9 October 2024 : Daily Answer Writing

Q1) What are the reasons behind the limited success of the co-operative movement? How can co-operatives be made more effective in fostering rural development?

(150 Words/10 Marks)

ANS

A cooperative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise. Here need for profitability is balanced by the needs of the members and the wider interest of the community. Cooperative movement was introduced in India as a State policy and with the enactment of Cooperative Societies Act, 1904.

The co-operative movement in India had limited success because of the following reasons:

1. Forward and backward linkages: Inadequate infrastructure restricts market accessibility hindering their growth; last mile connectivity between markets and hinterlands is lacking.
2. Capital crunch: Co-operatives faces resource constraints with their weak fund base, restricting their borrowing capacity. E.g., Banks are reluctant to lend money due to NPA issue.
3. Training and capacity building: Inadequately trained manpower translates into inefficient management who are unable to face stiff competition from big corporates.
4. Social issues: Social inequality results in dominant group cornering lion’s share of benefits. It has led to nepotism, favoritism and partiality.
5. Bureaucratization: A complex hierarchy of bureaucratic power centers has led to red-tapism and unnecessary governmental control. E.g., IFFCO, land co-operatives, etc.
6. Political interference: Politicization of co-operatives leads to beneficiaries’ selection based on political considerations.

Solving the above bottlenecks can help realize full potential of co-operatives in fostering rural development. In this regard, some measures to make co-operatives more effective are:

1. Creating world class infrastructure for improving market accessibility. E.g., NIP, NMP, Bharatmala, Sagarmala, etc. are welcome initiatives.
2. Credit system for cooperatives be liberalized. Also, some portion of the credit be earmarked for small and marginal sections; better implementation of Priority Sector lending mechanism by banks.
3. Creating a cadre of trained, dedicated and honest workers by pooling in both government and private resources.
4. Cooperatives be set up taking the local conditions into consideration; involving Panchayats in planning and co-ordination with the locals. E.g. Amul, Lizzat papad, etc.
5. Efforts should be made to acquaint women through awareness campaign. Also, adult education and literacy programmes be undertaken for rural area on a large scale to reduce social barriers.
6. Liberalize governmental control over co-operatives and sensitize members against possible political interference. The small cooperatives should be given hand holding support towards enabling them to scale up their activities.

Co-operative movement is a noble idea which is crucial for inclusive socio-economic development. Government initiatives like National Policy on Cooperatives, Multi-State Cooperatives Societies Act, 2002 with their reformative agenda have resolved some challenges to an extent. More reforms are needed to realize full potential of the movement, which in turn can transform rural India. Setting up of Ministry of cooperation is a step in the right direction.