History of Co-operative

The Indian cooperative sector completed more than 100 years of its existence till now. It was born during the later part of the colonial era predominantly as a Government initiative to address the twin issues of farmers' indebtedness and poverty. This initiative was formalized in a legislation enacted in 1904 entitled the "Cooperative Credit Societies Act, 1904". During a century of its existence, this sector has built a network consisting of more than 5.45 lakh individual cooperative organisations and over 236 million members. It is numerically the largest movement of its kind in the world. With a working capital base of Rs. 34,00,555 millions, presence in practically all walks of rural life and a coverage spanning almost all villages of the country, the cooperatives have come to be recognized as one of the most important economic and social organisations in the nation's life. Cooperatives are meant to be enterprises of the citizens and it is envisaged that a vibrant and robust cooperative movement can significantly contribute in harnessing the positive potential of social capital the greater good of society. The Cooperative Credit Societies Act of 1904 was followed by a number of supporting legislations including the Cooperative Societies Act, 1912 which provided for the formation of non-credit societies and federal cooperative organisations. Provinces like Bombay, Madras, Bihar, Orissa and Bengal enacted their own cooperative laws on the lines of the 1912 Act. In1928, the Royal Commission on Agriculture submitted a report emphasizing the importance of cooperative sector and observed that "if cooperation fails, there will fail the best hope of Rural India". In 1942, the government enacted the Multi Unit Cooperative Societies Act which was an enabling instrument for incorporation and winding up of cooperative societies. The Reserve Bank of India formed in 1934, had agriculture credit as a part of its basic mandate. By extending refinance facilities to the cooperative credit system it played an important role in spreading the cooperative movement to far corners of the country. Post-Independence, cooperatives were considered to be the part of the strategy of planned economic development. Rapid and equitable economic development became the focus of the State policy. In the early 1960s, cooperative legislation all over the country underwent a major change on the basis of the findings of the All India Rural Credit Survey Committee (1951-54) formed under the Chairmanship of Shri A.D. Gorwala. The crux of the Committee's recommendations was that the State should play an active role in the spread of the cooperative movement. Based on these recommendations, States enacted new laws / amended the existing ones under Entry No. 32 of List II, Schedule 7 of the Constitution. The new legislations gave them a major role in the functioning of the cooperative institutions. Cooperative Societies having jurisdiction over more than one State had to encounter different laws and therefore a need was felt to introduce a separate consolidated legislation for them. Parliament accordingly enacted a Multi-State Cooperative Societies Act in 1984 under Entry No. 44, of the List I of the Schedule 7 of the Constitution.

Over the years, there has been a growing realisation that undue interference from the State, lack of autonomy and widespread politicisation has severely impaired the functioning of these institutions and there is need to introduce urgent reforms in the sector. During the last two decades, a number of Committees were appointed to go into various issues of cooperatives. Choudhary Brahm Prakash Committee (which proposed a model law) (1990), Mirdha Committee (1996), Jagdish Kapoor Committee (2000), Vikhe Patil Committee (2001) and V. S. Vyas Committee (2001 and 2004) went for a complete dissection of the sector and made a number of valuable suggestions to turn cooperatives into self-reliant, autonomous and democratized institutions. These Committees strongly advocated the need to replace the existing government dominated cooperative laws by a new people centric legislation.
As a consequence of these recommendations and on support of a sizable section of the cooperative community, two major events took place on the cooperative scene of the country.

(a) The Government of Andhra Pradesh passed the A.P. Mutually Aided Cooperative Societies Act 1995. This was followed by similar enactments in eight other States; Bihar, Jharkhand, Madhya Pradesh, Chhattisgarh, Jammu and Kashmir, Karnataka, Orissa and Uttarakhand.
(b) The Union Government replaced the existing Multi-State Co-operative Law by a fresh statute – the Multi-State Cooperative Societies (MSCS) Act, 2002.Government of India announced a National Policy on Co-operatives in 2002.The ultimate objective of the National Policy is to provide support for promotion and development of cooperatives as autonomous, independent and democratic organisations so that they can play their due role in the socio-economic development of the country. The Policy further aims at reduction of regional imbalances and strengthening of cooperative education, training and human resource development for professionalization of cooperative management. It recognizes the distinct identity of cooperatives and seeks to support their values and principles by catalyzing States to provide them an appropriate administrative and legislative environment.

Co-operatives in India have had a chequered history. During the first few decades after Independence, this sector played a pivotal role in the economy by making significant contribution to our primary sector production. It had an important role in bringing food sufficiency through the green revolution, in building up a network for distribution of new varieties of seeds, fertilizers and cash credit and in creating an environment of participation and hope among the people. Beginning with Amul in Gujarat, it took extraordinary strides in the dairy sector too. Currently, 170 District Cooperative Milk Producer Unions and 22 State Dairy Federations deserve credit for (a) turning India into the largest milk producing nation of the world, and (b) bringing substantial raise in the family income of millions of milk producers across the country. But, even this sector has now begun showing some signs of fatigue. In many areas, production has reached a plateau and the rate of capital formation is inadequate.

Source: 9th Administrative Reforms Committee Report, India titled Social Capital- A Shared Destiny.