History of Credit co-op society in India
The Rochdale Pioneers
Co-operatives started out as small grass roots organizations
in Western Europe, North America and Japan in the middle of the last century,
however, the it is the Rochdale Pioneers that is regarded as the prototype of
the modern co-operative society and the founders of the Co-operative Movement.
In 1844 a group of 28 artisans working in the cotton mills
in the town of Rochdale, in the north of England established the first modern
co-operative business, the Rochdale Equitable Pioneers Society (photo). The weavers
faced miserable working conditions and low wages, and they could not afford the
high prices of food and household goods. They decided that by pooling their
scarce resources and working together they could access basic goods at a lower
price. Initially, there were only four items for sale: flour, oatmeal, sugar
and butter. The Pioneers decided it was time shoppers were treated with
honesty, openness and respect, that they should be able to share in the profits
that their custom contributed to and that they should have a democratic
The Cooperative Movement in India
1. Preamble
The history of cooperatives in India is more than a hundred
years old. The canvas of events is far too vast to give it the space it
deserves in a Report of this nature. The following is only a brief attempt to
recapture the major events that led to the cooperatives as we see them today.
2. Background
Even before formal cooperative structures came into being
through the passing of a law, the practice of the concept of cooperation and cooperative
activities were prevalent in several parts of India. Village communities
collectively creating permanent assets like village tanks or village forests
called Devarai or Vanarai was fairly common. Similarly, instances of pooling of
resources by groups, like food grains after harvest to lend to needy members of
the group before the next harvest, or collecting small contributions in cash at
regular intervals to lend to members of the group viz., Chit Funds, in the
erstwhile Madras Presidency, “Kuries” in Travancore, “Bhishies” in Kolhapur
etc. were to be found. The “Phads” of Kolhapur where farmers impounded water by
putting up bunds and agreed to ensure equitable distribution of water, as well
as harvesting and transporting of produce of members to the market, and the
“Lanas” which were yearly partnerships of peasants to cultivate jointly, and
distribute the harvested produce in proportion to the labor and bullock power
contributed by their partners, were similar instances of cooperation.
The proposal for agricultural banks was first mooted in 1858
and again in 1881 by Mr.William Wedderburn the District Judge of Ahmednagar, in
consultation with Justice M.G. Ranade, but was not accepted. In March 1892, Mr.
Frederick Nicholson was placed by the Governor of Madras Presidency (for
inquiring into the possibility) of introducing in this Presidency, a system of
agricultural or other land banks and submitted his report in two volumes in
1895 and 1897.
In 1901 the Famine Commission recommended the establishment
of Rural Agricultural Banks through the establishment of Mutual Credit
Associations, and such steps as were taken by the Government of North Western
provinces and Oudh. The underlying idea of a number of persons combining
together was the voluntary creation of a new and valuable security. A strong
association competent to offer guarantees and advantages of lending to groups
instead of individuals were major advantages. The Commission also suggested
the principles underlying Agricultural Banks.
3. Cooperative Credit Societies Act, 1904 - The First
Incorporation
Taking cognizance of these developments and to provide a
legal basis for cooperative societies, the Edward Law Committee with Mr.
Nicholson as one of the members was appointed by the Government to examine and
recommend a course of action. The Cooperative Societies Bill, based on the
recommendations of this Committee, was enacted on 25th March, 1904. As its name
suggests, the Cooperative Credit Societies Act was restricted to credit
cooperatives. By 1911, there were 5,300 societies in existence with a
membership of over 3 lakes. The first few cooperative societies registered in
India under the 1904 Act in the first 5-6 years are as follows: Rajahauli
Village Bank, Jorhat, Jorhat Cooperative Town Bank and Charigaon Village Bank,
Jorhat, Assam (1904), Tirur Primary Agricultural Cooperative Bank Ltd., Tamil
Nadu (1904), Agriculture Service Cooperative Society Ltd., Devgaon, Piparia, MP
(1905), Bains Cooperative Thrift & Credit Society Ltd., Punjab (1905),
Bilipada Service Cooperative Society Ltd., Orissa (1905), Government of India,
Sectt. Cooperative Thrift & Credit Society (1905), Kanginhal Vyvasaya Seva
Sahakari Bank Ltd., Karnataka (1905), Kasabe Tadvale Cooperative Multi-Purpose
Society, Maharashtra (1905), Premier Urban Credit Society of Calcutta, West
Bengal (1905), Chittoor Cooperative Town Bank, Andhra Pradesh (1907), Rohika
Union of Cooperative Credit Societies Ltd., Bihar (1909). Under this Act,
several non credit initiatives also came up such as the Triplicane society in
Madras which ran a consumer store, weaver credit cooperatives in Dharwar and
Hubli, which gave credit in the form of yarn etc. However, these were
registered as Urban Credit Societies.
The 1904 Act provided for constitution of societies,
eligibility for membership, registration, liabilities on members, disposal of
profits, shares and interests of members, privileges of societies, claims
against members, audit, inspection and enquiry, dissolution, exemption from
taxation and rule making power. All other operational and managerial issues
were left to the local governments namely to formulate suitable rules and model
bye-laws of the cooperative societies. The institution of the Registrar,
visualized as a special official mechanism to be manned by officers with
special training and appropriate attitudinal traits to prompt and catalyze
cooperative development was the result of the Cooperative Societies Act of
1904.
4. Cooperative Societies Act, 1912
With the developments in terms of growth in the number of
cooperatives, far exceeding anticipation, the Cooperative Societies Act of 1912
became a necessity and cooperatives could be organized under this Act for
providing non-credit services to their members. The Act also provided for
Federations of cooperatives.
With this enactment, in the credit sector, urban cooperative
banks converted themselves into Central Cooperative Banks with primary
cooperatives and individuals as their members. Similarly, non-credit activities
were also cooperatively organized such as purchase and sales unions, marketing
societies, and in the non agricultural sector, cooperatives of hand loom
weavers and other artisans.
5. Maclagen Committee on Cooperation (1914)
The Banking Crisis and the First World War both affected the
growth of cooperatives. Although member deposits in cooperatives increased
sharply, the war affected the export and prices of cash crops adversely,
resulting in increased over-dues of loans of primary agricultural societies. To
take stock of the situation, in October, 1914 a Committee on Cooperation under
Sir Edward Maclagen was appointed by the Government, in October 1914, to study
the state of, and make recommendations for the future, of cooperatives. The
Committee’s recommendations, which are detailed in Annexure-3, are basically
related to credit cooperatives. It recommended building up a strong three-tier
structure in every province with primaries at the base, the Central Cooperative
Banks at the middle tier and the Provincial Cooperative Bank at the apex,
basically to provide short-term and medium-term finance. Considerable emphasis
was laid on ensuring the cooperative character of these institutions and
training and member education, including training of the Registrar and his
staff.
6. After the 1912 Act
The first Cooperative Housing Society, the Madras
Cooperative Union in 1914, the Bombay Central Cooperative Institute in 1918 and
similar institutions in Bengal, Bihar, Orissa, Punjab etc. came up. Other than
consumer cooperatives and weavers cooperatives, other non-agricultural credit
cooperatives generally performed well and grew in strength and operations
during this period.
7. Government of India Act, 1919
In 1919, with the passing of the Reforms Act, Cooperation as
a subject was transferred to the provinces. The Bombay Cooperative Societies
Act of 1925, the first provincial Act to be passed, among others, introduced
the principle of one-man one-vote.
8. The agricultural credit scenario
The agricultural credit scenario was a matter of concern and
various committees looked into the problems of cooperative banks in various
provinces. The Royal Commission on Agriculture in 1928 also reviewed the
cooperative sector and among others recommended the setting up of land mortgage
banks.
9. In both agricultural
In both agricultural and non agricultural non-credit
sectors, societies were organized, but most faced difficulties in operation as
a result of opposition by private marketing agencies and also the inexperience
of their office bearers. This focused attention on strengthening of cooperative
institutes and unions for education and training. A prominent development of
this time was the setting up of the All India Association of Cooperative
Institutes in 1929.
10. The setting up
The setting up of the Reserve Bank of India (RBI) in 1934
was a major development in the thrust for agricultural credit. The Reserve Bank
of India Act, 1934 itself required the RBI to set up an Agricultural Credit
Department. As cooperatives were to be channels for rural development, with the
establishment of popularly elected governments in 1935, programmes were drawn
up in which rural indebtedness received priority. The Mehta Committee appointed
in 1937 specifically recommended reorganization of Cooperative Credit Societies
as multi-purpose cooperatives.
11. The Second World War
The Second World War boosted the prices of agricultural
commodities leading to increased returns to farmers and consequently reduction
in over-dues to the cooperatives. To counter shortages of essential
commodities for domestic consumption as well as raw materials, the Government
resorted to procurement of commodities from producers and rationing, for which
it decided to utilize the cooperatives. This provided a momentum to the growth
of multi-purpose cooperatives.
12. The period between
The period between 1939-1945 provided a further stimulus to
the growth of the Urban Cooperative Credit structure. Many societies had
started banking functions and had grown in size and operations over a period of
time, with substantial diversification of activities.
13. Multi-Unit Cooperative Societies Act, 1942
With the emergence of cooperatives having a membership from
more than one state such as the Central Government sponsored salary earners
credit societies, a need was felt for an enabling cooperative law for such
multi-unit or multi-state cooperatives. Accordingly, the Multi-Unit Cooperative
Societies Act was passed in 1942, which delegated the power of the Central
Registrar of Cooperatives to the State Registrars for all practical purposes.
14. In 1944, the Gadgil Committee
In 1944, the Gadgil Committee recommended compulsory
adjustment of debts and setting up of Agricultural Credit Corporations,
wherever cooperative agencies were not strong enough.
15. Cooperative Planning Committee (1945)
The Cooperative Planning Committee under the chairmanship of
Shri R.G. Saraiya was set up in 1945. The Committee found cooperative societies
to be the most suitable medium for democratization of economic planning and examined
each area of economic development.
16. Pre-Independence Development
In 1946, inspired by Sardar Vallabh Bhai Patel and led by
Shri Morarji Desai and Shri Tribhuvan Das Patel, the milk producers of Khera
District of Gujarat went on a fifteen day strike. Their refusal to supply milk
forced the Bombay Government to withdraw its order granting monopoly
procurement rights to Polson, a private dairy. History was made when two
Primary Village Milk Producer Societies were registered in October 1946. Soon after
on 14th December 1946, the Khera District Cooperative Milk Producers Milk Union
known as Amul was registered.
The Registrars’ Conference in 1947 recommended that the
Provincial Cooperative Banks be re-organized to give greater assistance to
primary societies through Central Banks. For the first time an effective
linking of credit with marketing, and providing assistance by way of liberal
loans and subsidies for establishment of a large number of godowns and
processing plants was considered.
It would be appropriate to mention here some developments in
Bombay vis-à-vis cooperatives, which had an impact on the cooperative sector.
Shri Vaikunth Bhai Mehta took over as Minister, In-charge of Cooperation in the
Bombay Government after which the cooperative movement in the province received
a boost. A Committee on Cooperative Education and Training under the
chairmanship of Sir Janardan Madan, made recommendations for cooperative education
programmes and the setting up of an Education Fund. The Agricultural Credit
Organization Committee, with Sir Manilal Nanavati as Chairman recommended State
assistance in agricultural finance and conversion of all credit cooperatives
into multi-purpose cooperatives. It also recommended a three-tier cooperative
credit banking system, and various subsidies etc.
17. Developments in the Post-Independence Era
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.
The First Five Year Plan (1951-56), outlined in detail the
vision of the cooperative movement in India and the rationale for emphasizing
cooperatives and panchayats as preferred organizations for economic and
political development. The Plan emphasized the adoption of the cooperative
method of organization to cover all aspects of community development. 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.
All India Rural Credit Survey Committee (1951)
A major watershed initiative at this time was the
appointment by Government of the Gorwala Committee, popularly known as the All
India Rural Credit Survey Committee. The Committee was appointed in 1951 and
submitted its report in 1954. It observed that large parts of the country were
not covered by cooperatives and in such areas where it had been covered, a
large segment of the agricultural population remained outside its membership.
Even where membership did exist, the bulk of the credit requirement (75.2%) was
met from other sources. The Committee recommended introducing an integrated
system of rural credit, partnership of the government in the share capital of
the cooperatives and also appointment of government nominees on their boards,
thus participating in their management. The Committee emphasized the importance
of training. The creation of the State Bank of India was also a major recommendation.
Detailed recommendations of the Committee have been presented in Annexure-3.
The Government and the elected representatives accepted the
basic approach and the major recommendations of the Gorwala Committee. The
Union Government acquired a major interest in the Imperial Bank which was
converted into the State Bank of India. A National Cooperative Development and
Warehousing Board was set up. The Reserve Bank of India Act was amended to
enable it to play an active role in building up of cooperative credit
institutions.
The All India Cooperative Congress, held at Patna in 1956,
accepted the principle of state participation and government representation on
the Board of Directors of cooperatives. It resolved that the number of such
nominees should not exceed one-third of the total number of Directors or three,
whichever is less and applicable even to cooperatives having government share
capital in excess of 50% of total share capital. This recommendation was
accepted by the Central Government.
In 1953, the Government of India and the Reserve Bank
jointly constituted a Central Committee for Cooperative Training to establish
necessary training facilities for cooperative personnel. The All India
Cooperative Union and the State Cooperative Unions were entrusted with training
of members and office bearers of cooperative organizations.
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. It aimed at enabling cooperatives
to increasingly become the principal basis for organization of economic
activity. 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. State partnership with
cooperative institutions at various levels, the essential basis of which was to
be assistance and not interference or control, was recommended and for
facilitating State partnership in cooperatives, the Plan also recommended the
establishment of a National Agricultural Credit Long-term Operations Fund. The
National Cooperative Development Fund was also established by the Central
Government, during this period, to enable states to borrow for the purpose of
subscribing share capital of non credit cooperative institutions in the
country.
The Industrial Policy Resolution of 1956 emphasized the need
for State assistance to enterprises, organized on a cooperative basis for
industrial and agricultural purposes, and “to build up a large and growing
cooperative sector”.
The Committee on Cooperative Law under the chairmanship of
Shri S.T.Raja in 1956 recommended a Model Bill for consideration of State
Governments. Another important development, at this time, which affected the
cooperative sector, was the National Development Council Resolution (1958). The
Resolution on Cooperative Policy stressed that cooperatives should be organized
on the basis of the village community as the primary unit and that there should
be close coordination between the village cooperative and the Panchayat. The
Resolution also recommended that the restrictive features of existing
cooperative legislation should be removed. Many State Governments amended their
Acts, as a result of the recommendations of the Model Bill
Cooperative marketing and processing of agricultural produce
formed an important part of the Integrated Scheme of Cooperative Development in
the Second Plan. About 1900 primary marketing societies were set up and State
Marketing Federations were established in all the States, as well as the National
Cooperative Marketing Federation at the Centre. Marketing cooperatives along
with the agricultural cooperatives played a major role in promoting the Green
Revolution by providing credit and inputs to farmers as well as processing
their increased outputs.
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. Even the medium and large industries and in transport an
increasing range of activities can be undertaken on cooperative lines”.
From the mid-sixties onwards agro processing cooperatives,
particularly in the sugar and spinning sector grew in number and contribution,
driven primarily by the government’s policy of encouraging large scale
industries in the cooperative sector and term loan assistance from financial
institutions.
With the setting up of NDDB to replicate the Anand pattern
of cooperatives in milk, the Indian dairy cooperative movement received a
spurt. Later on NDDB also ventured into the field of edible oils
After the Indo-China war in 1962, both the Consumer
Cooperative Structure and the Public Distribution System (PDS) was
strengthened. The government as a matter of policy decided to give preference
to consumer or other cooperatives in the allotment of fair price shops and
certain States allotted new fair price shops only to cooperatives.
With the growth of public deposits in Urban Cooperative
Credit Societies, it was felt necessary to insure these under the Deposit
Insurance Scheme of Reserve Bank of India. Selective provisions of the RBI Act
1934 and later Banking Regulation Act 1949 were made applicable to Cooperative
Banks w.e.f. March 1, 1966 to regulate their banking business and facilitate
insurance coverage of deposits. Thus, they became an integral part of the
banking system of the country.
18. Some National Institutions which came into existence in
the 1960s
The Agricultural Refinance Corporation was set up in 1962 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
establishment of the NCDC gave a great boost to the growth of cooperative
marketing and processing societies.
While on a visit to Anand in October 1964, impressed by the
socio-economic transformation brought about by milk cooperatives, Shri Lal
Bahadur Shastri, the then Prime Minister of India, spoke of the desirability of
setting up a national level organization, the National Dairy Development Board
(NDDB), to replicate the Anand pattern of cooperatives in milk throughout the
country.
Several other significant organizational developments also
took place during this period such as the setting up of various National
Cooperative Federations and re-organization of the National Cooperative Union
of India (NCUI). In 1967, the Vaikunth Mehta National Institute of Cooperative
Management was set up in Pune. Growth of consumer cooperatives was also an
important development of this period. Simultaneously, the growth of Land
Development Banks also accelerated and rural electric cooperatives and
programmes for dairy, poultry, fishery and labour cooperatives were set up.
19. The Fourth Five Year Plan (1969-1974)
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. It also made necessary provisions to provide
cooperatives with management subsidy and share capital contribution, as well as
for the rehabilitation of Central Cooperative Banks. It also emphasized the
need to orient policies in favour of small cultivators.
20. The Mirdha Committee
The Mirdha Committee in 1965 laid down standards to
determine the genuineness of cooperative societies and suggest measures to weed
out non genuine societies; to review the existing cooperative laws and
practices to eliminate vested interest. The recommendations of the Committee
resulted in amendments in the cooperative legislation in most states, which
destroyed the autonomous and democratic character of cooperatives.
21. The Fifth Five Year Plan (1974-1979)
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 under-privileged was to receive special attention. Based on the
recommendations of an Expert Group appointed by the Planning Commission in
1972, structural reform of the cooperative set-up was envisaged. The Plan
recommended the formulation of Farmers’ Services Cooperative Societies as had been
envisaged by the National Commission on Agriculture and stressed the need for
professional management of cooperatives.
22. The Sixth Five Year Plan (1979-1985)
The Sixth Five Year Plan (1979-1985) also emphasized the
importance of cooperative efforts being more systematically directed towards
ameliorating the economic conditions of the rural poor. The Plan recommended
steps for re-organizing Primary Agricultural Credit Societies into strong and
viable multi-purpose units. It also suggested strengthening the linkages
between consumer and marketing cooperatives. Consolidation of the role of
Cooperative Federal Organizations, strengthening development of dairy, fishery
and minor irrigation cooperatives, manpower development in small and medium
cooperatives were some of the planned programmes.
23. NABARD Act, 1981
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.
24. Multi-State Cooperative Societies Act, 1984
With the objective of introducing a comprehensive central
legislation to facilitate the organization and functioning of genuine
multi-state societies and to bring uniformity in their administration and
management, the MSCS Act of 1984 was enacted. The earlier Multi-Unit
Cooperative Societies Act of 1942 was repealed.
25. The Seventh Five Year Plan (1985-1990)
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 Plan recommended amongst
others development of Primary Agricultural Credit Societies as multiple viable
units; realignment of policies and procedures to expand flow of credit and
ensure inputs and services particularly to weaker sections; special programmes
for the North Eastern Region; strengthening of consumer cooperative movement in
urban as well as rural areas and promoting professional management.
26. With increasing demand
With increasing demand from proponents of an autonomous
cooperative movement and reforms in the Cooperative laws, the Government
constituted a Committee on Cooperative Law for Democratization and
Professionalization of Management in Cooperatives in 1985, headed by Shri
K.N.Ardhanareeswaran. The Committee recommended the deletion of those legal
provisions in State Cooperative Acts, which militate against the democratic
character and autonomy of cooperatives, and also recommended incorporation of
several provisions which could activize democratic processes for infusing
professional management into cooperatives.
27. Similarly, in 1989
27. Similarly, in 1989 the Agricultural Credit Review
Committee under the chairmanship of Prof. A.M. Khusro examined the problems of
agricultural and rural credit and recommended a major systemic improvement. The
Committee recommended that the Eighth Plan should become the plan for revival
of weak agricultural credit societies.
28. Model Cooperatives Act, 1990
In 1990, an Expert Committee, under the chairmanship of
Choudhary Brahm Perkash, was appointed by the Planning Commission to make a
rapid review of the broad status of the cooperative movement, suggest future
directions and finalize a Model Cooperatives Act. The Committee submitted its
report in 1991. Since cooperation is a State subject and each State has its own
cooperative legislation covering cooperatives whose membership is confined to
the State, the report of the Committee, along with a draft Model Cooperative
Law, was circulated to all State Governments for their consideration and
adoption at State level.
29. The opening up of the economy in 1990
The opening up of the economy in 1990, and the liberalized
economic policies followed by the government since then, led to increasing
pressures for various governments, state and central, to bring about changes
that would provide cooperatives a level playing field to compete with the
private sector. The Eighth Five Year Plan (1992-1997) laid emphasis on building
up the cooperative movement as a self-managed, self-regulated and self-reliant
institutional set-up, by giving it more autonomy and democratizing the
movement. It also spoke of enhancing the capability of cooperatives for
improving economic activity and creating employment opportunities for small
farmers, labourers, artisans, scheduled castes, scheduled tribes and women and
emphasized development and training of cooperative functionaries in
professional management.
30. Parallel Cooperative Legislation
From the Ninth Plan (1997-2002) onwards, there has been no
specific mention about cooperatives as a part of the Plan. Since Cooperation
is a State subject and recognizing the difficulties in having the existing
State Cooperative Acts amended on the lines of the Model Cooperatives Act, a
section of cooperators and civil society initiated action to put in place
Parallel Cooperative Legislation for self-reliant cooperatives. Self- reliant
cooperatives are generally defined as those which have not received any
assistance from the Government in the form of equity contribution, loans and
guarantees. These Acts are largely based on the recommendations of the
Choudhary Brahm Perkash Committee. Nine States namely AP (1995), MP (1999),
Bihar (1996), J&K (1999), Orissa (2001), Karnataka (1997), Jharkhand
(1996)), Chhattisgarh (1999) and Uttaranchal (2003), have so far enacted
Parallel Cooperative Acts which are enabling and ensure autonomous and
democratic functioning of cooperatives.
31. Multi-State Cooperative Societies Act, 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. Unlike the State Laws, which remained as a parallel
legislation to co-exist with the earlier laws, the MSCS Act, 2002 replaced the
earlier Act of 1984.
32. National Cooperative Policy (2002)
In 2002, the Government of India enunciated a National
Cooperative Policy. The objective of the Policy is to facilitate an all round
development of cooperatives in the country. The policy promises to provide
cooperatives with the necessary support, encouragement and assistance, to
ensure their functioning as autonomous, self-reliant and democratically managed
institutions, accountable to their members, and making a significant
contribution to the national economy.
Based on the recommendations made at a Conference of State
Ministers for Cooperation, the Government of India in 2002 constituted a
Ministerial Task Force to formulate a plan of action for implementation of
National Cooperative Policy. The Task Force suggested that a single law instead
of parallel laws should be introduced in the States. It also recommended, among
others, that in order to depoliticize cooperatives, Members of Parliament or
Members of Legislative Assemblies should not be allowed to hold office of any
cooperative society.
33. The Companies Amendment Act, 2002
A Committee under the chairmanship of Dr.Y.K.Alagh
recommended the amendment of the Companies Act, 1956. On the basis of the
recommendations of the Committee, the Producer Companies Bill was introduced in
the Parliament and became law on 6th February, 2003 as Part IXA - Producer
Companies in the Companies Act, 1956. Based on the cooperative principles of
mutual assistance, it provides an alternative to the institutional form that is
presently available to cooperative enterprises.
34. NCDC Amendment Act, 2002
Recognizing the need to improve its scope of lending and to
bring about changes in its funding, the NCDC Act was amended in 2002, which has
enabled it to cover notified services, livestock and industrial activities and
more importantly to directly fund cooperatives against suitable security.
35. Task Force on Revival of Cooperative Credit Institutions
To nurse the rural cooperative credit system back to health,
to ensure that the rural credit doubled over three years and that the coverage
of small and marginal farmers by institutional lending was expanded
substantially, the Government of India in August 2004 set up a Task Force to
suggest an action plan for reviving rural cooperative credit institutions and
legal measures necessary for facilitating this process. The Task Force, chaired
by Prof. A. Vaidyanathan, recommended that any financial restructuring which
did not address the root causes of the weaknesses of the system would not
result in its sustained revival and would require legal measures. The recommendations
of the Task Force in accordance with its Terms of Reference are basically
confined to revival of credit cooperatives for which it suggests a financial
package. The Vaidyanathan Committee has also suggested a model cooperative law
that can be enacted by the State Governments. Recommendations of the Task
Force are being currently implemented. The Vaidyanathan Committee has also
given its report on the long-term cooperative credit structure.
36. Cooperative Movement at a Glance
Cooperatives, in all spheres, today cover approximately 99%
of Indian villages and 71% of total rural households in the country. Their
contribution to the national economy may be seen from the following table:
Cooperative share in the economy - Percentage
Agricultural Credit Disbursed - 18*
Fertilizer Distributed - 36*
Production of Fertilizer - 25*
Sugar Produced - 50**
Spindleage - 10#
Milk Procurement to Production - 8$
Yarn Production - 22#
Handlooms - 54#
Wheat Procurement - 33#
Fishermen Cooperatives - 21#
Storage Facilities (Village) - 64#
