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What are Co-operative Societies? | CO-OPERATIVES SOCIETIES | POLITY

  • A co-operative society is a type of volunteer association. Article 19 states that the Right to form co-operative societies is a fundamental right and Article 43-B provides for the promotion of co-operative societies (DPSP).
  • The main purpose of co-operative societies is to provide service to its members. It is a kind of business where individuals belonging to the same class and similar profession join their hands for the promotion of their common goals.

Co-Operative Movements In India

  • The need for profitability is balanced by the needs of the members and the wider interest of the community, the Cooperative Movement was started by the weaker sections of society for protecting its members from the clutches of profit hungry businessmen.

Co-operative Movement in pre-Independence era

  • The term cooperative Societies came into existence when the farmers of Poona and Ahmednagar spearheaded an agitation against the money lenders who were charging exorbitant rates of interest. Hence, British government came forward and passed three acts- the Deccan Agriculture Relief Act (1879), the Land Improvement Loan Act (1883) and the Agriculturists Loan Act (1884).
  • But Cooperative move came with structure and shape when British enactment of the Cooperative Credit Societies Act, 1904. In 1919, cooperation became a provincial subject and the provinces were authorised to make their own cooperative laws under the Montague-Chelmsford Reforms. This categorization carried on to Government of India Act, 1935. In 1942, Government of British India enacted the Multi-Unit Cooperative Societies Act to cover Cooperative Societies with membership from more than one province.

Co-operative Movement in post-Independence era | CO-OPERATIVES SOCIETIES | POLITY

After independence cooperatives became an integral part of Five-Year Plans.

  • In 1958, the National Development Council (NDC) had recommended a national policy on cooperatives and also for training of personnel’s and setting up of Co-operative Marketing Societies.

Agriculture in India

  • In 1984, Parliament of India enacted the Multi-State Cooperative Societies Act to remove the plethora of different laws governing the same types of societies.
  • The most important success stories lays behind the success of White Revolution which made the country the world’s largest producer of milk and milk products; and Green Revolution and the conversion of villages into model villages have assumed great importance in the wake of the Green Revolution.
  • 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
    • Reduction of regional imbalances
    • Strengthening of cooperative education, training and human resource development.  (CO-OPERATIVES SOCIETIES | POLITY)

Committee related to the Cooperative Movements in India

  • All-India Rural Credit Survey Committee Report (1954)
  • Chaudhary Brahm Prakash Committee (which proposed a model law) (1990)
  • Mirdha Committee (1996)
  • Jagdish Kapoor Committee (2000)
  • Vikhe Patil Committee (2001)
  • S. Vyas Committee (2001 and 2004)

Co-operative societies by 97th Constitutional Amendment Act

  • The 97th Constitutional Amendment Act of 2011 gave a constitutional status and protection to co-operative societies. In this context, it made the following three changes in the Constitution:
    • It made the right to form co-operative societies a fundamental right (Article 19).
    • It included a new Directive Principle of State Policy on promotion of cooperative societies (Article 43-B).
    • It added a new Part IX-B in the Constitution which is entitled as “The Cooperative Societies” (Articles 243-ZH to 243-ZT).
  • The new Part IX-B contains various provisions to ensure that the cooperative societies in the country function in a democratic, professional, autonomous and economically sound manner.
  • It empowers the Parliament in respect of multi-state cooperative societies and the state legislatures in respect of other co-operative societies to make the appropriate law.

The Major features of the Act

  • Incorporation, regulation and winding up of cooperative Societies based on the principles of Voluntary formation, democratic member Control, member economic participation and autonomous functioning;
  • Specifying the maximum number of directors of a Co-operatives Society to be not exceeding twenty-one members;
  • A fixed term of five years from the date of election in respect of the elected members of the board and its office bearers; and an authority or body for the Conduct of elections to a Cooperative Society;
  • A maximum time limit of Six months during which board of directors of a Co-operative Society Could be kept under Supersession or suspension;
  • Independent professional audit;
  • right of information to the members of the Co-operative Societies;
  • Empowering the State Governments to obtain periodic reports of activities and accounts of Co-operatives Societies;
  • reservation of one seat for the Scheduled Castes or the Scheduled Tribes and two Seats for women on the board of every Cooperative Society, which have individuals as members from Such Categories ; and
  • Penalties in respect of offences relating to Co-Operatives Societies.

Articles Related to Co-operative Societies at a Glance | CO-OPERATIVES SOCIETIES | POLITY

243ZH deals with Definitions
243ZI deals with the in-corporation of Co-operative Societies
243ZJ deals with the number and term of members in board and its office bearers
243ZK-Election of members of board
243ZL-Suppression and suspension of board and interim management
243ZM-Audit and accounts of co-operative societies
243ZN-Convening of general body meetings
243ZO-Right of a member to get information
243ZQ-Offences and penalties
243ZR-Application to multi-state co-operative societies
243ZS-Application to Union Territories
243ZT-Continuance of existing laws

Reasons For The 97th Amendment | CO-OPERATIVES SOCIETIES | POLITY

  • The co-operative sector, over the years, has made significant contribution to various sectors of national economy and has achieved voluminous growth. However, it has shown weaknesses in safeguarding the interests of the members and fulfilment of objects for which these institutions were organised. Co-operatives need to run on well established democratic principles and elections held on time and in a free and fair manner. Therefore, there was a need to initiate fundamental reforms to revitalise these institutions in order to ensure their contribution in the economic development of the country and to serve the interests of members and public at large and also to ensure their autonomy, democratic functioning and professional management.
  • The “co-operative societies” is a subject enumerated in Entry 32 of the state list of the Seventh Schedule of the Constitution and the state legislatures have accordingly enacted legislations on co-operative societies. Within the framework of State Acts, growth of co-operatives on large scale was envisaged as part of the efforts for securing social and economic justice and equitable distribution of the fruits of development. It has, however, been experienced that in spite of considerable expansion of co-operatives, their performance in qualitative terms has not been up to the desired level. A strong need has been felt for amending the Constitution so as to keep the co-operatives free from unnecessary outside interferences and also to ensure their autonomous organisational set up and their democratic functioning.
  • The Central Government was committed to ensure that the co-operative societies in the country function in a democratic, professional, autonomous and economically sound manner. With a view to bring the necessary reforms, it was proposed to incorporate a new part in the Constitution so as to provide for certain provisions covering the vital aspects of working of co-operative societies like democratic, autonomous and professional functioning. It was expected that these provisions will not only ensure the autonomous and democratic functioning of co-operatives, but also ensure the accountability of management to the members and other stakeholders and shall provide for deterrence for violation of the provisions of the law.

Importance of Cooperative sector for India

The Cooperatives play very important role in India because it is an organization for the poor, illiterate and unskilled people. The importance of Cooperative sector for India is given below:

  • It provides agricultural credits and funds where state and private sectors have not been able to do very much.
  • It provides strategic inputs for the agricultural-sector; consumer societies meet their consumption requirements at concessional rates.
  • It helps to overcome the constraints of agricultural development.



Indian Polity

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