KRISHI VIDYAPEETH, RAHURI)

Theory Notes
B.Sc.(Hons) ABM

Course No: ECON 244

COURSE TITLE: THEORY & PRACTICE OF CO-OPERATION

CREDITS: 3 (2+1)

Course Teacher: Dr. M. D. Jagtap

M.Sc.(Agri), M.B.A.,Ph.D.

Name of the Student ………………………………..........

Reg. No : : ………………………………….

Semester: : IVth (New)

Academic Year: : 2022-2023.

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 Teaching Schedule Theory
Lecture Topic Weightage
(%)

1 Co-operation- Concept of cooperation – Origin of cooperative ideology- 4

2&3 Nature of Cooperatives-Distinctive Features of Co-operative Ownership 4

4&5 Evolution of cooperation -pioneers of cooperative movement –Robert 3

Owen-

6&7 Evolution of cooperative movement- Raiffeisen movement- 3

8&9 Evolution of cooperative principles- Rochdale principles- 3

10&11 Reformulation of cooperative principles by ICA in 1937, 1966 & 1995 – 6

ICA statement on Cooperative Identity.

12 History and development of cooperative movement in India 6

13&14 Pre and post-independence period of developments 6

15 Sectors of cooperative development – Agricultural and Non-Agricultural 4

cooperatives

16 Primary Agricultural Credit Societies (PACS) 3

17 Farmers Service Societies (FSS) 3

18 Large Sized Agricultural Multi-Purpose Societies (LAMPS) 3

19 District Central Cooperative Banks 3

20 State Cooperative Banks, PCARDBs 3

21 Cooperative Marketing Societies 6

22 Processing Cooperatives- Dairy Cooperatives 3

23&24 Consumer Cooperatives–Urban Cooperative Banks–Industrial Cooperatives 6

25 National Co-operative Federations and its role 3

26&27 Cooperative Education and Training- Organizational Structure- NCUI, 6

NCCE, NCCT

28 Cooperative Education and Training- Organizational Structure- 6

VAMNICOM, RICM, ICM and the role of universities

29 Role of International Co-operative Alliance (ICA) in the promotion of Co- 4

2
 operatives.

30 Cooperatives, State and political economy – current political environment 6

and its effects on cooperatives

31 Future of cooperative movement in India 3

32 Impact of Cooperatives- The agenda for the future 3

Tota 100
l

Suggested Readings:

1. Umesh C.Patnaik and Ananta K.Roy. Co-operation and Co 0perative Management .Kaiyani
Publishing Ludhiana - 141008.

2. G.R.Madan. Co-operative Movement in India. Mittal Publications,Daryaganj,New Delhi-110

3. SarkarA.N.AgriBusinessCooperativeManagement.EverestPublishingHouse,EverestLane,536,
Shaniwar Peth, AppaBalwant Chowk,Pune – 411 030.
4. R.R.Paul. Money, Banking and International
Trade.KalyaniPublishers,RajinderNagar,Ludhiana-141008.
5. M.L.Jhingan.Money,Banking,InternationalTrade andPublicFinance.
VrindaPublications(P)Ltd.B
5,AshishComplex(Opp.AhlconPublicSchool),MayurVihar,Phase–I,Delhi-110 091

6 Mamoria,C.B.andR.D.Saxena.Co-operationinIndia, Kitabmahal,15-ThornHillRoad
, Allahabad.

7 Joshi, S.S and Charles V. Moore. Essentials of Farm Financial Management. Today
andTommorrow’s printed and Publishers-22 B-5, Original Road, Karol Baugh, New Delhi –
110005.
8 S.B.Verma,G.P.Sah,S.C.Pathak.RuralcreditandCo-
operativeDevelopment.Deep&DeepPublication Pvt.Ltd.F-159,Rajouri Garden,NewDelhi-
110027.
9 Dr.V.D.Varkey,V.G.Vartak.Co-operative Management.Pragati
BooksPvt.Ltd.119,BudhwarPeth ,Jogeshwari MandirLane,Pune-411002.

*********

3
 INTRODUCTION TO COOPERATION
Introduction
The ancient Indian scripture Rig Veda states;
May you all have a common purpose

May your hearts be in unison

May you all be the same mind

So that you can do work, efficiently well

The concept of co-operation is old as human society. It is the basis of domestic and social life.
Science may points out the way to survival and happiness of all mankind through love and co-
operation.
Co-operation is derived from the Latin word “Co-operari”, ‘Co’ means “with” and ‘operari’
means “to work”. Hence co-operation means Working Together with others for a common
purpose. Aristotle, a Philosopher of Ancient Greece, recognized the social nature of man when
he said, “Man is a Social Animal”. Man cannot lead a happy and contented life if he lives in
isolation. Therefore, there is a great need for Co-operation, which can be considered as the
basic principle underlying human life. The word Co- operation literally means Working
Together or Act Together.
Mc Legan Committee Defines Co-operation as “The Theory of co-operation is very briefly, the
isolated and powerless man can, by association with others and by moral development and
mutual support obtain, in his own degree, the material advantage available to wealthy or
powerful persons and whereby develop

4
 himself to the fullest extent of his natural abilities. By the union of forces, material
advancement is secured and by united action self- reliance is fostered and it is from the inter-
action of the influences that it is hoped to attain the effective realization of the higher and more
prosperous standard of life which has been characterized as “better business”, “better farming”
and “better living”.
“Co-operative Societies can help the transformation from Capitalism to Socialism and finally to
Communism”. – Lenin
The basic idea behind Co-operation is “Self Help and Mutual
Help” and “Mutual Aid”
Concept of cooperation

The Primitive concept of Co-operation was related more to cultural, religious and social
aspects. Co-operation was a way of life and it was inherent in the Society itself.
The Modern concept of Co-operation is altogether different from
the primitive one. “It denotes a special method of doing business”
- T.N. Hajeela

Premitive Concept of Co operation- It’s a way of life than a type of business.

Modern Concept of Co operation- Special method of doing business.

Different viewpoints of co-operation

According to the Sociologists Co-operative Movement is an instrument for establishing social

harmony through the removal of class struggle.
Economists are of the opinion that co-operative is a means of countering the exploitation of
weaker sections by conferring on them a better economic status.
In a legal sense, Co-operation signifies special privileges and concessions conferred by law on
its members.
According to the Socialist Co-operative School, “Co-operation is a weapon for the
development of socialist thought and the realization of firms or households for business
purpose and economic institution through which economic activity is conducted in the pursuit
of economic objectives”

FEATURES OF CO-OPERATIVES
Co-operation is a special method of doing business. It has the following features:

1. It is an association of persons
2. It is an undertaking
3. It is a voluntary organization
4. Service objective
5. It is democratic organization

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 6. It is based on proportionality or equity
7. It is with the norms of social justice
8. It is a socio-economic movement

9. The basis is equality

10. It is a universal movement
11. At the service of both of the members and of the community
1. An Association of Persons: A Co-operative Society comes into existence when a group
of individuals join hand andform an association.
2. An Enterprise or Undertaking: Co-operation lays stress on ethical standard and it is
basically an enterprise. It is run by members themselves at their own cost and risk.
3. Voluntary Association: An individual is free to join the Society and resign from his
membership of the Society at his will and discretion.
4. Service Objective: The main object of co-operative society is to serve its members
rather than to earn profits.
5. Democratic Management: The Co-operative Society follows the cardinal principle of
democracy i.e, one man one vote. The affairs are handled by the Board of Directors. The capital
does not get any special treatment over human being in co-operation.
6. Equity : No discrimination among members is made on the grounds of religious faith,
political ideology, and educational qualifications and so on.
7. Norms of Social Justice : There is no class division among capitalists and working
class in Co-operation.
8. Socio-economic Movement: A part of Socio-economic Movement The Co-operative
movement is viewed as a constituent part of the overall socio- economic movement of the
country.
9. Proportionality or equality: It is based on proportionality or equality The surplus is
distributed not according to share taken
but according to the proportion of business operation a member has effected with the society.
10. Universal Movement: It is a Universal Movement found in all countries of the world.
11. At the service of both the members and the community : Every society stands for
the economic upliftment of the members and the social, cultural and economic betterment of the
local community

BJECTIVES OF CO-OPERATION

Self-help made effective by organization is called Co-operative Society. The main objectives of
co-operatives of co-operatives are:
1. Elimination of Middlemen.
The First and foremost objective of co-operative society is to remove the middlemen in different
fields, who take away the gains that should have gone to the real beneficiaries.
2. Raising economic status of the poor.

6
 The most basic aim of a co-operative society is to raise the standard of living of the poor.
3. Removal of the ills of capitalism
The basic cause of the ills of capitalism is the profit motive. This leads to exploitation, class
struggle, economic inequality and unfair competition. These evils adversely affected the interest
of workers and gave birth to co-operative movement. Therefore the aim of co- operation is to
restrict the amount of profit and provide better service to its members.
4. Raising moral standards of its members.

Co-operative movement wishes to direct human life towards goodness by raising their moral
standard.

5. Increasing the prosperity of the whole community.

. A co-operative society aims at bringing about the welfare of not a particular individual but of
the whole community.
6. Abolition of Social Inequalities.
The feeling of ‘high’ or ‘low’ among members of the community act as a cause of social
tensions, the removal of which is the goal of the co-operative movement.
7. Political and Religious Neutrality.
As far as possible, a co-operative remains aloof from political parties and religious groups.
8. Development of Corporate Life.
A Co-operative aims at providing a corporate life to the weaker sections of the community.

BENEFITS OF CO-OPERATION

Benifitsare studied under three broad categories viz.,

The benefits of co-operation

1. Economic Benefits
2. Social and Political Benefits
Economic
3. Social Benefits. Educational
Educational Ethical
4. Ethical
1. Economic Benefits
The following are the Economic Benefits derived out of a Co- operative institution.
I. The substitution of profit incentive in business by that of service to the community.
II. A more equitable distribution of wealth.
III. A break up of monopolistic tendencies. .
IV. Increase in purchasing power and real wages to individuals.
V. Reduction in cost of distribution system by elimination of unnecessary middlemen.
VI. The more accurate correlation of demand and supply.
VII. Stabilization of employment.

7
VIII. General improvement in employer, employee relationships.
IX. Cheap marketing and processing of farm products at reasonable prices.
2. Social and Political Benefits.
The important Social Benefits are as follows:
I. To provide a unique education in democracy, responsibility and toleration.
II. To train for political power.
III. To evolve an industrial relationship among all.
IV. To preserve a strong friendly or family spirit.
V. To secure rational construction and unifying approaches to social and economic problems.

VI. To prevent underemployment and unemployment.

VII. To secure moral as well as physical satisfaction of pure quality, correct weight and fair
dealings.
VIII. To prevent exploitation of man by man.
3. Educational Benefits
Following are the important educational objectives or benefits of cooperation.
I. The individuals lean by experience gained in practical work of co-operation.
II. Co-operation also sponsors education. There are many co- operative schools and colleges
formed to provide affordable education and also employment to educated unemployed
youths.
III. To train the people to take initiatives in organizing
IV. To create experts
4. Ethical or moral Benefits
Following are the important ethical and moral benefits of cooperation
I. The policy of honesty is a necessity in co-operation
II. Cooperation returns money value for honesty and other virtues.
III. The motto of co-operation is “ each for all and all for each”
IV. Co-operation aims at the production of fine human beings.

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 PRINCIPLES OF CO-OPERATION

The term “principle”, derived from the Latin word “Principium” meaning “basis”, has different
meanings: the primary idea, a certain thesis, a rule of an organization. The principles of co- operation
may be considered as the broad guidelines for co- operative societies in the conduct of various
activities. “ALL FOR ONE AND ONE FOR ALL” “SELF HELP AND
MUTUAL HELP” Co-operative principles are those principles which are essential for the
achievement of the co-operative objectives.
In the words of George Davidonic, “They are Set of Rules which
governs the life and activity of Co-operative Organization.”
In spite of the diversity of their sources, co-operative principles have come to be known the world
over mainly as Rochdale’s principles. This is due to two reasons: first the clarity in the formulation
of the Rochdale pioneers; and second, the universality in their application. These principles have
inspired the co-operative movement throughout the world. These principles are;
(1) Democratic control (2) Open membership (3) Limited interest on capital; (4) Patronage dividend;
(5) Cash trading; (6) Political and religious neutrality; and (7) Promotion ofeducation.

1937 Committee
In the course of time, co-operative movement spread out in various countries and various forms
of co-operations were developed. It began to be doubted that whether Rochdale principles
formulated as early as 1844 would meet the needs and requirements of the various form of co-
operative organizations. The need of reformulating co-operative principles also arose out of two
other factors; one, the ideological, and the other practical or technological. With the
establishment of socialist state in Russia, the co-operators of the world began to be seriously
divided on account of ideological grounds. The other important factor which necessitated a
second look at co-operative tenants and philosophy was the size and complexity of the operations
of co-operative which had increased far beyond the simple ideas and forms of Rochdale pioneers.
Advanced technology was influencing procedures and organization in the co-operative sector. In
1934, the International Co-operative Alliance (ICA) was asked to appoint a special committee to
examine and formulate the principles of co-operation. This committee divided the Rochdale
principles into two classes:
1. Essential and obligatory principles, and
2. Non essential principles.
Essential Principles: The 1937 committee regarded the company as following as major essentials or
obligatory attributes of the co-operative activity;
1. Open membership
2. Democratic management
3. Limited interest on capital
4. Payment of dividend in proportion to transactions
Non-Essential: the three traits described as of less importance and therefore, presumably, non-
essential, were;

9
 1. Religious and Political neutrality
2. Cash trading
3. Education
It is worthwhile to mention that the 1937 ICA report came as pinch of salt to many co-
operators. Neither the supporters of capitalists or classical form of co-operatives, nor the leaders of
co-operative activity in socialist states were satisfied with the report. The very concept of graded
validity of principles was resented in many quarters. The snappy or summary manner in which the
principles were expressed failed to carry adequate meaningfulness to be either enlightening or
helpful. It was the practical co-operator, and co-operative administrator, who sought guidance while
making up his mind how he should make a correct co-operative choice. While promoting the objects
of his co- operative organization. Is non -voluntary membership, even though open, compatible with
co-operation? What are the limits on open’s of membership? Can or must, the principles of ‘one
man, one vote’, be followed at all stages and in all circumstances? Must interest on capital be paid?
Must dividend be distributed? These were very vital questions, even in regard to the principles,
which the committee had qualified as essential. As for the less essential principles’, there was no
guidance at all, as to how and how far they could be varied or abandoned. The co-operative
movements in different countries went their own way, improving their own modifications to all the
more and less essential principles set out in 1937 report.
Changing situation of the world

After 1937 great changes took place all over the world. Conditions as they emerged after
second world war were radically different in most of the countries of the world. Social and political
conditions of various nation changed considerably and the co-operatives had to adapt themselves to
these changing conditions. It was not possible for the co-operative movement to keep aloof from the
far reaching changes taking place in technology and management. It was increasingly becoming
evident that if co-operative enterprises were to survive and flourish, they must fully take advantage
of the vast opportunity offered by modern technology. The fast moving changes were throwing a big
challenge to the co-operatives to act not only in a big way but also to set up highly sophisticated
organizations which could be economically efficient without being co- operatively unsound.
The seven principles classified by the International Co- operative Alliance as primary and
secondary began to be considered as somewhat unrealistic and even outdated in the rapidly changing
times. In some of the countries some of the principles were not followed in actual practice.
Practically, the agricultural co-operatives did not follow closely the plan and some of the principles
were entirely abandoned.
Many co-operators strongly felt that the original wordings of the principles were not clear
and there was an urgent need to review them in the light of the changes taking place.
1966 Commission

In October 1964, the Central Committee of ICA appointed a Commission “to ascertain how
far the principles of Rochdale-as defined by ICA Congress at Paris in 1937-are observed today and
the reasons for any non-observance.” The Commission was asked to consider, in the light of its
study, whether the Rochdale Principles, so defined and stated, meet the needs of the co-operative
movement, having regard to the present day economic, social and political situation, or whether any
of the principles should be reformulated in order to contribute in the

10
best manner to the fulfillment of the aims and tasks of the co- operative movement in its different
branches.
The Commission’s report, submitted in 1966, was characterized by two important features
which distinguished it from 1937 report. Firstly, the commission did not differentiate between some
principles are essential, while, others as non- essential. Secondly, in formulating the principles,
brevity or brilliance of phraseology at the cost of its accuracy and adequacy was carefully avoided by
the commission, having being asked to reformulate co-operative principles, the commission came to
the conclusion that “its formulation cannot be formulas”. They must be attempts at exact, and at the
same time comprehensive and adequate statement of the nature and the extent of the trust underlying
each formulation. True co-operative principles must be true in both senses; firstly, they must be
appropriate ways leading to the common goal of co-operators; and secondly, they must explain, as
fully as is necessary and possible, all the implication of their justification and results. This means a
substitution of formulas by exact and adequate statements. The commission, both in the body of its
report, and in the summary of its findings, has presented carefully phrased formulations which are no
more verbose than necessary but which do not leave out any of the essential implications of each
statement.
According to the Commission, the following should continue to be considered essential to
genuine and effective co- operative practice both at the present time and in the future as far as that
can be foreseen:
1. Membership of co-operative society should be voluntary available without artificial restriction or
any social, political or religious discrimination, to all persons who can make use of its services
and are willing to accept the responsibility of membership.
2. Co-operative societies are democratic organizations. Their affairs should be administered by
persons elected or appointed in a manner agreed to by the members and accountable to them.
Members of primary societies should enjoy equal rights of voting (one member, one vote) and
participation in decision affecting their societies. In other than primary societies the
administration should be conducted on a democratic basis in a suitable form.
3. Share capital should only receive a strictly limited rate of interest, if any.
4. Surplus or savings, if any, arising out of the operations of a society belong to the members of that
society and should be distributed in such manner as would avoid one member gaining the
expense of others.
This may be done by decision of the member as follows:
a) By provision for development of the business of the co- operative;
b) By provision of common services; or
c) By distribution among the members in proportion to their transactions with the society.
5. All co-operative societies should make provision for the education of their members, officers,
and employees and of the general public, in the principles and techniques of co- operation, both
economic and democratic.
To these the Commission has thought it important to add a principle of growth by mutual co-
operation among o- operatives.
6. All co-operative organizations, in order to best serve the interests of their members and their
communities, should actively co-operate in every practical was with co- operatives at local,
national and international levels.

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 In submitting the above formulation, the Commission also added certain remarks. The
first is that these principles are not associated arbitrarily or by chance. They form a system and are
inseparable. They support and reinforce one another. They can and should be observed in their
entirely by all co-operative movement. The second remark is that, although the principles originated
as rules governing the relations of the individual members of co-operatives with one another and
with their societies, their application is not confined to primary societies. They should be loyally
observed by secondary organizations also, with such modifications as are necessary or desirable for
individual persons. The fact that they are not of universal application in our time does not mean that
they are no longer appropriate, particularly for co-operative societies which, by reason of their youth
and inexperience, cannot afford to risk strains on either finances or the unity of their membership.
There were different stages in which the principles were developed. The important stages were:
I. Roach Dale Principles as in the First Stage.
II. International Co-operative Alliance (ICA) principle in the second stage.
III. Karve Committee on Co-operative principle as in the Third Stage and;
IV. IV. Co-operative Principles by ICA in 1995 as Final Stage.
V.
1. ROACH DALE PRINCIPLES
The first Co-operative Society came into being in 1760. This was set up by Wool Wickand
Chaton. There were various Co-operative societies formed on different lines in between 1760 and
1844 periods but they did not succeed. In 1844 Twenty Eight Flannel Weaves in a place called
Roach Dale in England formed a Consumer Co-operative Society for benefitting the weavers’
community. They succeeded on their venture basically on the fact that they were running the store
with some basic principles. This society is working in England as a Wholesale Equitable Pioneers
Co-operative Society.
The principles given by them for the first time include the following:
a) Open Membership:-Membership of co-operative society is open to all those who belongs to
the area who need their service.
b) Democratic Control:-Management of the co-operative society is done democratically
through democratic principle and the elected body controls the day to day affairs..
c) Limited Interest on Share Capital:- Interest on capital provided was only limited.
d) Patronage Dividend:-Dividend distribution is on an equitable manner. Nobody gets special
privilege on account of high capital contribution.
e) Cash Trading:-They decided to sell goods only on cash basis and no credit was allowed.
f) Political and Religious Neutrality:-They gave equal importance to all religion and politics.
g) Promotion of Education:-Education is important for its development so they extended co-
operative education to all.
h) Selling Pure and Unadulterated Goods:- They sold quality goods at affordable prices.
2. INTERNATIONAL CO-OPEURATIVE ALLIANCE (ICA) PRINCIPLES
International Co-operative Alliance is an international body set up for the promotion of co-
operative ideas and spreading the principles of co-operation around the world. Due to enormous

12
 changes taking place in Economic, Social and Political fronts, the International Co- operative
Alliance (ICA) appointed a sub- committee in 1934 to take a fresh look at the co- operative
principles. They evaluated the principles enunciated by Roach Dale, its relevance and observance in
the present time and finally submitted its report in 1937. Based on the sub- committee report the ICA
instead of formulating principles, they simply classified the Roach Dale Principles in to two-
Essential and Non Essential in 1937.
They are:

1. Open Membership
2. Democratic Control
3. Limited Interest on Share Capital Essential Principles
4. Patronage Dividend
5. Religious and Political Neutrality
6. Cash Trading
7. Promotion of Education Non Essential Principles
8. Selling Pure and Unadulterated goods

3 .KARVE COMMITTEE ON CO-OPERATIVE PRINCIPLE.

Again in 1960 due to the dynamic nature of the world, ICA appointed a commission in 1964.
Five nations namely UK, USA, USSR, Germany and India were represented in the commission.
Prof. D.G. Karve from India was the Chairman of the Commission and therefore, the Commission is
popularly known as Karve Commission on Co-operative principles. The commission recommended
the following principles in its report submitted in 1966.
1. Open and Voluntary Membership:-Membership of a Co-operative Society is open to all
those who wish to join it. There is no discrimination on the grounds of caste, creed, religion, race,
sex or politics. The only point to be remembered while giving membership is that his or her
profession is not opposed to that of a co-operative society. For example a money lender is not
admitted as a member of primary co- operative credit society.
2. Democratic Management:-The management of a Co- operative society should be done
democratically. The ultimate responsibility of managing the entire society is vested with the General
Body. The main points to be taken care of in a democratic management are:- a) Each member has
only one vote.
b) Majority rules in all matters. c) Committee of management should always have the authority of
members before they take any important step. According to the principle of democratic control, the
Board of Management is an elected body, which controls the day to day affairs.
3. Limited Interest on Share Capital. As per the Co- operative Societi1es Act, 1969, interest
on capital is restricted. For the purpose of collecting necessary amount of funds, the society is bound
to pay interest. Whatever interest is paid, it should be on a limited scale.

4. Equitable Distribution of Surplus. Earning of profits is not the basic objective of a co-
operative society. But this does not imply that co-operatives are run on no profit no loss basis, or
they are managed with losses. The surplus of the society is disposed of as follows..

a. Provision is made for the development of the society.

b. Provision is made for Common Services.
c. Some of the surplus is distributed among the members on equitable basis.

13
 5. Co-operative Education. The progress of the society depends to a greatest extent on how
best its members can takes an active part in its affairs, which is possible only when the members are
educated. Co-operative education includes:
a. Education to members
b. Education to office bearers; and
c. Education of prospective members.
6. Co-operation among Co-operatives

In order to best serve the interest of members all co- operative organizations should actively
co-operate in every practical way with other co-operatives at Local, National and International
levels. Such type of co-operation is necessary to acquire greater strength to face adverse conditions.
4. CO-OPERATIVE PRINCIPLES BY ICA IN 1995.

The ICA Tokyo Congress held in 1992, initiated steps to review the current ICA Co-
operative Principles of 1966 and make possible changes to prevent the erosion in values of co-
operation. Based on the direction given to Dr. Ivan Mac Pherson (Canada), he reviewed the
principles and submitted a report in 1994 which was approved by ICA General Assembly in
Manchester in September 1995. This report contains seven principles:-
The co-operative principles are guidelines by which co- operatives put their values into practice.
1. Voluntary and Open Membership
Co-operatives are voluntary organisations, open to all persons able to use their services and willing
to accept the responsibilities of membership, without gender, social, racial, political or religious
discrimination.

2. Democratic Member Control

Co-operatives are democratic organisations controlled by their members, who actively participate in
setting their policies and making decisions. Men and women serving as elected representatives are
accountable to the membership. In primary co-operatives members have equal voting rights (one
member, one vote) and co-operatives at other levels are also organised in a democratic manner.

3. Member Economic Participation

Members contribute equitably to, and democratically control, the capital of their co-
operative. At least part of that capital is usually the common property of the co-operative.
Members usually receive limited compensation, if any, on capital subscribed as a condition of
membership. Members allocate surpluses for any or all of the following purposes: developing their
co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting
members in proportion to their transactions with the co-operative; and supporting other activities
approved by the membership.

4. Autonomy and Independence

Co-operatives are autonomous, self-help organisations controlled by their members. If they
enter into agreements with other organisations, including governments, or raise capital from external
sources, they do so on terms that ensure democratic control by their members and maintain their co-
operative autonomy.

5. Education, Training and Information

14
 Co-operatives provide education and training for their members, elected representatives,
managers, and employees so they can contribute effectively to the development of their co-
operatives. They inform the general public - particularly young people and opinion leaders - about
the nature and benefits of co- operation.

6. Co-operation among Co-operatives

Co-operatives serve their members most effectively and strengthen the co-operative
movement by working together through local, national, regional and international structures.

7. Concern for Community

Co-operatives work for the sustainable development of their communities through policies approved
by their members.
To conclude, that the above said principles are the important qualities that make co- operative
institutions effective, distinct and valuable. The Government should provide a conducive
environment for the co-operatives in which they may combine in their working co- operative values,
socio-economic objects and competitive strength in the Globalized Era.

Co-operative Movement:-

The origin and history of cooperative movement in India can be dealt under two eras.

a) Pre-Independence Era:

The cooperative movement in India during pre-independence era can be

divided in to four phases viz.,

1. Initiation phase (1904-1911)

2. Modification phase (1912-1918)

3. Expansion phase (1919-1929)

4. Restructuring phase (1930-1946)

1. Initiation phase (1904-1911):

In olden days rural credit service was dominated by non-institutionalfinancial agencies (i.e. private
money lenders) charging exorbitant interest rates fromfarmers. In extreme cases or out of distress the
poor farmers have to sell their belongingsto clear their debts. This precarious situation triggered a sort
of agitation by farmersagainst private money lenders in certain areas. The revolts found in Poona
andAhemadnagar areas of Maharashtra attracted the attention of government. Immediatelythe
government passed three acts viz.,

Deccan Agriculture Relief Act (1879)

15
Land Improvement Loan Act (1883)

Agriculturists Loan Act (1884)

In 1892, the Madras government appointed Federick Nicholson tostudy and examine the village banks
organized on cooperative lines in Germany. Aftercoming from there Nicholson submitted a report and
raised a slogan “Find Raiffeissen”.During 1901, Indian Famine Commission and another
committeeheaded by Sir Edward Law recommended the formation of credit societies on
Raiffeissenmodel. These recommendations resulted in the enactment of Cooperative Credit
SocietiesAct (1904).

Important/salient features of 1904 Cooperative Credit Societies Act:.

Classification of cooperative societies into rural and urban was made. Accordingto this, rural
societies are those having 4/5ths of the total members from farmingcommunity and urban societies are
those having 1/5ths of the total members fromnon-agriculturists.

Both the organization and control of these societies was to be done by Registrar ofcooperatives.

Loans could be extended to the members on personal and collateral security.

The principle of “one man one vote” was specified in the Act.

2. Modification phase (1912-1918):

Cooperative Societies Act of 1912 was enacted for rectifying the shortcomingsof 1904 Act.

Important features of 1912 Cooperative Societies Act:

It provided legal protection to all types of cooperatives

Liability is limited in the case of primary societies and unlimited for centralsocieties.

As this act of 1912 gave provision for registration of all types of cooperativesocieties, it led to the
emergence of rural cooperatives both on credit and noncreditfronts. But this growth was uneven
spatially i.e. localized in some areasonly.During the year 1914, the Government appointed a
committee under thechairmanship of Edward Mac Lagan to look in to the performance of the
societies. Hepresented his report in 1915. The Mac Lagan committee’s recommendations
andCooperative Societies Act of 1912 introduced the cooperative planning process in India.

The important observations of Mac Lagan committee were:

Illiteracy among the members.

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Misappropriation of funds.

Rampant nepotism or favoritism shown on the basis of family relationship

Undue delays in sanctioning of loans.

Irregularity in repayment of loans.

Suggestions offered by Mac Lagan committee for the effective functioning of

cooperatives:

All the members of the society should be made aware of the cooperativeprinciples.

Dealings should be restricted to the members only.

Honesty should be the main criterion for extending a loan to some one.

Careful scrutiny of applications before advancing a loan and effective follow upfor proper
utilization of loan amount.

Loans should not be advanced for speculative purposes like investment in stockmarkets, lotteries
etc.

Ultimate authority should be with all the members but not with the office bearers.

Thrift should be encouraged among the members, so as to build reserve fund.

The principle of “one man one vote” should be strictly followed.

As far as possible, the capital should be raised from the savings of the membersonly.

Punctuality in repayment should be strictly insisted up on the borrowers.

3. Expansion phase (1919-1929):

This phase was considered as “Golden Era” for the cooperative movementin India. Cooperative
movement got impetus as the cooperatives became a provincialsubject under Montague Chelmsford
Act of 1919. The economic prosperity during theperiod 1920-1929 also contributed to the growth of
cooperative movement.During the same period, the birth of Land Mortgage Banks (LMBs) tookplace
first in Punjab (1924) subsequently in Madras (1925) and in Bombay (1926).

4. Restructuring phase (1930-1946):

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In the year 1931, Indian Central Banking Enquiry Committee also emphasized shortcomings with
reference to undue delays in advancing loans andinadequacy of credit.In the year 1932, Madras
Cooperative Societies Act came into existenceaiming at the growth of the cooperative movement.
Madras Cooperative Land MortgageBanks Act (1934) came into force for the development of long-
term credit. Excessive andabnormal fall in prices of agricultural commodities and the economic
depression of earlythirties lead to the collapse of the cooperative movement. Various enquiry
committeeswere also constituted for restructuring and reorganization of cooperative societies.
Theywere

Vijayaraghavacharya committee in Madras.

Rehabilitation Enquiry committee of Travancore (Kerala) and Mysore.

Kale committee of Gwalior.

Wace committee of Punjab.

The Agricultural Finance sub-committee under the chairmanship of Prof.D.R. Gadgil, in 1944
recommended the

Adoption of limited liability for cooperatives.

Assessing the credit –worthiness of a farmer based on his repayment capacity.

Subsidizing the cost of administration of small cooperative societies.

Linking credit with marketing.

In 1945, the Cooperative Planning Committee (CPC) under thechairmanship of Sri. R.G. Saraiya
pointed out that the limited progress of cooperatives isdue to the Laissez-faire policy of Government
and illiteracy of the people, etc.\

b) Co-operative Movement After Independence/ During Five Year Plan.( 1951

Planning commission was established in March, 1950, prepared first five year plan (1951-1956)

COOPERATIVE MOVEMENT IN PLANNED ECONOMY

After India attained Independence in 1947, cooperative development received a boost, with
cooperatives being given a vital role in the various plans formulated by the Planning Commission. A
Study on Development of Cooperative Movement in Planned Economy 43 in 1950 set the social
and economical targets based on equity and justice.

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The First Five Year Plan (1951-56): It recognized cooperation as an instrument of planned
economic action in democracy. It provided for setting up of urban cooperative banks, industrial
cooperatives of workers, consumer cooperatives, housing cooperatives, diffusion of knowledge
through cooperative training and education and recommended that every government department
follow the policy of building up cooperatives.

The Second Five-Year Plan (1956-1961): emphasized “building up a cooperative sector as part of
a scheme of planned development” as being one of the central aims of National Policy. The Plan
drew up programmes of cooperative development based on the recommendations of the All India
Rural Credit Survey Committee (AIRCS). It was envisaged that every family in a village should be
a member of at least one cooperative society. Linking of credit and non-credit societies to provide
better services to the farmers was also targeted.

The Third Five Year Plan (1961-1969): stressed that “Cooperation should become, progressively,
the principal basis of organization in branches of economic life, notably agriculture, minor
irrigation, small industries and processing, marketing, distribution, rural electrification,
housing and construction and provision of essential amenities for local communities. The
Agricultural Refinance Corporation was set up in 1963 by the Government of India to provide
long-term loans to cooperatives, through Central Land Mortgage Banks. In 1963, the National
Cooperative Development Corporation (NCDC) was established as a statutory corporation by an
Act of Parliament.

The Fourth Five Year Plan (1969-1974): gave high priority to the re-organization of cooperatives
to make cooperative short-term and medium-term structure viable. The Mirdha Committee in 1965
laid down standards44 Anil Kumar Soni&Harjinder Pal Singh Saluja to determine the genuineness
of cooperative societies and suggest measures to weed out non genuine societie.

The Fifth Five Year Plan (1974-1979): took note of the high level of over-dues. In its recommended
strategy for cooperative development, the correction of regional imbalances and reorienting the
cooperatives towards the underprivileged was to receive special attention.

The Sixth Five Year Plan (1979-1985): The Plan recommended steps for re-organizing Primary
Agricultural Credit Societies into strong and viable multipurpose units. It also suggested
strengthening the linkages between consumer and marketing cooperatives. The National Bank for
Agriculture and Rural Development (NABARD) Act was passed in 1981 and NABARD was set up to
provide re-finance support to Cooperative Banks and to supplement the resources of Commercial
Banks and Regional Rural Banks to enhance credit flow to the agriculture and rural sector.

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The Seventh Five Year Plan (1985-1990): pointed out that while there had been all round progress
in credit, poor recovery of loans and high level of overdues were matters of concern.

The Eighth Five Year Plan (1992-97): emphasized the need to follow the Narsimham committee
report and tried to make cooperative banking more strong.

The Ninth Five Year Plan (1997-2002): The Multi-State Cooperative Societies (MSCS) Act, enacted
in 1984, was modified in 2002, in keeping with the spirit of the Model Cooperatives Act and to
achieve the objective of removing the incidence of poverty and unemployment and ensuring food and
nutritional security.

The Tenth Five Year Plan (2002-2007): to achieve high-targeted annual agricultural growth rate
and export, massive expansion and up gradation of agricultural marketing, storage and
distribution infrastructure are given priority.

The Eleventh Five Year Plan (2007-2012): During the Eleventh Five Year Plan many important
schemes, especially in cooperative credit sector,computerization, human resource development
and public awareness were formulated and implemented to facilitate the public in general, especially
the farmers.

The Twelfth Five Year Plan (2012-2017) – Revitalization of PACS/LAMPS and ensuring their
viability and profitability with a view to making them financially strong to provide greater
assistance of rural credit to the farmers and Encourage micro credit groups and women
cooperatives to inculcate the habit of small savings in the rural areas as a sub system of
cooperatives.

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 Sectors of cooperative development – Agricultural and Non-Agricultural
cooperatives

Types of Cooperative Societies in India

Based on the nature of activities performed, co-operatives can be categorized as:

Consumers’ Co-operative Societies.

Producers’ Co-operative Societies.

Marketing Co-operatives.

Housing Co-operatives.

Co-operative Credit Societies.

Co-operative Farming Societies.

1. Consumers’ Cooperative Societies: They are the oldest form of cooperatives. They are formed for the benefit of
consumers who wish to get household goods at reasonable prices. These societies make bulk purchases of goods
from producers directly or from wholesalers at wholesale rates and sell the goods to members. Sometimes the goods
are also sold to non-members. The prices charged from non-members would be higher when compared to the prices
charged from members.

Since purchases are made directly from the producers or wholesalers in bulk quantities, the cost of purchases is less
and they are able to pass on this benefit to members in the form of lower prices. They ensure steady supply of goods
to members. The difference between the sale price and purchase price represents the surplus earned. The surplus is
distributed among the members in the form of bonus.

The first consumer co-operative was set up in 1903 in Madras province. Currently there are around 9,000 consumer
co-operatives in the country. There are Primary societies at the local level, Central or wholesale societies at the
district level, State Consumer Co-operative Federation at the State level and National Co-operative Consumer
Federation at the National level.

2. Producers Co-operatives: They are formed by small producers who plan to obtain inputs (raw materials,
components, tools and equipment) and to sell their output (finished goods) by direct distribution and without any
involvement of middlemen. They are also called as industrial co-operatives. Goods are produced to meet the
requirements of members. Goods can also be sold to outsiders at a profit. Certain portion of the profits earned is
spent for the welfare of the community and the balance is distributed among members.

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3. Marketing Co-operatives: They are voluntary associations of producers formed with the objective of ensuring a
steady market for the output of members. Marketing Co-operatives are especially suitable for marketing of
agricultural products.

They seek to protect producers from being exploited by the middlemen. The output of the members is pooled
together, the products are processed (e.g. crushing of oil seeds, ginning and pressing of cotton etc.) graded and sold
at the best possible price. The members are assured of correct weight and measurement and fair prices for their
produce. The sale proceeds are distributed among the members according to their contribution to the pool. They also
provide credit, storage facilities, information about market price, demand and supply etc.

4. Housing Co-operatives: Housing co-operatives are formed by those who are interested in acquiring residential
property. They undertake activities relating to purchase of land, obtaining governmental approvals, development of
the site, construction of houses or flats and allotment of houses/flats to its members. Since housing co-operatives
construct many flats or buildings they are able to purchase building materials at cheaper rates. The Stamp duty to be
paid when property is purchased from a co-operative society is waived off. Therefore members are benefited by the
lower cost of property.

5. Co-operative Credit Societies: The objective of forming cooperative credit societies is to provide loans to
members at reasonable rates of interest and to develop the habit of thrift among members. They accept deposits from
members and provide loans to members at reasonable rates of interest. The formalities are much simpler when
compared to availing of a bank loan. The co-operative credit societies are of two types. They are:

Agricultural credit societies and

Non agricultural.credit societies.

Agricultural credit societies are formed in villages and provide loans to agriculturists and rural artisans. Non
agricultural credit societies are formed in urban areas and provide loans to people living in urban or semi-urban
areas.

Co-operative credit societies in India operate in a three tier structure. At the lowest tier are the Primary Agricultural
Co-operative Credit Societies which are organized at the village level. At the second tier are the Central Co-
operative Banks organized at the district level. At the uppermost tier are the Sate Co-operative banks organized at
the State level. From July 1982, NABARD has been designated as the apex institution for policy making, planning
and operations in the field of agriculture credit.

6. Co-operative Farming Societies: They are formed by small farmers with the objective of maximizing
agricultural output. It is especially suitable for developing countries like India where land is highly fragmented.
High fragmentation of land leads to low output, and lack of resources to implement modern methods of cultivation.
In the case of co-operative farming societies, land holdings of members are consolidated, modern methods of
cultivation adopted and good quality of seeds and fertilizers are used. Since the purchase of seeds and fertilizers and
hiring of equipment is done in a centralized manner, the costs are lower. The benefits of collective farming such as
lower cost of inputs, implementation of modern methods of cultivation etc leads to higher productivity and profits
which is shared by all the members.

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The co-operative movement has played an important role in promoting economic welfare among the weaker sections and the
rural community. Political interference and corruption among members of the managing committee in some co-operatives have
led to their failure. Information regarding the benefits offered by the co-operatives has to be communicated on a wide scale
among the rural poor and weaker sections of the society. They should be encouraged to voluntary associate themselves and start
co-operative enterprises for furthering their welfare.

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 Study of Primary Agricultural Co-operative Credit Society (PACCS)

Co-operative credit societies have a very important role to play in Indian financial system,
especially in the sphere of rural finance, both for agriculture and small scale and cottage
industries. The co-operative banking as yet remains the best answer or the most satisfactory
institution for providing finance to borrowers in the rural areas of India.

The co-operative credit societies in India consist mainly of short-term and medium term
agricultural credit societies, long-term agricultural credit institution and non-agricultural credit
societies. As regards the short-term and medium-term agricultural credit societies, they consist
broadly of three categories viz.

a) Primary agricultural co-operative credit societies (PACCS)at village level,

b) District / Central co-operative credit bank(DCB/CCB) at the district level, and
c) State co-operative banks (SCB) or apex Bank at the state level.

Primary Agricultural Co-operative Credit Societies

Primary Agricultural Co-operative Credit Societies are the kernel of the co-operative
movement. They are the very foundation stone of the co-operative credit structure.

Objectives:

The main objects of the credit societies are to provide short and medium-term credit, supply of
agricultural and other requisite and the marketing of agricultural produce. The society is also
expected to inculcate habit of thrift and savings amongst the members.

Functions:

In the context of the national drive for increasing agricultural production and consequent need for
making available to the members adequate credit in cash and kind, the primary credit societies have
a crucial role to play. It is expected to provide not only loans but also the necessary input supplies, so
that the farmer is not handicapped in his efforts to switch over to the modern methods of cultivation.
A co-operative credit society is now expected to help, formulate and implement a plan of agricultural
production for the village and undertake such educative, advisory and welfare work as the members
might be willing to take up. Among the more important of these functions are the following:

1. To associate itself with the programme of production.

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2. To lend adequate amount to producers, especially agricultural producers and in this process
increasingly cater to the small producers.
3. To cater also to the consumption needs of smaller producers as well as agricultural laborers to a
limited extent, provided the borrower can and will repay and there are adequate means for insuring
repayment.
4. To borrow adequately and equip itself financially for the above purposes.
5. To attract local savings to the maximum possible extent, not only as share capital but also as fixed
deposit.
6. To supervise the use of loans.
7. To recover and to see that loans are repaid punctually.
8. To distribute fertilizers, seeds, agril.implements etc.
9. To supply certain consumer goods in common demand such as sugar, kerosene etc.
10. To collect or purchase produce, where necessary, on behalf of a consumer society, marketing society
or government.
11. To store produce.
12. To associate itself with programmes of welfare, economic and other, for the village.

Area of operation:

Till recently, the area of operation of primary credit societies was limited and the well known rule
of ‘one village, one society’ was followed. Mehta committee on co-operative credit (1960)
recommended that the membership should not be too large and the area too extensive. No village,
included in a society, should not be at a distance of more than 3 or 4 miles from the head-quarters
village. The population covered should not exceed 300 or 500 cultivating families. However, the
limits on population covered and restriction on the distance of a village from societies head quarter
vary from state to state.

In other words, it should be a position to employ full time paid staff and to have an office which is
conveniently located so that it can supply production requisites to farmers. The area of operation
should also not be so large that the cultivators finds inconvenient to obtain the services, which he
requires from the society.

Membership:

Membership of the primary societies is open to all persons, agriculturist, artisans and small traders
of good character, who reside within the area of operation of the society the minimum initial
membership for a primary co-operative society is 10.

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Management:

The management of a co-operative society is democratic being based on the principle of ‘one man,
one vote’. The management is vested in a general body consisting of all the members and the
managing committee consisting of 5 to 9 members. The supreme management of a co-operative
society vests in the general body, which meets once a year. As it is not possible to a general body
every time, managing committee is elected and entrusted with certain well defined powers. The
office-bearers of a co-operative society consist of a president is normally the chairman of all the
meetings of the society and its committees. The secretary is the executive officer of the managing
committee for all its functions.

Sources of Working Capital:

The share capital held by a person in the society is the measure of his interest in its financial
stability and soundness. The members feel strong attachment to and take interest in a society in which
they have invested some of their own money. It also enables society to contribute for the share
capital of the central banks. The collection of share capital from members is a good way of promoting
thrift among them. And as such an individual is required to contribute to the share capital in certain
proportion to his borrowings.

The State Governments participates in the share capital of these societies, which form the
backbone of the co-operative credit movement. Government’s contribution helps the society in getting
larger borrowing power. State participation is always indirect i.e. through apex and central bank and it
is not more that the share capital contributed by the society. As regards borrowings by its members,
there is linking of share capital with borrowings.

Reserve Funds:

The reserve fund is meant to meet unforeseen losses and also to serve as an important assets and
security in borrowing and hence forms an important element in the working capital of society. The
growth of the reserves ultimately depends upon sizable profits which in turn depend upon volume of
business.

Deposits:

Deposits raised locally have always been considered as an ideal method of raising the capital. It is
recommended that after a member’s share holding in the society reached the limit of 20 % of
borrowings. The society may collect thrift deposit at 5 % of his borrowings each year.

Borrowings:

26
 Borrowings of primary societies come from, central banks, state government and commercial bank
etc.

Loan operation:

Primary credit societies advance loans to their members who are the tillers of the soil, owing their
own land or cultivating it as tenant and to credit worthy agriculturist members. A member who
defaults in repayment is not ordinarily eligible for grant of further loans. In case of late payment his
demand for loans is liable to be curtailed.

At present the PACCS advance two types of loans.

1. Short-term loans: for a period upto 6 months to 18 months to meet the seasonal cultivation
requirements of the farmers and
2. Medium-term loans: for a period from 15 months to 5 years for purchase of bullocks, milch cattle,
pumping-sets and other improved implements, sinking or repairs of wells, minor land improvements
etc.
3. An Important condition of reorganization of credit society was that they should reorient
operational policies so as to ensure that
i) Credit was production oriented,
ii) Its use was supervised, and
iii) Its recovery was made on the dates would coincide with harvest time.

Rate of Interest:

One of the essential requisite of agricultural credit that it should not be too costly, but provided at a
reasonable rate of interest. The rate of interest charges by the agricultural credit societies varies from
state to state, but it usually ranges between 9 to 12%.

Security:

The basic principle of co-operation is that the loans should be advanced on personal security, that
is, it should primarily depend on the man and his sureties and not on his property. However, presently
only the short term loans are advanced on the basis of sureties and repaying capacity. As regards
medium term loans, given are given creating a charge on landed property or mortgage on land.

Repayments of loans:

The repayment of loan given by the PACCS to its members is of considerable importance for the
success of the credit movement. While recovering the loans, the dues dates have been so fixed that it is not

27
too distant from the harvesting season and at the same time, reasonable time is allowed for enabling the
cultivator borrower to dispose of his produce. The loans are gradually to be paid in two or three
installments.

Study of District/ Central Co-operative Bank (DCB/CCB)

Primary Co-operative Credit Societies in a particular area, generally a district federate and form
District Central Co-operative Bank. The DCC bank occupies a position of cardinal importance in the
co-operative credit structure. They form an important link between the state co-operative bank and
the primary co-operative credit societies.

The DCC bank is of two types, In one type, generally known as ‘Banking Union’ the
memberships societies only. In the case of second type of the DCC bank, both individual and societies
are allowed to become members of the bank. In such a bank, the management vests in a board of
directors elected from both the societies as well as individual. A large majority of the central co-
operative banks in India are of this type.

Objectives and Functions:

The chief object of DCC bank is to meet the credit needs member societies. They finance
agricultural credit societies for production purposes, marketing societies for working expenses. They
serve as a ‘balancing centre’ for adjusting the surplus and deficiency of working capital of the primary
credit societies. They also work as an intermediary to link the primary societies with the money
market. Besides providing capital loans the DCC banks also provide certain banking facilities to
members, such as acceptance of deposits, remittance of funds, collection of cheques etc. in some
states ,they are responsible for supervision and inspection of primary societies.

In brief, the following are the main objects of DCC Banks:

1. To act as a balancing centre of finance for the primary societies in the district by providing them
with funds when they have a shortage and servicing as a clearing house their funds, which are
surplus?
2. To encourage thrift and collect savings from members and others.
3. To provide a safe place for investing reserves of primary societies,
4. To provide other banking facilities,

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5. To develop the co-operative movement in the district on sound lines and to act as friend ,philosopher
and guide,
6. To develop and extend banking facilities in rural areas,
7. To supervise, guide and control the working of member societies.

Area of operation:

For the efficient functioning of a central co-operative bank it is imperative that its area of
operation should be such it may have sufficient business turnover so as to employ the necessary staff,
meet the overheads and build up strong reserve fund. At the same time, it is also necessary that is area
of operation should not be so unwisely that it may not able to supervise and coordinate the work of
primaries. The norms for the area of operation of a central co-operative bank, which would be most
suitable from the point of view:

a) Enabling the bank to become strong and powerful unit.

b) Discharging its responsibilities towards the lower tiers the co-operative credit structure efficiently and
economical would be a revenue district.
The standing Advisory Committee of the Reserve Bank of India that, ordinarily, there should be only
one central bank for each district. If however, in a particular area, financial and other conditions
justify the formation of a bank for a region, smaller than a district, there should be no objection to this.

Membership:

The membership of DCC Bank generally consists of primary societies registered within the
area of operation of the bank and the individuals. The Rural Credit Survey Committee approved the
admission of individual agriculturist as members as purely transitional arrangement pending
establishment of co-operative societies in the area concerned.

Branch Banking:

For the effective linking of the central co-operative institution with societies at the primary
level, the Rural Credit Survey Committee suggested that it should have branches at some intermediate
level between the villages and districts. Branch banking on the part of DCC banks has assured added
significance in view of the increase in the number of primary agricultural credit societies and their
loan operations. These branches are expected to help in expediting the processing of the loan
applications and attracting rural deposits.

Sources of Working Capital:

The source of working capital of a DCC banks consist of:

29
 1. Share Capital 2. Reserve and other funds 3. Deposits

4. Borrowing from: a) State co-operative Bank b) Reserve Bank of India c) Government

5. Grants from government

1. Share Capital;

The share capital of DCC bank is subscribed by the affiliated societies and individual members.
The face value of the share varies from Rs 50 To Rs. 100. Under the bye-laws o the central banks, the
affiliated societies in proportion to their borrowings. The RBI suggested the proportion to 10 % of the
borrowings. In order to strengthen the financial structure of these banks and to enforce confidence of
the public. The state government has also been participating in this share capital.

2. Reserve and other funds:

At present, the DCC bank maintains three types of reserves,

a) Statutory Reserve Fund: It is built out of profits, part of which is set aside for reserve fund,
instead of disturbing the entire profit as dividend among share holders.

b) Bad and Doubtful Debt Reserves: Besides maintain the statutory reserve fund, most of the
central banks now maintain bad and doubtful debt reserves, in order to keep at the disposal of the
bank authorities funds from which bad debts can be written off. The significance of these reserves has
increased in recent years, as many of the central banks have been providing lavish credit facilities to
their affiliated societies.

c) Stabilization Fund: Credit stabilization fund has been constituted in the RBI at the national level
and in the co-operative credit institutions at the different purposes in to medium-term loans when
repayment becomes difficult on account of famine, drought etc.

Every year, 15 percent of the profits of central banks are contributed to their stabilization funds.
State government passes on the entire excess dividend over three percent on the share held by them, to
the stabilization funds of central banks. The state Government also makes a lumpsum contribution to
the stabilization fund to the extent of 5 to 10 percent of the outstanding of agricultural loans, and
while doing so, 50 percent of this contribution is given as grant and 50 percent as interest free loans.

3. Deposits:

The third important source of working capital of DCC banks is deposits. The importance of
deposits of the co-operative banking structure, to provide a satisfactory service to any programme of

30
 agricultural production, hardly needs to be emphasized the central banks tap deposits from urban and
rural areas so as to provide funds in large quantities to primary societies for agricultural development.

The state Government has passed orders to authorizing institutions etc. to deposits their savings
in co-operative banks. The RBI has also formulated a scheme for linking concessional finance from
RBI with efforts at deposits mobilization by the DCC banks.

4. Borrowings:

The apex banks have always been the main source for the bulk of the borrowings of the central
bank. The borrowing limit of these banks is generally linked with their own funds, which is presently
10 to 15 times of the owned funds.

Formerly, the RBI not provides loans directly to the DCC banks, but through the state co- operative
banks. However, recently the RBI has formulated a scheme under which ‘A’, ‘B’ and ‘C’ class central
banks are given loans directly, on the recommendation of the Registrar and against government
guarantee.

The DCC banks also borrow from the government, but such loans from a very negligible
proportion of their total working capital. Some of the DCC banks also obtain advances, overdraft and
cash credit accommodation from commercial banks.

Management:

The management of a DCC banks vests in a board of directors consisting of 12 to 15 members.

In order to shape the policies of the central bank for the benefit of the affiliated primary societies, the
representatives of the societies generally dominate the board, restricting the number of individual
members to 2 to 3 only. In most of the DCC banks, government officials are found to be the chairman
of the boards. In many states have been nominated on the boards of some of the central banks lately;
some of the banks have come under the domination of politicians. The Central bank can not function
as a progressive and efficient institution unless it can command the services of competent has laid
down that a DCC bank should have four key personnel viz.:

i) The manager, to exercise overall supervision.

ii) The Executive Officer, to direct the field staff.
iii) The chief Accountant, to ensure maintenance of proper accounts, and
iv) A Special Officer, to deal with the co-ordination of marketing societies.
However, most of the DCC banks have not been able to secure services of competent and efficient,
for many reasons.

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 Loan Operation:

The central banks advance loans to the affiliated societies for financing agriculture. Short term
loans are given upto 12 months, for financial seasonal agriculture operations, purchasing agricultural
implements,marketing,processing and consumption loans while medium term loans given for a period
ranging from 1 to 5 years for purchase of bullocks, milch cattle, pumping sets, digging or repairs of
well and improvement of land.

Procedure for advancing loans:

A society which wants to borrow loans from the DCC has to forward on application in the
prescribed from to the together with the following documents.

1.A certified copy resolution passed in the general body or by the managing committee, starting the
amount of loan.
2.Assets statements in respect of each member of the society.
3.A statement showing the latest financial position of the society.
4. A certified copy of the buy-laws and certificate of registration of the society in case of the first
application.
5.In case of crop finance, a statement in respect of each member showing allocation of lands various
crops.
Application for medium term loan is to be accompanied by the documents mentioned under 1, 2, 3
and 4, above.

The application of the society is generally prepared by its secretary and forwarded to the central bank
through the intermediary agency e.g. local supervising unions in Maharashtra. Application which are
complete in all respects, are placed by the bank before the board of directors for consideration and
sanction of loan or credit limit. In most of the central banks, the sanctioning authority is the executive
or loan committee of the board. After the loans have been sanctioned, the managing committee
executes the documents, draws the loan amounts and disburses the loans. The loans are disbursed to
the members of the society, at the society head-quarters, usually in the presence of a co-operative
supervisor or inspector. When credit limit is sanctioned, a society is entitled to draw funds under limit,
from time according to its requirements.

Overdues:

One of the most distinguishing trends in the working of DCC banks is the rise in the amount of
overdue. If effective steps are not taken to recover these high overdue, it might lead to the virtual
collapse of the co-operative movement in some parts of the country.

32
Rate of Interest:

The rate of interest on loans charges by the central banks varies according to the purpose of the
advance. In some states the rate of interest for medium term loans was the same as that for short-term
loans. In most other states, the rate of the interest charges on medium term loan for agricultural
purposes was higher than on short-term loans.

The margin retained by the central banks on the advances in respect of funds obtained by
borrowings from the apex, varied between 1 to 3 percent.

Security:

The central banks advances loans to the affiliated societies on the security of promotes executed by
them. At the society level, the loans are secured by personal security of members and mortgage of
lands. These securities also serve as a security for the loans from central banks to the society.

33
 Study of State Co-operative Bank (SCB)

The State Co-operative Bank or the Apex Bank occupies a crucial position in the three tier co-
operative credit structure in India. It is the head of the co-operative movement in the state. It
assures key position in the co-operative credit structure because it is only through the Apex/bank that
the RBI provides finance to the agriculturists.

The State Co-operative Bank is formed by federating DCC banks in the state. It distributes
resources among various DCC banks according to their requirements. As the DCC banks are not
allowed to carry on lending operation among them, the apex bank operates as a ‘Balancing Centre’,
balancing excess fund in some DCC bank with deficiencies of some other DCC banks.

In addition, the Apex Bank plays the important role of acting as an intermediary between the DCC
banks on one hand and money market on the other. It mobilizes financial resources from richer sectors
of the urban population and makes those funds available to the DCC banks and through them to
primary societies which lend these amounts to agriculturist.

Objectives and Functions:

The chief functions of the State Co-operative Bank can be summed up as follows:

1.They act as the balancing centers for the resources of the co-operative in the state.
2.They co-ordinate the co-operative policy at the state level.
3.They play a pivotal role in the formulation and execution of credit.
4.They establish and maintain contacts with the money market and the Reserve Bank.
5.They act as an investment agency for the central bank.
6.They supervise and guide the activities of the central bank.
7.They act as the friend, philosopher and guide of the co-operative movement.
Area of Operation:

The apex bank is the head of the co-operative movement in the state and as such, its area of
operation is one complete state. There is only one apex bank for each of the state in the country.

Membership:

The membership of the State Co-operative Bank comprises central co-operative banks,
primary co-operative societies and individuals. Out of 25 Apex institutions working in the country

34
 in a 1976-77, only 7 institutions were ‘Pure’ type and the rest were mixed institutions which permitted
societies as well as individual to hold shares.

Sources of Working Capital:

1. Share Capital:

The share capital constitutes the basic sources of the working capital of the apex bank. There exists
linking of the share holding by the member institutions. With their borrowings Government also
contributes liberally to the share capital of the apex bank.
2. Reserve Fund:

The state co-operative bank maintains various types of reserve funds, viz., the statutory reserve
fund, bad debt reserve fund, agricultural credit stabilization fund and other funds.
3. Stabilization Fund:

The Agricultural credit stabilization fund also been constituted in the apex banks so that short-
term loans for agricultural purposes can be converted into medium-term loans, if repayment
becomes difficult on account of natural calamities like famine, drought etc. the manner in which
this fund should be constituted and the purpose for and manner in which it would be utilized, need to
be mentioned in the bye-laws of the apex bank.
4. Owned Fund:
The owned fund of the state co-operative bank consists of the paid-up share capital, statutory
reserves and other funds created out of net profits. The importance of owned funds is considerable
great as they serve as a margin of: security for the creditors and as a cushion against overdue. Owned
funds are important for co-operative banks as their ability to borrow also rests on this capital base.

5. Deposits:

The state co-operative bank has a considerable responsibility towards meeting the credit
requirement of the members of primary societies and the central banks. The apex bank is required to
make special efforts for tapping deposits from urban areas so that these saving may be made
available for agricultural development in rural areas. The state co-operative bank has thus a great
responsibility in the matters of mobilization of deposits.
6. Borrowings:

Borrowings constitute the main important source of the working capital of the apex banks. The
RBI is the main source of these borrowings. The RBI provides loans to the apex banks for short-term
and medium-term agricultural purposes. The apex banks also borrow from the state government and

35
 the State Bank of India are generally used for financing marketing and processing societies, consumer
stores and government food grain procurement scheme.
7. RBI Financial Assistance:

The RBI has been playing a unique role in the development of co-operative finance in India. The
RBI provides this finance through the apex banks, as it is neither possible nor desirable for it to
directly numerous primary societies and central banks. The aggregate of short- term credit limit
sanctioned by the RBI to the apex banks for financing seasonal agricultural operations and marketing
of crops has increased considerably.
Management:

As in case of other co-operative institutions, the main authority of the state co-operative banks rests
in the general body. The body generally meets once in a year. The general business is conducted by
the board of directors. The constitution of this board, however, shows considerable variation in most
of states. The central co-operative banks are expected to be in majority on the boards of the apex
banks. The state representation is generally limited to 3 to 4 nominees of the state government.

Among the employees of the bank, the executive head, called the general manager, occupies an
important position. The necessity of an expert banker as a manager is all the more great in some of the
apex banks as many people on their boards have hardly any banking experience. The importance of
trained, efficient and experienced manager for an apex banks has become all the more imperative
because of the fact, that these banks face through competition from nationalized banks who are
entering the field of agricultural finance. In additional to this, it is also necessary to have trained staff
at the head office and the field staff technically equipped with new agricultural and supervised credit.
Loan operation;

The apex banks advance loans to the affiliated central banks and to societies mostly through its
branches. In some of the states, ‘A” and ‘B’ class banks are financed directly, while advances to ‘C’
class banks are made on recommendations of the registrars of co-operative societies. The short-term
advances for seasonal agricultural operation and marketing of cross are given on the security of co-
operative papers such as non-overdue promotes of societies duly endorsed by the applicant bank and
the medium term loans for purchase of cattle and machinery, sinking of well. etc.
Rate of Interest:

The rate of interest charged by the state co-operative banks on its loans and advances shows
considerable variations from state to state. The average lending rate of these banks for short-term
agricultural advances ranged between 7 to 12 percent.

36
 Cooperative Education and Training- Organizational Structure- NCUI, NCCE, NCCT

Cooperative Education and Training- Organizational Structure- VAMNICOM, RICM, ICM

and the role of universities

INTRODUCTION: It is a universally accepted fact that cooperative movement in its facets is

depending on education and training of its members. Cooperative education and training are co-
related and interdependent, without one the other cannot be possible. While education develops
mental facilities and increases knowledge, training develops the skill, chieseles and levels it.
Education sharpens the intellect, broadens the vision and builds up the character of an individual.
Training gives a practical shape to all these matters. The success of co-operative movement is
essential depending on cooperative education and training of members on the one hand and in the
application of the principles, practice and methods of cooperation as a way of doing business, on the
other hand. Both education and training are therefore essential for the proper development of any co-
operative.

The importance of co-operative education training is loudly pronounced for the underdeveloped and
developing countries where literacy is at its low level. Some of the cooperators defined cooperation
as “an economic programme employing educational action”. But to some other co-operators, co-
operation is “an educational programme employing economical action”. The importance of co-
operative education is also amplified by the saying namely “Create cooperators before creating
cooperatives”.
Ever since the beginning of co- operative movement in the world as a way of doing business and as
an economic programme aimed at the well-being of the people who belonged to the underprivileged
and under classified societies, co-operative education training found its due importance in all its field
of activities. Cooperation in its technical sense (as a way of doing business) was a new and strange
phenomenon unknown to the ordinary people when it was introduced. And as such knowledge and
information of this form of doing business and its practical application were considered essential for
its success by the early cooperators. Rochdale Pioneers while formulating the principles for the
successful conduct of their consumer store had foresightedly recognized the importance of
cooperative education and training. And they did not fail to include co-operative education as one of
their principle.

37
 The ICA in reformulating these principles had recognized in unequivocal terms, the importance of
co-operative education and training and included this as one of the principles in 1966. And of date
the

one of the revised principles. A committee on cooperative education and training was formed in
1935. The Chairman of the committee was Sir Malcom Darling. This Committee is considered as the
first committee which recommended for a planned programme as a systematic approach on co-
operative education and training.

The main aspect of these recommendations relates to a three phased programme namely.

1. Education and training programme for the trainers namely instructors and teachers on
cooperation.

2. Education and training programme for the personnel of cooperative department.

3. Education and training programme for employees of cooperative societies, MC members and
ordinary members.

The committee also suggested that the entire scheme should be financed jointly by the Govt of India
and Provincial Governments. The Cooperative Planning Committee (Sarayya Committee) of 1946
reviewed the progress in co-operative education and training so far achieved by implementing
various schemes. The Committee was not satisfied with the progress. It recommended for opening
cooperative colleges and intensifying the cooperative studies in schools and colleges. The Sarayya
Committee also suggested for providing facilities for advanced study and research on cooperation in
colleges. From the above instances and incidents it is accepted beyond doubt the necessity and
importance of cooperative education and training for the development of cooperative movement in
its totality.

ORIGIN AND GROWTH OF COOPERATIVE EDUCATION AND TRAINING IN INDIA

The history of cooperative education and training in India dates back to 1904 when the cooperative
movement in India started. Sir Frederick Nicolson while submitting his report for introducing
cooperative movement in India also exhorted for “enlighted membership”. The organized efforts
towards providing cooperative education and training were made next in 1914. The Edward
Maclagan Committee of 1914 along with other recommendations had also submitted proposals for
implementing various programmes for co-operative education and training. The Committee was of
the opinion that lack of co-operative education and training will jeopardize the very progress of
cooperative movement in India. In a sense, the Committee was exhorting to “create cooperators
before creating cooperatives”. The Royal Commission on Agriculture in 1928 had also made certain

38
 specific recommendations for implementing education and training programmes on cooperation. The
Commission was also of the opinion that co- operation should be made a subject of study in schools
and colleges. The most important event during the pre-independence era was the appointment of a
committee which suggested that the national board for co-operative education and training should be
renamed as National Council for Co-operative Training (NCCT).

NATIONAL COUNCIL FOR COOPERATIVE TRAINING (NCCT)

INTRODCUTION: National Council for Cooperative Training which is known as NCCT was
established as per the recommendations of Swaminathan Committee of 1973 on 1st July 1976 with
its headquarters in New Delhi. The members of this council consists of the representatives of the
Government of India, RBI, NCUI, national and state level cooperative federation, National Council
for Education, Research and Training (NCERT), University Grants Commission (UGC), Agricultural
Universities of India, Registrar of co-operative societies and the Secretary of Government of India in
charge of Co-operation. The President of NCUI shall be the Chairman of NCCT and the Chief
Executive of NCUI shall be the Director General of NCCT. The NCCT is in overall charge of
planning and coordination in the entire training programme on cooperation in the country.

Objectives of NCCT

Following are the important objectives of NCCT

1. The prime objective of NCCT is to strengthening managerial structure of cooperatives

and helping them in professionalization by improving the skill and knowledge of employees through
a variety of programmes.

2. To the respective state co-operative unions.

3. The administration of the National Institute at Pune and the intermediary training centres at the
regional level should be transferred under the control of this board.

4. Cooperation should be made an optional subject of study for gradution and PG courses.

The most important decision was that provision should be made b the state governments in their
respective Co-operative Societies Act for creating a fund by the name of Education Fund to be
subscribed by the cooperatives working in profit. This fund is to be exclusively used for cooperative
education and training etc.

39
Another event that happened in this field was the appointment of a committee by the Government of
India constituted by NCUI. Dr
.M.S. Swaminathan was the Chairman of the Committee. It was appointed in 1973. Swaminathan
Committee was asked to examine the adequacy of the existing structure by education, training, and
also suggest measures for development and improvement.

The committee submitted its report which contains following recommendations.

1. Education and training programme should be separated.

2. Establishment of training centres for providing training to the subordinate staff in eachstate.

This Committee also recommended for providing training to non- official cooperators. It was
different category of cooperators. The activities of the central committee should be streamlined so as
to make it more result oriented. In short the entire training and education programme in India were
getting a definite shape as a result of the recommendations of the survey committee.

In the year 1960, the Government of India set up a Study Team to conduct a detailed study on the
cooperative education and training programmes in India. The Committee was asked to examine the
activities of the central committee and submit proposals for making these programmes more effective
and suitable to meet the needs of the fast growing cooperative movement. The study team submitted
its report during the same year.

Simultaneously a national level conference of Ministers of Cooperation was convened at New Delhi.
This conference discussed in detail the report of the Study Team and finally the conference took the
following decisions.

 The central committee for the cooperative education and training should be replaced by a
more powerful body by name the National Board for Cooperative Education and Training. The first
important event during the post independence period in this field happened in 1953 when the Govt.
of India in consultation with the RBI constituted a committee at the national level exclusively for
cooperative education and training. And this committee was known as Central Committee for
Cooperative Education and Training.

 All India Rural Credit Survey Committee for 1954 in its foremost recommendations namely
integrated system of rural credit included cooperative education as one of the important ingredients
for the development and success of the cooperative movement in India. The Committee submitted
specific schemes and programmes for strengthening, developing and diversifying the education and
training activities of the central committee constituted in1953. The Committee also envisaged an

40
 integrated scheme for the training of employees of cooperative department and cooperative
institutions and also the cooperators as a whole.

The scheme suggested by the Committee were:

1. Classification of trainees in three categories namely higher, intermediate, and subordinate.

2. Upgradation of the existing training centre at Pune as a national level institute and expanding
the training programmes for higher level traineers.

3. Establishment of Regional Training centres for providing training to the intermediate level
staff. As a first step the committee suggested for starting 5 such centres.

It is the bounden duty of NCCT to bring out a managerial cadre capable of handling the cooperatives
as the most modern business organisation. It has also been the endeavours of NCCT to develop job
oriented and need based programmes for all sectors of employees with varied durations. A modular
approach has been adopted by NCCT to develop more and more job oriented

training packages for all the categories of employees by upgrading the training technology through
diversified training programmes to achieve professional competence and administrative efficiency.

NCCT is having a 3 tier system of cooperative training consisting of

1. VAMNICOM at the apex level.

2. Institute of Cooperative Management (ICM)/co- operative training colleges at the middle

level.

3. Subordinate training centres or Junior Training Centres at lower level.

The Vaikunda Mehta National Institute of Cooperative Management (VAMNICOM) and the
Institute of Co-operative Management (ICM) are controlled and administered by NCCT directly
while the subordinate training centres are governed by the respective state cooperative unions. But
the entire programmes and schemes for training are chartered out and coordinated by NCCT at the
national level. Unlike the cooperative training programmes in India, the cooperative education
programme is not having a well organized set up in India. Until the Swaminathan Committee of 1973
all the programmes for cooperative education and training were jointly undertaken. As a result of the
Swaminathan Committee report, these two schemes were separated and separate programmes were
formulated for education and training. It has to be mentioned in this context that both the training and
education programmes are formulated and guided by the NCUI. In 1956 a centre was started in New
Delhi as a subsidiary to NCUI for providing education and training to the trainers or teachers of

41
 cooperation. This centre is known as National Centre for Cooperative Education.

NCCT shall have the following functions :-

 To formulate overall policies and plans relating to cooperative training;
 To organize and direct arrangements in regard to the training of personnel employed in the
cooperative departments and cooperative institutions in the country;
 To assess periodically the needs of training for cooperative personnel to facilitate planning
and designing of training arrangements (such assessment may preferably be for the Five Year Plan
periods);
 To keep effective liaison with and coordinate the activities of Government of India, financing
institutions, universities including agricultural universities, University Grants Commission,
international agencies like the International Cooperative Alliance, etc., in matters relating to
cooperative training;
 To establish and manage cooperative training institutions;
 To identify the problem areas of cooperative requiring research and organize research studies,
to establish and manage cooperative research institutions;
 To arrange for training of teaching staff of cooperative training institutions;
 (viii) To ensure maintenance of high academic standards in cooperative education and
training in various institutes in the country and suggest syllabi and standards of examinations for
different courses;
 To promote education in cooperation in schools and colleges and for this purpose to suggest
syllabi and standards of examination and arrange publication of standard text books on cooperation;
 To explore the possibility of obtaining recognition for Vaikunth Mehta National Institute of
Cooperative Management as an institution of national importance or explore the possibility of its
recognition as deemed to be university;
 To evaluate the various courses in cooperative training and suggest measures for
improvement;
 To arrange for provision on consultancy services to cooperatives particularly onproblems of
management and
 To raise funds by way of grants, fees, subscriptions and contributions from Central
Government, Cooperatives and other Institutions.

42
 NATIONAL COOPERATIVE UNION OF INDIA –NCUI

INTRODUCTION: The origin of NCUI dates back to 1949 when a national

conference of the Indian Cooperative Congress was held in Bangalore. This conference
decided to have a national organisation especially in the non-official sector. The
Government of India took steps for implementing this decision in consultation with
RBI. Accordingly a national level cooperative union was organized in 1949 by
amalgamating the All India Cooperative Institutes Association of 1928 and Indian
Provincial Banks Association of 1949. The Union was organized and registered as a
cooperative society under the Multi Unit Cooperative Societies Act, 1945. The original
name of this union was Indian Cooperative Union with its headquarters in New Delhi.
The name subsequently changed as All India Cooperative Union. After the Gorhan
Committee Report the name was finally changed as National Cooperative Union of Indi.
The NCUI is now having the representation of more than 25 crores of ordinary
members. All the state cooperative unions, the state level and national level cooperative
federations, the Government of India and the RBI are its members. The administration
of NCUI is having a 3 tier system, comprising of General Body, Governing Council and
Executive Committee. The President of NCUI will be the head of all these. NCUI is
publishing two monthly magazines by name “The Cooperator” and “The Indian
Cooperative Review”. The NCUI is the national level apex body in the cooperative
movement in India. All the training and educational programmes in cooperation are
being guided and controlled by NCUI.

The following diagram depicts the training and education set up for co-operation in
India under NCUI.

43
 NATIONAL CENTRE FOR CO-OPERATIVE EDUCATION-
NCCE

The National Centre for Cooperative Education which is commonly known as NCCE
was established in 1956 as a subsidiary ot NCUI. Originally this centre was to provide
training and education t the trainers of cooperation. But subsequently when these two
programmes were separated the NCCE continued to provide education to the trainers.
The NCCE is considered as a national centre for education. Even though there exists no
well knit organizational set up in cooperative education; the NCCE is considered and
accepted as the apex level centre in educational set up. The NCCE is now undertaking
programmes for teachers on modern methods and techniques of teaching. The activities
of the centre have now been diversified to cater to the needs of the fast growing
cooperative sector. It has also stepped up its activities to include leadership
development programmes for the leaders of different types of cooperatives. The
educational programmes in cooperation in India are not having a middle level
organisation. The state cooperative unions are the state level agencies to implement
programme at the grass root level and the education programmes are being implemented
by the state cooperative union through their instructors.

The Institute of Co-operative Management, Pune (ICM Pune) formerly known as Co-
operative Training college (CTC), has the distinction of being the first ICM in the Country set
up to impart training to the Co-operative personnel in 1947. It has been engaged in
conducting training programmes for the intermediate as well as senior executives of the Co-
operative Institutions and the Officers of the Co-operative Department from its inception.

The Institute of Cooperative Management, Pune had privilege to get associated with and
guidance from eminent and well known co-operators like late Shri. Vaikunthbhabi Mehta,
Prof. D. G. Karve and Prof. D. R. Gadgil(Deputy Chairpersons of the Planning Commission)
at different stage of its development.
The Institute is continuously on the move to keep pace with the development in the
Cooperative Sector. New programmes are being developed regularly to meet the specific and
emerging requirements of the user organisations. The Institute has successfully conducted
Management Development Programmes of different types and durations since its inception.
Though we take pride in our achievements, we constantly strive to excel in our endeavors.
The Institute is under the administrative control of the National Council for Co-operative
Training (NCCT), New Delhi.

44
 National Council For Cooperative Training(NCCT)

National Council for Cooperative Training is registered autonomous society under the
Societies Registration Act, 1860 promoted by Ministry of Cooperation, Government of India.
The Council is responsible for organizing, directing, monitoring and evaluating the
arrangements for cooperative training for the personnel working in the cooperative sector in

the country. The main objective of the Council is to organize need based training
programmes and facilitate the process of human resource development for cooperatives for
the country. It also envisages conducting research in critical areas of cooperative movement.
The Council has established its own training structure comprising of the VAMNICOM, Pune
at National Level, Five Regional Institutes of Cooperative Management at Chandigarh,
Bangalore, Kalyani, Gandhinagar, Patna and 14 Institutes of Cooperative Management
located at Bhopal, Bhubaneswa, Chennai, Dehradun, Guwahati, Hyderabad, Imphal, Jaipur,
Kannur, Lucknow, Madurai, Nagpur, Pune and Thiruvananthapuram.

Organizational Structure

45
1. HEAD QUARTER LEVEL

The Minister of Cooperation, Ministry of Cooperation, Government of India is the President

of National Council for Cooperative Training (NCCT) and Governing Council of NCCT. The
Minister of State in the Ministry of Cooperation and Secretary, Ministry of Cooperation,
Government of India are the two Vice Presidents of NCCT and Governing Council of NCCT.
The Additional Secretary, Ministry of Cooperation, Government of India is the Chairman of
the Executive Council of NCCT which deals with the Administrative & Financial matters of
National Council for Cooperative Training. The Secretary, NCCT is the Member Secretary of
the Governing Council and Executive Council of NCCT.
2. INSTITUTE LEVEL
At the Institute Level, Management Committee in respect of each Institute is constituted by
the Governing Council, NCCT. These committees are responsible for looking after the
management of the institutes under their jurisdiction. The Management Committee of the
National Institute is constituted by the Government of India under the Chairmanship of
Additional Secretary, Ministry of Cooperation, Government of India. The Chairman of the
State Cooperative Union is generally nominated as Chairman of the Management Committee
of the Institutes of Cooperative Management for not more than two consecutive terms of 3
years each. Each Institute of Cooperative Management has Programme Advisory Committee
constituted under the Chairmanship of Registrar. The Chief Executives of State Cooperative
Federations, Heads of other concerned department of the State Government and
representatives of Local University/Management Institutes are members of this Committee.
The Annual Training programme of each institute is finalized in consultation with
Programme Advisory Committee.
NCCT is conducting programmes for senior level executives through VAMNICOM, Pune
and intermediate and junior level executives and members of cooperatives through 19
RICMs/ICMs.
AIMS AND OBJECTS

The following are the aims and objects of the Society-

46
● to formulate overall policies and plans relating to cooperative training;
● to organize and direct arrangements in regard to the training of personnel employed in
the cooperative departments and cooperative institutions in the country;
● to assess periodically the needs of training for cooperative personnel to facilitate
planning and designing of training arrangements ( such assessment may preferably be
made for the Five Year Plan period);
● to keep effective liaison with and coordinate the activities of Government of India,
Financing Institutions,
Universities including Agricultural Universities, University Grants Commission,
International Agencies like International Cooperative Alliance etc. in matters relating
to cooperative training;
● to establish and manage cooperative training institutions;

● to identify problem areas of cooperatives requiring research and organize research

studies to establish and manage cooperative research institutions;
● to arrange for training of teaching staff of cooperative training institutions;

● to maintain high academic standards in cooperative education and training in various

institutions in the country and suggest syllabi and standard text books on cooperation;
● to promote education in cooperation in schools and colleges and for this purpose to
suggest syllabi and standards of examination and arrange publication of standard text
books on cooperation;
● to examine the possibility of obtaining recognition for Vaikunth Mehta National
Institute of Cooperative Management as an institution of national importance or
explore the possibility of its recognition as deemed to be University;
● to evaluate various courses in cooperative training and suggest measures for
improvements;
● to arrange for provision on consultancy services to cooperatives, particularly on
problems of management;
● to educate farmers and arrange training to attain modern skill of farming in
cooperation of each other;
● to arrange training for small scale entrepreneurs, particularly in rural areas to
encourage cooperation amongst them and adopt cooperative methods to enhance their
business;
● to arrange for training and other activities relating to encouragement of cooperation
amongst other stake holders of cooperative sectors in the country;
● to strive for making institutions of cooperative management as centre of excellence;
● to do continuous research on cooperative so that it could be developed in tandem with
the changing technology, environment and requirements in the sector;
● to arrange various paid programmes by the training units to enhance the budgetary
support of the Society; and
● to raise funds by way of grants, fees, subscriptions and contributions from Central
Government, cooperatives and other institutions.

47
Regional Institute of Co-operative Management (RICM)

Phone
Name & Address of No./STD Mobile
No. the Institute Code No. Email & Website

1 Director 26690584 094818 https://www.ricmb.ac.in/

Regional Institute of 26692036 73288 ricmbangalore1962@gmail
Cooperative 26692537 .com
Management, No.67, (080)
Padmanabhanagar,
BSK II Stage,
Bangalore–560070.

2 Director 2600557 095309 http://ricmchd.org/

Regional Institute of 2660973 09411 ricmchd@hotmail.com
Cooperative 2609157
Management, Sector (0172)
32-C, Chandigarh.

3 Director 23262564 098985 www.urimanage.org.in

Udaybhansinghji 23261715 67461 director@urimanage.org.in
Regional Institute of 23260783
Cooperative 23260492
Management, Sector- (079)
30, Gandhinagar –
382030, Gujarat

4 Director 25828202 094326 www.nsricm.com

Netaji Subhas 25809201 68236 nsricmkalyani@gmail.com
Regional Institute of 25828236
Cooperative (033)
Management, Central
Park, Kalyani, Nadia
– 741 235, West
Bengal

5 Director 2287851 094731 http://www.dnsricmpatna.org/

D.N.S. Regional 2283907 99303 dnsricmpatna@rediffmail.com
Institute of (0612) dnsricmpatna@gmail.com
Cooperative
Management, Unit

48
 Phone
Name & Address of No./STD Mobile
No. the Institute Code No. Email & Website

VIII, Shastri Nagar,

Patna-800023.

Institute of Co-operative Management (ICM)

Sl. Phone No
No Name & Address of the (Office,Residence)
. Institute STD Code Email & Website

1 Director 2562826 www.icmbhubaneswar.nic.in

Madhusudan Institute of 2562825 micmbbs@gmail.com
Cooperative Management, 2562830/
Bhubaneswar–751012. 08895551492
(ODISHA) (0674)

2 Director 2725477 –
Institute of Cooperative 4034733 icmbpl@gmail.com
Management 07694011940
E-8/77, Trilanga Road, 08518964535
Shahpura, Bhopal – 462039 (0755)
Madhya Pradesh

3 Director 26220639(D) www.nicmchennai.in

Natesan Institute of 26211423 nicmchennai1954@gmail.com
Cooperative Management, 26210423
2377A, Shanthi colony Road, 09944263226
Annanagar, Chennai-600040, 26221835
Tamil Nadu (044)

4 Director 2734272 www.icmdehradun.org

Institute of Cooperative 09412075516 icmddn017@gmail.com
Management, 6 Old Mussoorie (0135)
Road, Rajpur, Dehradun,
Uttrakhand

49
Sl. Phone No
No Name & Address of the (Office,Residence)
. Institute STD Code Email & Website

5 Director 2134784 http://icmguwahati.gov.in

Institute of Cooperative 2335307 (F) icmghy@gmail.com
Management, 09435706460
VIP Road, Hengrabari (0361 )
Guwahati –781036 (Assam)

6 Director 24015332 www.icmhyderabad.com

Institute of Cooperative 24015325 icmhyderabad@yahoo.co.in
Management, 24012384
Rajendranagar, Hyderabad- 24015332
500030 (Telangana) 09492297488
(040)

7 Director 2414526 www.icmimphal.org

Institute of Cooperative 2415132 (F) icmimphal2013@rediffmail.com
Management, Imphal 09612934424 somo793@rediffmail.com
Cooperative Complex, (0385)
Lamphelpat, P.O.-Lamphel,
Pin-795004, Manipur.

8 Director, Institute of 2711776 (O) https://www.icmjaipur.in/

Cooperative Management, 10- 2711062 (F) icmjpr@gmail.com
B, Block-A, Jhalana 09983073808
Institutional Area, Jhalana (0141)
Doongri, Jaipur-302004
Rajasthan

9 Director 2784044 www.icmkannur.org

Institute of Cooperative 2784002 kannuricm@gmail.com
Management, 2784088 (F)
Parassinikkadavu P.O., Kannur 09249526505
Dist, Kerala–670563 (0497)

50
Sl. Phone No
No Name & Address of the (Office,Residence)
. Institute STD Code Email & Website

10 Director 2661820 (O) –

Indira Gandhi Institute of 2662357 (F) igicmlko@rediffmail.com
Cooperative Management, 09335221992
Block-B, Sector-18, (0522)
Rajajipuram, Lucknow
– 226 017 (U.P.)

11 Director 2690056 (O) www.icmmadurai.in

Institute of Cooperative 2690055 (Director) info@icmmadurai.in
Management, P.T.C. Post, 09003249037 icmmadurai@gmail.com
Chinnaudaippu, Madurai- (0452)
625022. Tamil Nadu

12 Director 2715010 http://www.dgicmnagpur.in/

Dhananjayrao Gadgil Institute 2710074 dgicm_nagpur@yahoo.com
of Cooperative Management, 2715011
New Nandanwan, ICM Bus (F)09423638600
Stop, Nagpur. 08087130883
(0712)

13 Director 25433816 www.icmpune.org

Dr. V.V. Patil Institute of 25434984 icmpune1947@gmail.com
Cooperative 25425285
Management,43/16-A, 25533357
Erandwana Karve Road, Nal 07350094733
Stop, Bank of India and Indian (020)
Oversease Bank Lane Near
Shangrila Hotel, Pune-411004
(Mah)

14 Director 2340384 http://icmtvm.org/

Institute of Cooperative 2351544 icm-tvm@hotmail.com
Management, Poojappura,
Thiruvananthapuram, 09446396707
Kerala – 695 012 (0471)

51
 Role of International Co-operative Alliance (ICA) in the promotion of
Co-operatives
International Co-operative Alliance
The International Co-operative Alliance
The International Co-operative Alliance (ICA) is an independent, non-governmental
organisation that unites, represents and serves co-operatives worldwide. It exists to
provide an effective and efficient global voice and forum for knowledge, expertise and
co-ordinated action for and about co-operatives.
ICA raises awareness about co-operatives. It helps individuals, government
authorities and regional and international institutions understand the co-operative
model of enterprise. It channels specific information to institutions and the media
showing the importance of co-operatives to a wide range of economic and social issues.
ICA is the voice of the co-operative movement. The ICA acts as the custodian of
cooperative values and principles around the world. It makes the case for co-operatives
as businesses that use a distinctive values-based economic model that put people before
profit. It also aims to demonstrate how co-operatives give individuals and communities
an instrument of self-help and influence over their development.
ICA ensures that the right policy environment exists to enable co-operatives to
grow and prosper. It helps its members in their lobbying for new legislation and more
appropriate administrative procedures that respect the co-operative model, its values
and principles. It provides political support as well as technical expertise to enable co-
operatives to compete on a level playing field.
ICA provides its members with key contacts and information on best practice. It
facilitates contacts between co-operatives for trading purposes and intelligence sharing
in a wide range of areas. It organises meetings, workshops and individual meetings to
address key issues affecting co-operatives and allows discussion among co-operators
from around the world.
ICA provides technical assistance to co-operatives. Through its development
programmes at global and regional levels, ICA promotes capacity building, advice and
financial support to the co-operative movement globally.

National Cooperative Consumer Federation

The National cooperative consumer federation was established on 16 October 1965. It is the
functional body of the consumer cooperatives in the country. NCCF has a network of 29
branch offices located all over the country. NCCF is registered under the Multi-State Co-
operative Societies Act, 2002.

52
The National Cooperative Consumers Federation of India has started to establish trade
connections with manufacturers which include government agencies also. It helps to
undertake purchase, sale, and supply of different consumer products. NCCF has also
undertaken the development of infrastructure and other construction activities.

Objectives of NCCF
The primary objective of NCCF is to give support to the consumer cooperatives for their
supply of consumer goods for other distributing agencies. The distribution of consumer goods
is distributed at a reasonable rate. Technical guidance is given to consumer cooperatives.

Vision and Mission of NCCF

NCCF is an organisation that promotes consumer cooperative movements in the country. It
provides voluntary information and other functioning of cooperatives. It also provides
financial assistance and economic betterment of the country.

NCCF has attained more knowledge and resources through all the years of its functioning,
and it does the following:

● To meet the requirement of the consumers and make them satisfied.

● NCCF will focus and work for consumer satisfaction, and it will maintain
transparency in its functions.
● NCCF will put continuous efforts to achieve higher standards of work performance.

● It considers the growth of its members by adopting best practices and by using the
best technology in the market.
● NCCF will focus mainly based on the interests of the consumers and will work to
achieve higher growth in the market.

Trade/business Activities
Some of the trade and business activities in which NCCF involves are:

● Domestic
● Import: An import by NCCF shall be done by the reputed International supplier at a
reasonable and also competitive price. Which meets the regulations of the Indian
government.
● Export: The export of various goods will be done under the policy of the Indian
Government either directly by NCCF or through any of its Business Associates.
NCCF’s investment of money can be directly applied to the purchase of finished
goods which are ready for export will be sent for further processing for exports.

53
http://nccf-india.com/guideline/CHAPTER%204.pdf

The trade and business activities of NCCF can be classified into different categories, such as:

● Groceries include pulses, spices, edible oil, cotton, and other agricultural products.
● Textile products
● Agricultural products include sugar, pulses, etc.
● Tourism, import and, export
● Information technology and software development.

Detail information about the trade/business activities can be referred at http://nccf-

india.com/guideline/CHAPTER%202.pdf

Commercial Activities of NCCF

● Obtaining and supplying of agricultural products.

● The import and export of consumer goods are made.
● Trading of non-agricultural products. Some of the non-agro products include coal,
fertilisers, pesticides, etc.
● Supplying of stationery items for office use to government departments.

● Many consumer goods such as wheat, rice, sugar are distributed as per government
schemes.
● Construction of hospitals and housing projects all these comes under the development
of infrastructure, which also includes the development of cattle sheds, animal hostels,
etc.
● A system called as public distribution system under which the supply of day-to-day
items such as tea, salt, toiletries, sugar, sanitary items, etc. are supplied in the State of
West Bengal, Uttarakhand, Himachal Pradesh and other states which comes under the
public distribution system.
● Supply of Power Generation Units such as imported coal and other utilities.

● NCCF is one of the special agencies of the Government of India for exporting onion
to other countries.

Introduction

The National Federation of Urban Cooperative Banks and Credit Societies Ltd. (NAFCUB) is
an Apex Level Promotional body of Urban Cooperative Banks and Credit Societies Ltd. in

54
the Country. Our main objective is to promote the urban cooperative credit movement and
protect the interest of the Sector. The Federation was registered under the Multi-State
Cooperative Societies Act as a Multi State Cooperative Society on 17th February, 1977. The
Registered Office of NAFCUB is at Delhi and the area of operation is whole of the country.
We represent around 1600 Urban Cooperative Banks and more than 50,000 Cooperative
Credit Societies functioning all over India. Some of the personalities to mention are Former
President of India Her Excellency Smt. Pratibha Devisingh Patil, Hon’ble Union Minister of
Minority Affairs Shri Rahman Khan, Shri H.K. Patil, Hon’ble Minister of Rural Development
and Panchayat Raj, Government of Karnataka, Former Deputy Chief Minister Gujarat, Late
Shri Atmarambhai Patel, Former Union Minister Shri Suresh Prabhu, Former Minister of
State for Finance Late Dr. S.S. Sisodia, many Members of Parliament, Members of State
Legislatives and Councils of different States and many other distinguished personalities.

Vision & Mission

NAFCUB is committed to work towards building a strong and viable urban co-operative
banking and credit system across the Country, to strive for level playing field for the
institutions, to be an effective voice of the sector, to work towards eliminating visible
weaknesses and infirmities, to provide the training and other support and to knit the
institutions into a cohesive unit for them to benefit from strength of being in co-operative
system.

Objectives
The main objective of the National Federative is to promote Urban Cooperative Credit
movement in the country. The other objectives of the Federation are as under:

To provide a forum for discussion and follow up of issues relating to urban cooperative banks
and co-operative thrift and credit societies.

To promote and protect interest of member institutions and take up their problems
individually and collectively at appropriate forum as well as with the concerned authorities
/regulators.

To interact and liaise with the Ministries of the Union Government, State Governments, the
Reserve Bank of India, NABARD, Commercial Banks, financial sector institutions,
representatives of various bodies of financial, industrial and trading sectors both at national
and at international levels.

To promote urban cooperative credit movement in India and to undertake studies /research
projects related to the Movement.

To organize by itself and / or in collaboration with other bodies, conferences, conventions,

workshops, seminars and discussions on banking and financial services, cooperation,
management and allied subjects.

55
To arrange publication of periodicals, news bulletins and journals, to interact with media on
behalf of the sector and to exchange information of common interest of member banks and to
cooperate with the NCUI, NCCT, ICA, ICBA, CAB, NIBM, NIBSCOM, BIRD, IIB, IBA or
any other such national or international organization in the field of education, training and
publicity.

To develop and administer by itself or along with other institutions, schemes for mutual
benefit of urban cooperative credit institutions, and to take such action or enter into such
agreements as may be necessary for furtherance of the objectives.

To develop expertise in the areas of banking, management, technology and offer consultancy
services to the member institutions.

To take membership of other national and international institutions.

To undertake all activities and discharge all functions of a Federal Cooperative as envisaged
in section 24 of the Multi State Cooperative Societies Act, 2002.

Achievements
Some of the important achievements of NAFCUB are:-

● During the past 36 years of its existence, NAFCUB has attained

recognition as the Spokesman of the Sector.

● Conferment of Scheduled Status to Urban Cooperative Banks.

● Formation of Standing Advisory Committee by Reserve Bank of India

in 1983 as the highest consultative forum.

● Constitution of Marathe Committee for liberal Branch License policy

1992-93.

● Flexibility in Investments of SLR Funds by Urban Cooperative Banks.

● Containment of Madhavpura Bank crises by involvement by working

out a scheme and its implementation.

● Getting significant relaxation for Urban Cooperative Banks in

classification of their Investments in Govt. securities.

56
● Convening RBI to draw Vision Document for Urban Cooperative
Banking Sector and to encourage consultative approach for regulation of Urban
Cooperative Banks by signing MOU with State Governments.

● Acceptance of Vision Document paving their way for differential

Prudential Norms for tier I & II Banks.

● Formation of TAFCUB in almost all the states and encouraging for

voluntary Merger of UCBs to ensure non-descriptive exit of non-viable Banks.

● NAFCUB is member of all important Committees constituted by the

RBI. A few committees are:
a. Formation of Umbrella organization for UCBs.
b. Technology Support to UCBs.
c. Alternative avenues of raising capital by UCBs.
d. College Advisory Committee of College of Agriculture Banking, Pune.

● Providing a weekly capsule of developments in the Banking Sector to

Urban Banks by publishing a regular weekly newsletter “ Coop Banking “ &
Quarterly Journal “ Urban Credit”.

● Organizing Seminars and regular training programmes on specialized

topics relating to Urban Cooperative banks and Credit Societies.

● National launch of Core Banking Solution (CBS) for Urban

Cooperative Banks, particularly for smaller bank at Ahmadabad on 25th
December, 2010.

● Promoting to undertake Research in the field of Urban Cooperative

Banking Sector.

57
 Farmers' Service Society (FSS)

By early 1970s, it was found that the multi-purpose PACS had not succeeded much in
diversifying their operations, especially commodity marketing and processing, in reaching the
weaker sections and in becoming viable. They mostly under the control of the better-off
sections of the society and the small and marginal farmers were not able to get access to the
society or its services. The societies were not able to provide a variety of services like
funding infrastructural development such as godowns and agro-service centre as well as
providing finances for processing industries in their localities other than credit, and supply of
inputs. Hence, based on the recommendation of National Commission on Agriculture, the
scheme of setting up FSS to cater to the credit and non-credit needs of farmers at a single
point was launched in 1973.

A Group constituted by the Union Cabinet in July 1974 under the leadership of T.A.
Pai recommended the organization of FSS to meet the credit needs of rural area. The study
Team head by T.A.Pai recommended the setting up of 'Farmers Service Co-operatives'. FSS
has been evolved to change the power structure in favour of weaker sections in rural areas
and at the same time it will strengthen the co-operative movement through adoption of
commercial banking principles in the management of its finances.

Objectives
The main objective of FSS is to provide all types of credit and full package of services and
technical guidance to farmers particularly small farmers, for enhancing production, and for
diversification of activities on the farm in an integrated manner and at one contact point.

FSS and PACS

Farmers' Service Societies (FSS) would have the following features:

● FSS unlike PACS will have a compact area of operations in 10-20 villages (instead of
5-8
● villages for PACS) with a potential of reaching a business of Rs.2.5 to Rs.3 million
(instead of
● Rs.0.2 million for PACS) in 3 to 5 years.

● FSS unlike PACS will have branches and such FSS may even reach a business of
Rs.10 million
● in 5 to 7 years.

● FSS will have an overall strategy of agro-based development to utilize land and
manpower.
● FSS membership will be more oriented to the hitherto neglected weaker sections of
the rural
● population.

● FSS management will also be represented by this section.

● FSS will undertake both credit and non-credit (including agro-processing) operations.

58
 ● FSS will be a self-paying proposition in the sense that it will meet all its costs within
● reasonable period of time.
● FSS like PACS will be an integral part of a three - tiered cooperative credit
organization when
● sponsored by state cooperative banks.

● FSS will be a cooperative organization even when it is sponsored by the commercial

banks.
● FSS will have adequate and properly trained managerial and technical personnel.

● FSS as compared to PACS have the following three distinct features:

(a) they are much larger sized field level Rural Financial Institutions (RFIs),
(b) they have wider scope of operations, and
(c) their membership and management are relatively more from the weaker sections.
Some more specific features of these two cooperatives are given in Table below.

Major Features of PACS and FSS

Features PACS FSS

Area of Generally, a small area It serves an area covering 10 Kms or area

coverage of not less than 2,000 of operation extending up to a block or
hectares of cropped population of 10,000.
area.

Type of All types of farmers All farmers and other households including
beneficiaries rural artisans, agricultural labourers, etc.

Nature of Short-term crop loans Multi-term and multi-purpose credit. It will

credit and medium term carry out an agro-economic survey of the
business loans for agricultural area under its jurisdiction to find out the
and allied activities economic situation of the members and
accordingly prepare a credit plan for the
overall development of the area.

Nature of Supply of farm inputs, Package of services. Besides providing

non-credit marketing and loans (cash and kind) for agricultural and
business processing, and allied activities, FSS provide necessary
distribution of technical assistance to its members for the
essential commodities, development of agriculture.
etc.

Managemen a) Full-time paid a) Whole-time managing director and

t secretary functional specialists

b) Board of Directors b) Board of Directors consisting of 11

59
 consisting of 11 members of whom 5 shall be
members of whom not representatives of weaker sections and 2
less than 50 per cent shall be elected among other members
shall represent weaker besides 2 nominees of the Registrar of
sections Cooperative Societies, 1 nominee of the
financing bank and the managing director,
ex-officio.

Performance Criteria
From the preceding discussion, it appears that four organizational principles have been
followed in promoting FSS. These are: (a) vertically integrated organizational structure from
local to regional to state / national level (also applicable to PACS to some extent), (b) higher
density of field-offices of FSS, (c) larger coverage of clients with specific focus on the
weaker sections, and (d) multi-functional structure of operations which are horizontally
integrated (also applicable to PACS to some extent).

A study undertaken by RBI in 1980 on the working of FSS revealed that:

● A number of PACS co-existed in the jurisdiction of FSS and resulted in overlap in

jurisdiction.
● Large cultivators continue to wield influence over FSS management.

● The nominees of state government and the sponsor banks did not show much interest
in the functioning of FSS.
● Many FSS were functioning without technical staff.

● Many of the FSS did not arrange for the marketing of farm produce.
● They performed limited non-credit functions related to supply of farm inputs and
distribution of consumer goods.

Performance
There were 2410 FSS in India as on 30th June, 1991 with a total membership of 67.74 lakhs
of which weaker section constituted 83.54 per cent. The paid-up share capital was Rs.97.79
crores of which Rs.17.79 crores was contributed by the State Government. The FSS issued
loans to the tune of Rs.252.68 crores. The overdue was 40.86 per cent of their demand.

Large Area Multipurpose Societies (LAMPS) Scheme

60
The multi-purpose cooperative society was started by the Agricultural Department of the
Reserve Bank of India. With the endorsement of Co-operative Planning Committee, the
Multi-purpose societies were provided with finance for carrying out agricultural operations.
The Primary Agricultural Co-operative Societies for Tribal Areas in many states started to
organise Large Area Multi-Purpose Societies (LAMPS) to benefit the tribal community in
rural and semi-urban areas. The Ministry of Tribal Welfare has been elevating lives of
thousands of tribal women and their families through LAMPS in West Bengal.

Objectives of LAMPS
The LAMPS is the flagship scheme of NSTFDC and Adhivasi Mahila Sashakt
Yojna (AMSY) and its core objective is to encourage the tribal women to enhance their
financial status by carrying out livelihood activities. Its other objectives are as follows:

● To provide interest-free short-term loans or agricultural credit to tribal members for

farming and agriculture.
● To supply the necessary agricultural materials like seeds, fertilizers, pesticides at
subsidised prices.
● To provide financial assistance for the purchase of farm animals and cattle like pigs,
sheep and plough bullocks with subsidised prices.
● A free-of-cost supply of small agricultural machinery for better agricultural purposes.

● To guide, educate and encourage the marketing of the agricultural products.

● To provide consumption loan whenever the farmer needs with certain loan limit
range.
● To guide the landless agricultural farmers in collecting the minor forest products in
order to provide seasonal employment.
● To buy, sell and market the products that are acquired from the forests as minor
products.
● To assist the tribes with limited loans for Integrated Shopping Programme (ISP) to
start small shops in villages as a separate aspect of LAMP.
● To organise and encourage other livelihood activities to add and improve the social
standard of all tribal members.

Functions of LAMPS
Tribal development in India is extremely multi-faceted. It is necessary to concentrate on the
development of all aspects such as agriculture, industry, education, and living standards of
the tribal people. In order to bring about the positive changes through NSTFDC in West
Bengal, the West Bengal SC/ST Development & Finance Corporation and West Bengal tribal
Development Cooperative Corporation Limited have collaborated together. The Scheme has
benefited around 42000 tribal families in West Bengal.

LAMPS carry out the following activities to bring about the progress in their lives:

61
 ● Generating more employment opportunities for the tribal people by collecting and
marketing their Minor Forest Produce.
● Offering loans to the tribal women and assist them in helping in functioning their
processing units and other livelihood related activities.
● Support them in distributing essential supplies and other consumer articles to their
members.
● The scheme further encourages and supports the tribal women to participate in socio-
economic activities and improve their financial contribution towards their family.
● It promotes capacity building, creates the identity and helps them climb up the social
ladder.
● The LAMPS stand as guarantors for the tribal women to avail financial assistance
from NSTFDC.

Women Empowerment through LAMPS

● Economic independence is the main ingredient for the success and empowerment of
women. Tribal Women are empowered in their own traditional way and there is
relatively less social judgment owing to gender in the tribal society.
● The economic activity undertaken by tribal women is traditional in nature like animal
husbandry. It consists of house dairy, Goatery, piggery, duckery, sheep rearing or
activity like Bubai Rope making, Sal leaf Plates making etc.
● The intrusion through AMSY leading towards participation in economic activity and
the contribution by women in the family income upholds the capacity building
creating a Social Identity.
● The latest success of the LAMPS is that majority of the Tribal Women had acquired
the Bank Accounts. The passbook carrying their name and photo is a mark of identity
and self-respect for them.

The role of cooperatives (LAMPS) in tribal development.

There are about 250 scheduled tribal communities living in several states in India, most of
whom are economically disadvantaged. This article evaluates the role of cooperatives in
tribal development, while drawing from lessons of past policies for tribal advancement.
Large-sized Agricultural Multipurpose Cooperative Societies (LAMPS), at the primary level,
have been established to overcome the problems of inaccessibility and management in areas
like Tripura, Nagaland, Sikkim, and the Andaman and Nicobar Islands. These cooperatives
act as banks, consumer organizations, marketing channels and general rural
development agencies. Despite their valuable contribution to tribal development, LAMPS are
found to have inadequate storage space, poor financial foundations and corrupt management.
Cooperatives are also urged to take into account the social objectives of tribal communities,
and not just their economic needs.

62
 Cooperative Marketing

Cooperative marketing gives an idea of collective efforts to achieve specific objectives to

carry out marketing strategy for agricultural products. The cooperative marketing arises due
to the prevalence of many defects in the private and open marketing system. This concept
was first introduced in the European countries.

Cooperative is an important tool of economic development in rural India, when it comes to

cooperative marketing in India, it gives an idea of collective efforts to achieve specific
objective to carry out marketing strategy for agricultural products. The cooperative marketing
arises due to the prevalence of many defects in the private and open marketing system. This
concept was first introduced in the European countries. It is defined as form of organization,
where in person voluntarily associate together as human beings, on the basis of equality for
the promotion if economic interests of themselves.
Benefits of cooperative marketing in India:
The advantages that cooperative marketing can confer on the farmer are multifarious, some of
which are listed below:

● Increases bargaining strength of the farmers: If the farmers join hands and form a
cooperative society, they will be able to increase their bargaining strength because their
produce will now be marketed by single agency.
● Direct dealings with final buyers: It outcast an intermediaries which eliminates the
exploiters and ensures fair prices to both, the producers and the consumers.
● Provision of credit: The marketing cooperative societies provide credit to the farmers to
save them from the necessity of selling their produce immediately after harvesting. This
ensures better returns to the farmers.
● Easier and cheaper transport: This reduces the cost and botheration of transporting
produce to the market.
● Storage facilities: The cooperative marketing societies generally have storage facilities.
Thus, the farmers can wait for better prices; also there is no danger to their crop from rains,
rodents and thefts.
● Grading and standardization: This task can be done more easily for a cooperative agency
than for an individual farmer. For this purpose they can seek assistance from the government
or can even evolve their own grading arrangements.
● Market intelligence: The cooperatives can arrange to obtain data on market prices, demand
and supply and other related information from the markets on a regular basis and can plan
their activities accordingly.
● Influencing market prices: While previously the market prices were determined by the
intermediaries and merchants and the helpless farmers were mere spectators forced to accept
whatever was offered to them, the cooperative societies have changed the entire complexion
of the game.
● Provision of inputs and consumer goods: The Cooperative marketing societies can easily
arrange for bulk purchase of agricultural inputs like seeds, manures, fertilisers, pesticides,

63
 etc., and consumer goods at relatively lower prices and can then distribute them to the
members.
● Processing of agricultural produce: The Cooperative societies can undertake processing
activities like crushing oil seeds, ginning and pressing of cotton, etc.
Progress of Cooperative Marketing in India
Two types of cooperative marketing structures are found in India. Under the first type,
there is a two-tier system with primary societies at the base and the State society at the apex.
Under the second type, there is a three- tier system with primary societies at the village level,
Central marketing societies at the district level, and the State marketing society at the apex.
At present, the cooperative marketing structure comprises 2,633 general purpose primary
cooperative marketing societies at the Mandi level, covering all the important mandies in the
country, 3,290 specialised primary marketing societies for oilseeds, etc., 172 district Central
Federations and the National Agricultural Cooperative Marketing Federation of India Ltd.,
(NAFED) at the national level. NAFED is the apex cooperative marketing organisation
dealing in procurement, distribution, export and import of selected agricultural commodities.

Conclusion: It can be concluded that cooperative marketing is very essential in promoting

the Agriculture produce because cooperative marketing reduces the cost of marketing and
arranges good price to the participants of cooperative marketing.

************

Co-operative Marketing Societies

The establishment of co-operative marketing societies was another step which has

64
been taken to overcome the problems arising out of the present system of marketing
agricultural produce. The objectives of economic development and social justice can be
furthered by channelising agricultural produce through cooperative institutions.

Functions
The main functions of co-operative marketing societies are:
(i) To market the produce of the members of the society at fair prices;
(ii) To safeguard the members for excessive marketing costs and malpractices;
(iii) To make credit facilities available to the members against the security of the produce
brought for sale;
(iv) To make arrangements for the scientific storage of the members' produce;
(v) To provide the facilities of grading and market information which may help them to get a
good price for their produce;
(vi) To introduce the system of pooling so as to acquire a better bargaining power than the
individual members having a small quantity of produce for marketing purposes;
(vii) To act as an agent of the government for the procurement of foodgrains and for the
implementation of the price support policy;
(viii) To arrange for the export of the produce of the members so that they may get better
returns;
(ix) To make arrangements for the transport of the produce of the members from the villages
to the market on collective basis and bring about a reduction in the cost of transportation;
and
(x) To arrange for the supply of the inputs required by the farmers, such as
improved seeds, fertilizers, insecticides and pesticides.

Types
On the basis of the commodities dealt in by them, the co-operative marketing
societies may be grouped into the following types:
(i) Single Commodity Co-operative Marketing Societies
They deal in the marketing of only one agricultural commodity. They get
sufficient business from the farmers producing that single commodity. The examples are
Sugarcane Co-operative Marketing Society, Cotton Co-operative Marketing Society and
Oilseed Growers Co-operative Marketing Society.
(ii) Multi-Commodity Co-operative Marketing Societies
They deal in the marketing of a large number of commodities produced by the
members, such as foodgrains, oilseeds and cotton. Most of the co-operative marketing

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societies in India are of this type.
(iii) Multi-purpose, Multi-commodity Co-operative Marketing Societies
These societies market a large number of commodities and perform such other
functions as providing credit to members, arranging for the supply of the inputs required
by them, and meeting their requirements of essential domestic consumption goods.

Structure
The co-operative marketing societies have both two-tier and three-tier structure. In
the states of Assam, Bihar, Kerala, Madhya Pradesh, Karnataka, Orissa, Rajasthan and
West Bengal, there is a two-tier pattern with primary marketing societies at the taluka
level and state marketing federation as an apex body at the state level. In other states,
there is three-tier system with district marketing society in the middle. At the national
level, NAFED serves as the apex institution. The pattern of the three-tier structure is as
follows:
(i) Base Level
At the base level, there are primary co-operative marketing societies. These
societies market the produce of the farmer members in that area. They may be single
commodity or multicommodity societies, depending upon the production of the crops in
the area. They are located in the primary wholesale market, and their field of operations
extends to the area from which the produce comes for sale, which may cover one or two
tehsils, panchayat samitis or development blocks.
(ii) Regional/District Level
At the regional or district level, there are central co-operative marketing unions or
federations. Their main job is to market the produce brought for sale by the primary co-
operative marketing societies of the area. These are located in the secondary wholesale
markets and generally offer a better price for the produce. The primary co-operative
marketing societies are members of these unions in addition to the individual farmer

members. In the two-tier structure, the State societies perform the functions
of district level societies by opening branches throughout the district.
(iii) State Level
At the state level, there are apex (State) co-operative marketing societies or
federations. These state level institutions serve the state as a whole. Their members are
both the primary co-operative marketing societies and the central co-operative unions of
the state. The basic function of these is to coordinate the activities of the affiliated

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societies and conduct such activities as inter-state trade, export-import, procurement,
distribution of inputs and essential consumer goods, dissemination of market information
and rendering expert advice on the marketing of agricultural produce.
The cooperative marketing network of the country includes 27 state level
marketing federations 199 district/regional marketing co-operative societies, and 4398
primary cooperative marketing societies besides NAFED at the national level.
Membership

There are two types of members of co-operative marketing societies:

(i) Ordinary Members
Individual farmers, co-operative farming societies and service societies of the area
may become the ordinary members of the co-operative marketing society. They have the
right to participate in the deliberations of the society, share in the profits and participate in
the decision making process.
(ii) National Members
Traders with whom the society establishes business dealings are enrolled as
nominal members. Nominal members do not have the right to participate in decision
making and share in the profits of the societies.

Sources of Finance
In 1966, the Dantwala Committee estimated a capital base of Rs.2.00 lakhs for a
co-operative marketing society. At 2003 prices, it should be at least Rs.40.00 lakhs. The
following are the major sources of finance of a co-operative marketing society:
(i) Share Capital
Farmer-members and the State Government subscribe to the share capital of co-
operative marketing societies. Members may purchase as many shares as they like. They
are encouraged to invest sufficiently in the share capital. They are also persuaded to
invest their dividend and bonus in the shares of co-operative marketing societies.

(ii) Loans
Co-operative marketing societies may raise their finance by way of loans from the
Central and State Co-operative Banks and from commercial banks by pledging and
hypothecation and also by clean credit to the extent of 50 per cent of owned capital.
(iii) Subsidy
The Co-operative marketing societies get a subsidy from the government for the

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purchase of grading machines and transport vehicles to meet their initial heavy
expenditure. They also get a subsidy for a part of the cost of the managerial staff for a
period of 3 years to make them viable.

Functioning
The important functions carried out by the co-operative marketing societies are:
(i) Sale on Commission Basis
Co-operative marketing societies act as commission agents in the market, i.e., they
arrange for the sale of the produce brought by the members to the market. The produce is
sold by the open auction system to one who bids the highest price. The main advantage,
which the farmer-members get by selling the produce through co-operative marketing
societies instead of a commission agent, is that they do not have to accept unauthorized
deductions or put up with the many malpractices, which are indulged in by individual
commission agents. As there is no individual gain to any member in the marketing of the
agricultural produce through co-operative marketing societies, no malpractices are
expected to be indulged in.
This type of marketing is not risky for co-operative societies. But sometimes
traders in the market form a ring and either boycott the auction or bid a low price when the
produce is auctioned on the co-operative marketing societies shops. These tactics of the
traders reduce the business of co-operative marketing societies. Therefore, farmers
hesitate to take their produce for sale in the market through co-operative marketing
societies.
(ii) Purchase of Members' Produce
Co-operative marketing societies also enter the market as buyers. A society
participates in bidding together with other traders, and creates conditions of competition.
The commodities thus purchased by a society are sold again when prices are higher.
This system of the outright purchase of the produce by the society involves the risk
of price fluctuations. If the managers of societies lack business experience, they hesitate to
adopt the outright purchase system. In 1964-65, the National Cooperative

Development Corporation recommended that the outright purchase system should be

adopted only by a society which possesses the following qualities:
(a) The society has a trained manager, i.e., one who is capable of understanding the intricacies
of the trade;
(b) The society is financially sound and has adequate borrowing facilities;

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 (c) The society is affiliated to a good viable central level society; and
(d) The society possesses processing facilities.
(iii) Advancement of Credit
Co-operative marketing societies advance finance to farmers against their stock of
foodgrains in the godowns of the societies. This increases the holding power of the
farmers and prevents distress sales. Generally, societies advance credit to the extent of 60
to 75 per cent of the value of the produce stored with them. The recoveries are effected
from the sale proceeds of the produce of the farmer. This function involves no risk to the
society. Moreover, it increases the business.
(iv) Procurement and Price Support Purchases
Co-operative marketing societies act as agents of the government in the
procurement of foodgrains and other agricultural commodities at the announced
procurement or support prices.
(v) Other Functions
The following functions are also carried out by them, depending upon the
availability of funds and other facilities:
(a) They assemble the marketable surplus of small and marginal farmers and transport this
surplus from villages to the society headquarters for disposal;
(b) They make arrangements for the grading of the produce and encourage producers to sell the
produce after grading so that they may get better prices;
(c) They undertake the processing of produce;
(d) They make arrangements for the export of agricultural commodities in collaboration with
the State Level Co-operative Marketing Federation and the National Agricultural Co-
operative Marketing Federation;
(e) They undertake inter-state trade in agricultural commodities; and
(f) They distribute agricultural production inputs, such as fertilizers improved seeds, pesticides,
agricultural implements, and such essential consumer articles as sugar, kerosene oil and
cloth.

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 Dairy Cooperatives and Dairy Development in India

Dairy is an important sub-sector of Indian agriculture, accounting for nearly

17% of value of output from agriculture and allied activities. Dairying has emerged as an
important source of income and employment in rural areas, especially for marginal and small
farmers, who own about 33 percent of cultivable land mass but account for almost 60 percent
of female cattle and buffaloes in the country. Dairying contributes to a third of the gross
income of rural households and nearly half for the landless.
This sector is livelihood intensive and gender sensitive. Dairying is a
centuries-old tradition for millions of Indian rural households; domesticated animals have
been an integral part of the farming systems from time immemorial. Milk contributes more to
the national economy than any other farm commodity. Dairying is largely an organized
activity, consisting of milk vendors, sweet shops as well as other milk sellers, constituting
about 84% share in liquid milk market. The organized sector in dairying is relatively new in
historical terms and consists of modern processing units. This sector handles the balance of
milk procurement and sale.
The record of milk production is impressive and now India is the largest
producer of milk in the world. India’s milk production increased from17.0 million tonnes in
1950-51 to 88.1 million tonnes in 2003-04. The per capita availability of milk increased from
112 gms per day in 1968-69 to 231 gms per day at present .The growth rate of milk

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production during the 5th Five Year Plan (1975-76 to 1979-80)

was 2.91 per cent per annum and it increased to 4.13 per cent per annum during the
Ninth Five Year Plan (1997-98 to 2001-02).
In terms of trade, the value of output from livestock at about Rs. 1,733
billion in 2004-05 of which milk accounted for 68 percent 3. In fact, the value of milk was
higher than paddy (Rs. 704 billion) and wheat (Rs. 480 billion). Thus, in terms of value of
output, milk is now the single largest agricultural commodity in India. Dairy products
account for 70 percent of the output of the livestock sector and also provide employment to
around 75 million women and 15 million men.

History of Dairy Co-operative in India

The Co-operative movement started in India in the last decade of the 19th
Century since the enactment of “the Co-operative Credit Societies Act, 1904 (Act 10 of
1904)” under the British hegemony on Raiffeisen model borrowed from Germany with two
objects in view, i.e. to protect the farmers from the hands of the private money lenders and to
improve their economic condition. Madras province was the birth-place of this movement.
With the setting up of an Agricultural Co-operative Banks there the movement took root in
our Land and slowly gained strength. However, the growth of Co-operative movement in
India during British rule was very slow and haphazard one. In most of the cases, the
provincial governments took the lead. The foreign ruler had only made some committees or
framed a few rules and regulations. But they did not take any wide-ranging programme to
spread the movement all over the country.
It has been observed that the co-operative movement in India owes its origin
to agriculture and allied sectors. This sector has emerged as one of the largest in the world
and is playing an important role in socio-economic development of the country. It is an
attractive mechanism for pooling the meagre resources of its members for solving common
problems relating to credit, supplies of input and marketing of produce. The golden era of
Co-operative movement began after India had won freedom. Within two decades of
independence the membership of primary societies had increased four times while the share
capital and working capital increased 23 and 31 times respectively.
The dairy cooperative movement has been central to the development of
dairying in India. The history of Dairy Development Movement in India is a new one.

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During the pre-independence period this movement was limited to a few pockets of Calcutta,
Madras, Bangalore and Gujarat. The most notable of this venture was Kaira District Co-
operative Milk Producers’ Union Limited of Anand, Gujarat -- better known as Amul,
founded in 1946 in response to the exploitation of district’s dairy farmers. Dairy producers
came under the influence of Ghandian philosophy and nationalist revolutionaries, which
prompted the growth of the dairy co-operatives. But after independence, the National
Government took great initiative in setting up new Dairy Co-operatives in many parts of the
country.
In 1973, the Kaira Cooperative Union set up a marketing agency named Gujarat Cooperative
Milk Marketing Federation (GCMMF), which follows a three- tier structure at village, district
and state level for procuring, processing and marketing milk and milk products. The district
units also provide technical back-stopping to the milk producers and a range of services such
as feed, veterinary care, artificial insemination, education and training. These milk
cooperatives of Gujarat today own the GCMMF, the largest food products business in India.
GCMMF is also the largest exporter of dairy products from India and its brand name Amul is
known all over the world. This experiment laid the foundation of the cooperative movement
in milk production and marketing in India. The federal and egalitarian structure of these
cooperatives ensures social and economic equity to the milk producers and is one of the
major reasons for its success.
The government adopted this successful model and set up the National Dairy Development
Board (NDDB) in 1965 which prepared a blueprint for a milk revolution across the country.
Known as Operation Flood, this programme began in 1970 and was implemented across the
country. It was also one of the largest rural development programmes in the world which ran
for 26 years and helped India to emerge as the world’s largest milk producer in 2003-04 with
a record output of 88.1 million tonnes.

Role of Dairy Cooperatives

In the rural sector, dairying and milk production is an important economic activity and has
become a secondary source of income and employment. Co- operatives play an important
role in animal husbandry and dairying sector, which contributes about one-fourth of
agricultural GDP of the country. In India as of 2004,

there are 1.07 lakh cooperative societies, spread all over the country with a membership of
119 lacks.

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Dairy development along the cooperative lines was considered to be the most effective
strategy for helping the rural poor without altering the village social structure and providing
guaranteed market for milk at fixed prices, supply of cattle feed at a reasonable cost and
efficient veterinary and extension servicesDairy co- operatives all over India help small and
marginal farmers to take initiatives in shaping their destiny, as land-less; marginal and small
farmers constitute 75% of the total farmers engaged in this occupation. They serve more than
10 million farmers in over
1.30 lakh villages, covering 326 districts.
Role of dairy co-operatives is increasing day by day. During the year 2003-04, average daily
marketing of milk by cooperatives was 148.75 lakh litres. Dairy co- operatives could also
generate employment opportunity for some 12 million farm families. Processing of liquid
milk is also undertaken in co-operative sector. Milk is processed and marketed by 170 milk
producers’ co-operative unions (with a capacity of 298 LLPD) and 15 state Cooperative
Marketing federations.
Milk production generally takes place in rural areas, whereas the profitable market exists in
urban areas. Lack of transport facility, organized system of processing and marketing as well
as farmer’s margin in this occupation is very small. In view of these and several other
constraints, dairy co-operatives provide an answer for proper marketing of fluid milk. Dairy
co-operatives have succeeded simply because the farmers own and manage them. The core
feature of these co-operatives is farmer control at all three stages i.e. procurement, processing
and marketing of milk.
The structure of dairy co-operatives consists of primary milk producer societies at the
primary level and milk supply unions at the district level. The primary milk societies are
federated into unions, while state federations are functioning in some states. At the national
level, there is a National Co-operative Dairy Federation (NCDFI), which co-ordinates the
marketing efforts of all the state level co-operatives. National Dairy Development Board
(NDDB) is the national level body involved in promoting, financing and supporting milk-
distribution organizations that are owned and controlled by producers themselves.

NDDB was established with the objective of replicating the 'Anand Model' of dairy
development. The board, founded in 1965 has undertaken the challenging task

of organizing the illiterate farmers into a large co-operative network.NDDB supports the
development of dairy cooperatives by providing them financial assistance and technical
expertise. Over the years, brands in milk products created by cooperatives have become

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synonymous with quality and value. Brands like Amul (GCMMF), Vijaya (AP), Verka
(Punjab), Saras (Rajasthan). Nandini (Karnataka), Milma (Kerala) and Gokul (Kolhapur) are
among those that have earned customer confidence. The Dairy Cooperative Network includes
170 milk unions, operates in over 338 districts, covers nearly 1,08574 village level societies,
and is owned by nearly 12 million farmer members.

Dairy Co-operative Development in India :

The number of dairy co-operative societies was more in Uttar-Pradesh (18104). The second
highest was in Gujarat. The states in the eastern part of the country had relatively smaller
number of such societies. The states of Karnataka, Tamil Nadu, Maharashtra, Punjab and
Rajasthan showed good growth of societies. In terms of membership of these societies, the
state of Gujarat ranked first. This was followed by Tamil Nadu, Karnataka and Mahrashtra.
The membership was very less in all states located in eastern India. As for the procurement of
milk was concerned, about one-third of total milk procured by these co-operatives comes
from Gujarat. It was followed by Maharshtra, Karnataka and Tamil Nadu. The detailed
figures are presented in Table No. 1.
Table No. 1

Components of Dairy Development under Co-operative sector

(2003-04)
Sl. Name of State Farmer Rural Milk Milk
DCS *
No. Members Procurement Marketing
Organised
(No.) (‘000) (‘000 kg./Day) (000 L/day)
1 Andhra Pradesh 5072 756 950 898
2 Assam 65 3 4 8
3 Bihar 4737 241 402 451
4 Goa 169 19 43 89
5 Gujarat 11400 2360 5102 2101
6 Haryana 4219 230 331 153
7 Himachal Pradesh 283 21 25 15
8 Karnataka 9293 1737 2243 1518
9 Kerala 2578 706 614 738
10 Madhya Pradesh 5132 250 312 324

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 11 Maharashtra 18349 1582 2680 1421
12 Nagaland 76 3 2 4
13 Orissa 1654 122 127 132
14 Pondicherry 96 32 54 53
15 Punjab 6892 402 744 496
16 Rajasthan 9643 534 1036 855
17 Sikkim 189 7 9 7
18 Tamil Nadu 7578 1988 1664 511
19 Tripura 84 4 2 9
20 Uttar-Pradesh 18104 824 814 436
21 West-Bengal 2287 172 324 30
Total 107891 11993 17482 10249
Source : NABARD ,Statistical Statement Relating to the co-operative movement in India.
Note : * Dairy Cooperative Societies

Annual milk production in India has more than tripled in the last three decades, rising from
21 million tons in 1968 to 80 million metric tons in 2001. This rapid growth and
modernisation is largely credited to the contribution of dairy co- operatives under the
Operation Flood (OF) Project, assisted by many multi-lateral agencies including the
European Union, the World Bank, Food and Agriculture Organization (FAO), and World
Food Program (WFP).

Operation Flood
'Operation Flood ' was launched by the National Dairy Development Board (NDDB), an
institution constituted as a body corporate in 1965, which was declared as an 'institution of
national importance' by an Act of Parliament, in 1965. Operation Flood, launched in 1970,
introduced co-operatives into the dairy sector with the objectives of increasing milk
production, augmenting rural income, and providing fair prices for consumers.
The objectives of Operation Flood can be summarized as follows:
1. To enable each city’s liquid-milk scheme to restructure and capture a commanding
share of its market;
2. To identify and satisfy the needs of milk consumers and producers, so that consumers’
preferences can be fulfilled economically and producers can obtain a larger share of the price
paid by consumers for their milk;

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3. To facilitate long-term productive investment in dairying and cattle development; and
4. To ensure a sufficient supply of personnel to handle each facet of the project.
The three phases of Operation Flood succeeded in fulfilling a major part of their objectives.
During its first phase,
Operation Flood’s Phase I (1970-1980) linked 18 of India’s premier milk sheds with
consumers in India’s four major metropolitan cities: Delhi, Mumbai, Calcutta, and Chennai.
Operation Flood’s Phase II (1981–1985) increased the milk sheds (collection centers) from
18 to 136; 290 urban markets expanded the outlets for milk. By the end

of 1985 there was a self-sustaining system of 43,000 village co-operatives covering

4.25 million milk producers. Domestic milk-powder production increased from 22,000 tons
in the pre-project year to 140,000 tons by 1985, all of the increase coming from dairies set up
under Operation Flood. Producers’ co-operatives increased direct marketing of milk by
several million liters a day.
Phase III (1985–1996) enabled dairy co-operatives to expand and strengthen the
infrastructure required to procure and market increasing volumes of milk. Veterinary health-
care services, feed, and artificial-insemination services for cooperative members were
extended, and member education intensified. Phase III consolidated India’s dairy cooperative
movement, adding 30,000 new dairy co- operatives to the 42,000 existing societies organized
during Phase II. Milk sheds peaked to 173 in 1988-89 with the numbers of women members
and Women’s Dairy Cooperative Societies increasing significantly. From the outset,
Operation Flood was conceived and implemented as much more than a dairy programme.
Rather, dairying was seen as an instrument of development, generating employment and
regular incomes for millions of rural people.
Most of the dairy co-operatives in India are based on the principle of maximization of
farmers’ profit and productivity through cooperative effort. This pattern, known as the Anand
Pattern, is an integrated cooperative structure that procures, processes, and markets produce.
Supported by professional management, producers decide their own business policies, adopt
modern production and marketing techniques, and receive services that individually they can
neither afford nor manage. The Anand Pattern succeeds because it involves people in their
own development through co-operatives where professionals are accountable to leaders
elected by producers. The Anand model co-operatives have progressively eliminated
middlemen, bringing the producers in direct contact with consumers.

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Structure and Services of the Anand Pattern
The basic unit in the Anand Pattern is the village milk-producers’ co- operative, a voluntary
association of milk producers in a village who wish to market their milk collectively. Every
milk producer can become a member of the co- operative society by buying a share and
committing to sell milk only to the society. Each producer’s milk is tested for fat percentage
(many also measure solids-not-fat)

and is paid on the basis of the quality of the milk. In addition to milk collection, other
services such as cattle feed, artificial insemination, and veterinary services are also provided
by the societies.
Village milk producers’ co-operatives in a district are members of their district co-operative
milk-producers’ union. The Union buys all the societies’ milk, then processes and markets
fluid milk and products. Most Unions also provide a range of inputs and services to the
village societies — feed, veterinary services, artificial insemination, and other services and
have milk-processing plants to convert seasonal surpluses of liquid milk into milk powder
and other conserved products. This allows the Union to ensure better returns to its members.
The farmers had realized that marketing was the key to the success of the Anand Pattern and
to their success, when they had control over the marketing system.

Achievements of the Dairy Cooperatives in India till 2003-04

Reach

● The dairy cooperative network is owned by nearly 12 million farmer members.

● These producers are grouped in nearly 1,08,574 village-level dairy cooperative

societies.

● The societies are grouped in 170 district-level unions spanning 338 districts.

● The unions make up 22 state-level marketing federations.

Milk Production
• India's milk production increased from 21.2 million MT in 1968 to 88.1 million MT in
2003-04.
• Per capita availability of milk in 2003-04 is 231 grams per day, up from 112 grams per

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day in 1968-69.
• India's 3.8 percent annual growth of milk production surpasses the 2 per cent growth in
population; the net increase in availability is around 2 per cent per year.

Marketing
• In 2003-04, average daily cooperative milk marketing stood at 148.75 lakh litres;
annual growth has averaged about 4.2 per cent compounded over the last five years.

• Dairy Cooperatives now market milk in about 200 cities including metros and some
550 smaller towns..
• During the last decade, the daily milk supply per 1,000 urban consumers has increased
from 17.5 to 52.0 litres.

Innovation
• Bulk vending - saving money.
• Milk travels as far as 2,200 kilometers to deficit areas, carried by innovative rail and
road milk tankers.
• Ninety-five percent of dairy equipment is produced in India, saving valuable foreign
exchange.

Macro Impact
• The annual value of India's milk production amounts to about Rs. 880 billion.
• Dairy cooperatives generate employment opportunities for some 12 million farm
families.

Challenges Faced by the Dairy Cooperatives and Interventions

required to strengthen them

With the opening up of the economy, preferential treatments of yesteryears are no more
available to the dairy cooperatives. They are now required to compete in the open market.
The terms of the World Trade dictates removal of all safeguards put in place earlier to protect
the dairy industry from unfair outside competition. As a result, gradually internationalization
of our dairy business is taking place. This transformation demands the dairy cooperatives to

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improve their performance; be it in marketing or quality of products or governance.
While trying hard to improve their performance and professionalising their functions and
governance, the biggest obstacle that the dairy cooperatives face today is political and
bureaucratic interference. The cooperative laws are unable to provide the protection the dairy
cooperatives require to function as independent business entities. To end this dismal state of
affairs, the most important intervention needed to professionalise the functioning of the dairy
cooperatives is to liberate them from the clutches of the archaic cooperative laws enacted to
establish State control over the

affairs of the cooperatives. Additionally, in line with the developed countries, there should be
minimum laws to control the affairs of the cooperatives. Registrars of cooperatives should be
responsible only for registration of cooperatives, their byelaws and arbitration as and when
required. Routine management and governance should totally be left to the wisdom of the
owners (i.e. members) of the cooperatives.
The management in majority of the dairy cooperatives carries some or the other political
leanings. As a result, it has become a common practice that the management of dairy
cooperatives, irrespective of performance, gets superseded or suspended as and when
opponent political parties come to power. In consequence, to ensure continuity of and
protection to good management, depoliticalising cooperative institutions is a must. As
business institutions, the dairy cooperatives from time to time are bound to take hard
decisions. Irresponsible outside interference in the affairs of the dairy cooperatives is sure to
deteriorate performance, eventually making them unfit for competition. To arrest the trend,
the members need to be educated on governance matters. A few restrictions in the
cooperative laws could be introduced such as limiting term of members of governing bodies,
setting up independent bodies to hold free, fair and timely election and audit in cooperatives.
Improving quality of products poses a big challenge to the dairy cooperatives. In today’s
highly competitive market demand for superior quality products is on the rise. To capture the
world market the necessary prerequisite is product quality needs to match international
standards. Improvements in product quality are required to enhance and retain their share in
domestic market also. As quality upgradation is a long process, it calls for, besides
commitment of the management, substantial investment in hygienic milk production,
upgrading plants and machinery, upgrading manpower skills and setting up facilities for cold-
chain storage and distribution of milk and milk products starting from the farm level.
Presently, the dairy cooperatives do not have the capacity to make such huge investments

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requiring the Government support to create institutional facilities for research and
development, credit, training and education etc.
Poor productivity of milch animals constrains rapid development of the dairy industry.
Systematic planning and integrated policies and programmes for animal breeding, genetic
upgradation and feed and fodder management could only improve the situation. For all these
to happen, the Government has to intervene and create

funds (may be called Dairy Development Fund) for such programmes to be implemented on
mission mode integrating various schemes.
Excess manpower and low skill level of employees are areas of great concern for the dairy
cooperatives. The dairy cooperatives need to shed excess flab in manpower in order to match
manpower productivity as per market demand. Skill sets of the employees need to improve to
benchmark desired performance. Since the dairy cooperatives generally do not have capacity
to hire high-calibre professionals, the only out is to invest in extensive training and education
to upgrade the skills of the existing manpower. The employees need to be educated about the
merits of scientific and modern management practices and processes.

Securing members’ participation in the affairs of the cooperatives is another area where the
dairy cooperatives need to work hard. To earn allegiance of the members, cooperatives need
to be responsive to their needs. The dairy cooperatives have to work out suitable strategies so
that they can satisfactorily meet the requirement of the members. They can do so by
providing required support services to their members for veterinary care, input supply and
selling their milk and all these have to be done at reasonable cost. Members need to be
encouraged to participate in the business affairs of their cooperatives and they could no
longer be treated as mere suppliers of milk. Deputation of government officers to head the
affairs of cooperatives has to stop to secure members’ participation. Legal provisions to hold
free, fair and timely election are must and have to be ensured by the Government.

Conclusion
The contribution of cooperatives to India’s dairy industry is enormous. The cooperatives have
ushered in milk revolution in the country. The dairy industry has made India proud in recent
times. India is the leading producer of milk in the world. Dairy cooperatives are the backbone
of Indian dairy industry and have excelled in their areas of cooperatives. The strength of
India’s dairy cooperatives lies in the domestic market. It can easily sustain itself on this for
times to come provided the government provides suitable protection from subsidized imports.

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Income levels in urban India are going up and households spend 68 percent of their income
on self- consumption. This is an important source of strength for the domestic dairy
cooperatives. The de-licensing of the dairy industry has not threatened dairy

cooperatives. They seem to march ahead despite the entry of the private sector and
multinationals. The biggest strength of dairy cooperatives is their labour intensiveness. Cost
effectiveness is another important factor.
Dairy cooperatives have effectively used the toil of farmers to develop self reliance. It is
unique. The future is indeed bright for dairy cooperatives. The government needs to support
dairy cooperatives survive in the new economic order by coming up with policy prescriptions
aimed at generating enough surpluses at low cost, and also maintain due quality standards.
Instead of introducing policies that dismantle cooperative dairying, the government can
maximize welfare of millions of farmers by strengthening the cooperative.

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