Lecture 14 - History of Cooperatives - PDF

Econ-205 Agricultural Finance and Co-operation (2+1) Lecture-14 History of Cooperative Development in India Cooperatives and Indian Agriculture  History of Cooperative Deve...

Econ-205 Agricultural Finance and Co-operation (2+1) Lecture-14 History of Cooperative Development in India Cooperatives and Indian Agriculture  History of Cooperative Development in India The cooperative movement in India during pre- independence era can be divided in to four phases viz., a) Pre- 1. Initiation phase (1904-1911) Independence 2. Modification phase (1912-1918) Era: 3. Expansion phase (1919-1929) 4. Restructuring phase (1930-1946) 1. Initiation phase (1904-1911): ✓ During 1901, Indian Famine Commission and another committee headed by Sir Edward Law recommended the formation of credit societies on Raiffeissen model. These recommendations resulted in the enactment of Cooperative Credit Societies Act (1904). Important/salient features of 1904 Cooperative Credit Societies Act:. Classification of cooperative societies into rural and urban was made. According to this, rural societies are those having 4/5th of the total members from farming community and urban societies are those having 4/5th of the total members from non-agriculturists. Both the organization and control of these societies was to be done by Registrar of cooperatives. Loans could be extended to the members on personal and collateral security. The principle of “one man one vote” was specified in the Act.  2. Modification phase (1912-1918): ✓Cooperative Societies Act of 1912 was enacted for rectifying the shortcomings of 1904 Act. ✓Important features of 1912 Cooperative Societies Act: It provided legal protection to all types of cooperatives. As this act of 1912 gave provision for registration of all types of cooperative societies, it led to the emergence of rural cooperatives both on credit and noncredit fronts. But this growth was uneven spatially i.e. localized in some areas only. ✓ During the year 1914, the Government appointed a committee under the chairmanship of Edward Mac Lagan to look in to the performance of the societies. He presented his report in 1915. The Mac Lagan committee’s recommendations and Cooperative Societies Act of 1912 introduced the cooperative planning process in India. ✓ The important observations of Mac Lagan committee were: Illiteracy among the members. Misappropriation of funds. Nepotism. Undue delays in sanctioning of loans. Irregularity in repayment of loans. ✓ Suggestions offered by Mac Lagan committee for the effective functioning of cooperatives: All the members of the society should be made aware of the cooperative principles. Dealings should be restricted to the members only. Honesty should be the main criterion for extending a loan to some one. Careful scrutiny of applications before advancing a loan and effective follow up for proper utilization of loan amount. Loans should not be advanced for speculative purposes like investment in stock markets, lotteries etc. Ultimate authority should be with all the members but not with the office bearers. Thrift should be encouraged among the members, so as to build reserve fund. 3. Expansion phase (1919-1929): This phase was considered as “Golden Era” for the cooperative movement in India. Cooperative movement got impetus as the cooperatives became a provincial subject under Montague Chelmsford Act of 1919. The economic prosperity during the period 1920-1929 also contributed to the growth of cooperative movement. During the same period, the birth of Land Mortgage Banks (LMBs) took place first in Punjab (1924) subsequently in Madras (1925) and in Bombay (1926).  4. Restructuring phase (1930-1946): In the year 1931, Indian Central Banking Enquiry Committee also emphasized shortcomings with reference to undue delays in advancing loans and inadequacy of credit. In the year 1932, Madras Cooperative Societies Act came into existence aiming at the growth of the cooperative movement. The Agricultural Finance sub-committee under the chairmanship of Prof. D.R. Gadgil, in 1944 recommended the Adoption of limited liability for cooperatives. Assessing the credit –worthiness of a farmer based on his repayment capacity. Subsidizing the cost of administration of small cooperative societies. Linking credit with marketing. In 1945, the Cooperative Planning Committee (CPC) under the chairmanship of Sri. R.G. Saraiya pointed out that the limited progress of cooperatives is due to the Laissez-faire policy of Government and illiteracy of the people, etc.  Planning commission was established in March, 1950, prepared first five year plan (1951-1956) in 1951 under which main objectives with regard to cooperatives were a) Post- Involvement of cooperatives development programmes. in rural Independence Development of well organized credit system. Era: Extending cooperatives to the fields of farming, industry, housing, marketing etc. Training of higher level personnel engaged in cooperatives.  During the year 1951, All India Rural Credit Survey Committee(AIRCSC) appointed under the chairmanship of Sri. A.D. Gorwala pointed out two main drawbacks of cooperative credit. They were ▪ Cooperative credit was unevenly distributed. ▪ Cooperative credit was inadequate and mostly lent to the asset-oriented large cultivators rather than small and marginal farmers. The important recommendations of it were: Govt. partnership in cooperatives at all levels. There should be coordination between cooperative credit, marketing and processing. Development of adequate warehousing. Giving adequate training for cooperative personnel engaged at all levels. During Second five year plan (1956-1961) On the recommendations of All India Rural Credit Survey Committee during the year 1956, National Cooperative Development and Warehousing Board (NCDWB) was established. Apart from this, the setting up of producers’ cooperatives and processing cooperatives was also initiated. During the year 1959, the Committee on Cooperative Credit under the chairmanship of Sri. V. L. Mehtha opined that the membership in a cooperative should not be too large and each village falling under the service area of the cooperative should be at a distance of less than 3-4 miles. The Committee on Taccavi (Govt.) loans and cooperative credit under the chairmanship of Sri. B.P Patel in 1961-62, stressed that the cooperatives should provide loans to the farmers for carrying out agricultural operations and land improvement. These loans should be given only to the farmers under distressed conditions. The Committee on Cooperative Administration headed by Sri. V. L. Mehta said that the supervision of cooperatives at grassroots level i.e. PACSs should be done by District Cooperative Banks. During Third five year plan (1961-1966) The emphasis was placed on increased emphasis on cooperative credit and cooperative farming. During this period National Cooperative Development Corporation (NCDC) was established in 1963 and also National Federation of Cooperative Sugar Factories (NFCSF). All India Rural Credit Review Committee (AIRCRC) was constituted during July, 1966 under the chairmanship of Sri. B. Venkatappaiah. He submitted his final report in the year 1969 and recommended the Setting up of Small Farmers Development Agency (SFDA), Marginal Farmers and Agricultural Labourers Development Agency (MFAL) and Rural Electrification Corporation (REC). Reorganization of primary societies into economically viable units. Revitalization of weak cooperative central banks. Checking of over dues. Greater flexibility in conversion of short-term loans into medium-term loans. Simplification of loan application. Disbursement of a part of loan in kind form. During the third five year plan period itself the new concept of transport cooperatives was initiated. During Fourth five year plan (1969-1974), Fourth five year plan (1969-1974), gave impetus for the rehabilitation and reorganization of District Cooperative Credit Societies for the smooth flow of cooperative credit. During Fifth (1975-1979) and Sixth (1980-1985) five year plan During Fifth five year plan (1975-1979) new fertilizer projects were initiated with the success during fourth five year plan. National Bank for Rural Development (NABARD) was established for providing credit to agriculture and allied activities under Sixth plan (1980-1985).The strengthening of dairy cooperatives was also given importance in this period. During Seventh (1985-1990) and Eighth (1992-1997) five year plan Seventh five year plan (1985-1990), stressed up on ▪ Organizing of special cooperative loan recovery camps ▪ Strengthening of National and State Consumer Federation (NSCF) Eighth five year plan (1992-1997) emphasized on strengthening of milk and processing cooperatives. During Ninth Five Year Plan (1997-2002) Ninth Five Year Plan (1997-2002) focused on framing of national policy on cooperatives and finalization of a new Multi State Cooperative Societies Bill to replace the existing Multi State Cooperative Societies Act, 1984. The main features of the proposed amendment were Expansion of NCDC’s scope to include animal husbandry, forestry, horticulture, pisciculture, etc. Extension of NCDC’s coverage to livestock, industrial goods, handicrafts and the services sector, and Provision of loans directly to cooperative societies on appropriate security to be furnished by the borrower. During Tenth Five Year Plan (2002-2007) The following initiatives were taken with respect of cooperatives during tenth five year plan To make a special study of the role of the cooperatives and challenges to be met in the wake of globalization of Indian economy and also the issues relating to competitive efficiency of the cooperatives, To study constraints and give remedial measures for improving the commercial and economic viability of the cooperatives with regard to modernization, diversification, technology up- gradation, quality improvement, marketability and export promotion, etc. To study the regional disparity in the development of cooperatives, To identify the factors inhibiting the development of cooperatives in the states and suggest suitable programmes for encouraging cooperatives in the cooperatively underdeveloped states. To suggest measures for human resource development in the cooperatives. To review the role and functioning of consumer cooperatives and suggest suitable measures for their improvement During Eleventh five year plan (2007-2012) Providing loans to disabled people on concessional terms for undertaking self-employment ventures through Commercial Banks, Regional Rural Banks (RRBs) and Cooperatives. Such credit should be included in the Priority Sector and NABARD should ensure appropriate refinancing mechanisms. During Twelth Five Year Plan (2012-2017) Encourage micro credit groups and women cooperatives to inculcate the habit of small savings in the rural areas as a sub-system of cooperatives. The cooperative credit institutions are required to function as facilitators for linking these small groups and women cooperatives with credit institutions. Focus on milk shed development with improved facilities in dairy cooperatives. Modernization of cooperatives with automation and ICT application, Expansion of cooperatives in health and education sectors, Promotion of innovative activities through cooperatives.  Indian Cooperatives and Agriculture In the Indian context, it is pertinent to mention that a large segment of the population continues to depend on agriculture and allied sectors of the economy. Still after 100 years of initiation of cooperative movement, the significance of cooperative of agriculture and agriculturist has not diminished. Cooperative has significant contribution in the following areas : Agriculture Credit Agriculture Distribution Agriculture Marketing Agriculture Service Agriculture based Industry 1. Agriculture Credit: To increase the agriculture production, credit is first requirement. Farmers are provided agriculture credit through cooperative institution at their door step. 2. Agriculture Distribution: Apart from supplying credit, cooperative institution in India also supply agriculture input like seed, fertilizer, pesticide, insecticide to the farmers again at door step. Cooperative ensure quality product at reasonable price to farmers. Farmers take advantage of bargain of bulk purchase. 3. Agriculture Marketing: Cooperative institution in India also give marketing support to the farmers. The produce of farmers are pooled at Village level and market linkage is provided through federation. Marketing Cooperative society also provide warehousing facility and transportation. 4. Agriculture Service: Some times small and marginal farmers can not buy costly agriculture implements like tractor, tiller, thresher etc. Service Cooperative society provide these implements on hire basis. 5. Agriculture Industry: Cooperative Institute also support a number of agro based industry where farmers are directly or indirectly being benefitted. These industry provide direct employment and empowerment to men/women. Thank you Dr. Sanjeev Kumar [email protected] +91 8219271814