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Question:  Cooperatives have the ability to strengthen people’s participation and initiate economic development in backward and rural areas. Elaborate.


Answer:  Cooperatives are organization formed by people at the grassroots level to obtain a collective bargaining power for achieving common objectives. Some of the sectors where cooperatives operate are agriculture, spinning mills, sugar mills, dairies etc.

Working of cooperatives

  • Collective funding
    Cooperatives are set up through joint funding by all stakeholders. The corpus is created through membership and is later used for lending activities.
  • Democratic administration
    Cooperatives are not run by a single person or group. Elections to cooperatives are conducted by the state government to ensure that all stakeholders get to chose administrators.

Benefits of cooperatives

  • Credit to unorganized sector
    Institutional creditors such as commercial banks can lend to those having assets and fixed income. Cooperatives work without backing assets and income for lending.
  • Low profit model
    The profit margin for members is lower so that both the creditors and debtors do not face losses. Its main objective is service and not profits.
  • Transparency in functioning
    The cooperatives are structured in such a way that administration process is transparent. The government will also ensure that stakes of members are upheld.
  • Easy to register
    Registering and setting up a cooperative is very easy. The simplified process allows formation of new institutions covering all sectors.

Thus, cooperatives in India are strong but only in some parts. There is a need for strengthening them across the country to ensure holistic development.

Updated on 25 Jul 2021 |   Added on .14 Jul 2021  |  by admin