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Prelims Capsule


Ministry of Cooperation created by Centre to strengthen Cooperatives

Ministry of Cooperation created by Centre to strengthen Cooperatives


  • GS 2 || Polity || Central Government || PM & Central COM

Why in the news?

The Centre establishes a new Ministry of Cooperation to boost the cooperative movement.

Ministry of Cooperation:

  • The ministry is established to carry out the vision of’sahkar se samriddhi’ (through cooperation to prosperity).
  • The NGO Sahakar Bharati, whose founder Satish Kashinath Marathe is a part-time director on the RBI board, claims to have been the first to advocate for the establishment of a separate ministry for cooperatives.
  • It will provide a distinct administrative, legal, and policy structure for the country’s cooperative movement.
  • It will contribute to the development of cooperatives as a real grassroots movement.
  • The ministry will seek to improve cooperatives’ ‘ease of doing business’ by streamlining processes and facilitating the formation of multi-state cooperatives (MSCS)

All about Ministry of Co-operation:

Understanding meaning and importance Co-operatives:

  • An autonomous organization of individuals united voluntarily to satisfy their shared economic, social, and cultural needs and ambitions through a jointly owned and democratically controlled company, according to the International Labour Organization (ILO).
  • Cooperatives come in a variety of forms, including Consumer Cooperative Societies, Producer Cooperative Societies, and Credit Cooperative Societies.
  • The International Year of Cooperatives was designated by the United Nations General Assembly in 2012.
  • India is an agricultural country that helped to establish the world’s largest cooperative movement.
  • A cooperative-based economic growth model, in which each member works with a sense of responsibility, is highly important in India.

Significance of the ministry:

  • It will provide a distinct administrative, legal, and policy structure to support the country’s cooperative movement.
  • It will contribute to the development of cooperatives as a real grassroots movement.
  • It will seek to expedite processes for co-operatives’ “ease of doing business” and to allow the growth of multi-state cooperatives (MSCS).

Constitutional provision associated with Cooperatives:

  • The Directive Principles of State Policy (Part IV) now include a new Article 43B on the “development of cooperative societies.”
  • After Part IXA (Municipals), the Constitution (97th Amendment) Act of 2011 introduced a new Part IXB (Cooperatives) addressing cooperatives operating in India.
  • In Part III of the Constitution, following the words “unions and associations,” the phrase “cooperatives” was inserted. This makes it possible for all citizens to create cooperatives by making it a basic right of citizens.


The Pre-Independence Era’s Cooperative Movement:

  • Cooperatives were initially established in Europe, and the British government duplicated them in India to alleviate the plight of impoverished farmers, notably moneylender harassment.
  • When farmers in Pune and Ahmednagar (Maharashtra) organized a protest against money lenders who were charging high interest rates, the phrase “cooperative societies” was coined.
  • The Deccan Agricultural Relief Act (1879), the Land Improvement Loan Act (1883), and the Agriculturists Loan Act (1883) were all approved by the British government (1884). With the help of the Bengal government, the first credit cooperative association was established in Banking in 1903. It was established under the British Government’s Friendly Societies Act.
  • The Cooperative Credit Societies Act of 1904, on the other hand, provided Cooperative a defined organization and shape.
  • The Montague-Chelmsford Reforms made cooperation a provincial topic in 1919, allowing provinces to pass their own cooperative legislation.
  • The Multi-Unit Cooperative Societies Act was adopted by the Government of British India in 1942 to cover Cooperative Societies with membership from more than one province.

The Post-Independence Era’s Cooperative Movement:

  • Cooperatives were an important element of Five-Year Plans after independence.
  • The National Development Council (NDC) advocated a national cooperative strategy, as well as staff training and the formation of Co-operative Marketing Societies, in 1958.
  • The National Cooperative Development Company (NCDC) was established as a statutory corporation under the National Cooperative Development Corporation Act of 1962.
  • The Multi-State Cooperative Organizations Act was adopted by the Indian Parliament in 1984 to eliminate the multiplicity of separate rules regulating the same sorts of societies. In 2002, the Indian government issued a National Policy on Cooperatives.

What is the Importance of Cooperatives?

  • It provides agricultural credits and money in areas where the public and private sectors have been unable to help.
  • It offers strategic inputs to the agriculture sector, while consumer societies are able to satisfy their consumption needs at reduced prices.
  • It is a non-profit organization for the underprivileged who want to work together to address their issues.
  • It minimizes social barriers and soothes class tensions.
  • It lowers political factions’ bureaucratic sins and follies; it overcomes agricultural development restrictions; and it generates a favorable climate for small and cottage enterprises.
  • One of the most successful cooperative models in India is AMUL milk factory, AMUL model excelled in all aspects of a successful business.

Challenge associated with Cooperatives:

  • Limited Coverage: The majority of these societies have only a few members and operate in only one or two communities.
  • Unawareness: People are unaware of the Movement’s goals, as well as the laws and regulations that govern cooperative institutions.
  • Lack of appropriately qualified employees: The Co-operative Movement has been hampered by a lack of appropriately qualified employees.
  • Mismanagement and Manipulation: When a co-operative has a big membership, it is easy to mismanage it unless some secure management procedures are used. Money became such a significant weapon in governing body elections that the top positions of chairman and vice-chairman were generally given to the wealthiest farmers, who controlled the organization for their own gain.

Way forward:

  • With the progress of technology, new sectors are developing, and cooperative societies can play an important role in familiarizing individuals with such regions and technologies.
  • The cooperative movement’s guiding principle is to bring everyone together, even if they stay anonymous. People’s issues can be solved by the cooperative movement.
  • Cooperatives, on the other hand, contain irregularities, which must be checked via regulations and rigorous execution.
  • Market connections for agricultural farmers as well as cooperative organizations are needed to enhance cooperatives.


With the progress of technology, new sectors are arising, for example, Israeli agriculture technology necessitates the use of trained labor. As a result, cooperative organizations in rural regions can establish skill development centers. There must be regulations and stricter execution to check for anomalies in cooperatives. Agricultural farmers should have market access as well as co-operative societies.The primary problem is that they don’t have access to the market, which discourages cooperative development. Finally, the cooperative movement’s primary premise is to bring everyone together, even if they stay anonymous. People’s issues can be solved by the cooperative movement.

Mains oriented question:

What do you understand about cooperatives? What are the challenges associated with it? (150 words)