Gist of Kurukshetra January 2023 Issue: Cooperatives

Kurukshetra Magazine is a vital source of study material for the UPSC IAS exam. It is a monthly magazine that gives information about important government schemes and programmes in various sectors. Kurukshetra is an authentic source of information for the UPSC Exam. Here, we provide the Gist of Kurukshetra, exclusively for the IAS Exam.

Gist of Kurukshetra January 2023:- Download PDF Here

TABLE OF CONTENTS

1. Realising Sahkar Se Samriddhi
2. Women and Youth Participation in Cooperatives
3. Cooperative Entrepreneurship
4. Cooperative and Rural Livelihood
5. Modernisation and Competitiveness in Cooperatives
6. Cooperatives to FPOs: A paradigm shift
7. Broadening Outreach of Cooperatives

Chapter 1: Realising Sahkar Se Samriddhi

Introduction

• The cooperative sector has always played an important role in the overall economic development of the country with its member-driven and all-inclusive approach.
• It comprises two important principles of human civilization – ‘Sah’ and ‘Karya’ which imply the accomplishment of outcome-oriented activities through an all-inclusive approach. 
• Cooperatives are considered to be an essential element of social and economic policies. 
• They also have an inherent advantage in strengthening the efforts for overall economic prosperity with improved employment and livelihood security.
• They are people-centric organizations and through collective efforts bring cohesiveness and community business sense. It also enhances social bonding.

Seven Golden Principles of Cooperatives

Creation of New Ministry of Cooperatives

• Sardar Vallabhai Patel was the pioneer of the cooperative movement. He sowed the seed of the Anand Milk Union Limited(Amul) through Tribhuvandas Patel, which later became a global dairy brand.
• On 6th July 2021, the Ministry of Co-operation was established to enable and spread the growth of cooperative movement across the country.
• It should be noted that cooperatives play a major role in rural development and provides employment opportunities to poor people, thereby helping them to lead a dignified life.
• However, the cooperative movement started stagnating around the 1960s-70s. 
• Furthermore, the growth of cooperatives was not uniform across the states. For instance, states like Maharashtra, Gujarat, and Andhra Pradesh have a cooperative spread more than the national average. Whereas states like Uttar Pradesh, Madhya Pradesh, and Chhattisgarh have very few cooperatives.

Sahkar Se Samriddhi

• Sahkar Se Samriddhi Mission aims to ensure equitable and widespread growth of cooperatives.
• The reach of cooperatives can be widened in various sectors like fishery, primary production, agricultural processing, etc.
• The initial efforts include creating primary societies or primary cooperative credit societies in every village of India and connecting them to the nearby cooperative banks.
• It is a well-established fact that cooperatives have the potential to equitably distribute the profits and reap benefits for all its members. Thus in the coming two decades government is looking forward to deepening the cooperative movement in the country.

For more information on Sahkar Se Samriddhi, read here: Download PIB Summary & Analysis for 2nd February 2022. Download PDF

Advantages of cooperatives

• It can bring the economically weaker section to the forefront of economic growth and ensure their financial stability. Some examples are Amul and Lijjat Papad.
• It also helps in empowering women. For instance, Rs 60000 crores are directly remitted into the accounts of women farmers that are associated with Amul Cooperative.

Existing Issues in Cooperative Sector

• Sector/Regional/State level imbalance
• Regulatory Complexities
• Leadership, operational, and governance issues
• Lack of professional management in cooperative units
• Lack of cooperation among the members
• Non-adherence to cooperative principles and democratic values
• Lack of entrepreneurship, technological knowledge, awareness, etc

Way Ahead

• The emergence of cooperatives should be ensured in new and evolving sectors like health, tourism, insurance, etc.
• A targeted approach should be followed by all the villages to form a fully functional cooperative society. They should be prepared to meet emerging challenges.
• A culture of transparency should be promoted so that the trust of small farmers can be restored.
• Fair and regular elections should be conducted in cooperative societies.
• The cooperative sector should adopt the principles of corporate governance.
• As cooperation is a state subject, both the State and Union government should work closely through continuous dialog.
• The technological development of a cooperative society is also a very crucial aspect in realizing the full potential of the sector.
• A new cooperation policy covering all the dimensions should be formulated. Important policy parameters are given in the figure below.

Figure: The Seven vital parameters of prosperity through cooperation

Conclusion

Inspiration should be drawn from Maha Upanishad’s often-quoted phrase – Vasudhaiva Kutumbakam which implies that all living beings on the planet earth are a family. The cumulative efforts of all the stakeholders are required to bring everyone closer together and ensure robust economic growth.

Chapter 2: Women and Youth Participation in Cooperatives

Introduction

• International Labour Organization(ILO) defines a Cooperative as an association of persons united voluntarily to meet common economic, social, and cultural needs and aspirations through a jointly owned and democratically controlled enterprise.
• According to the Ministry of Cooperation, there are more than 30 lakh cooperatives globally, which engage more than 12% population of the world.
• India has nearly 8.55 lakh cooperatives engaging nearly 13 crore people.
• There are two types of cooperatives in India namely State Cooperative Society and Multi-State Cooperative Society.
• Amul, IFFCO, and KRIBHCO are the three cooperatives from India that are included in the 300 largest cooperative societies of the world.
• Through the New National Cooperative policy and schemes of the Ministry of cooperation, the Government of India is trying to penetrate cooperatives as a true people-based movement reaching the grass-root level.
• The dedicated framework of the Ministry of Cooperation with administrative, legal, digital, and policy framework intends to bring transparency and promote competition, marketing, and accessibility in every remote rural area of the country. 

Significance of Cooperatives

• They have made significant contributions to agriculture and allied sectors. 
• Around 8.5 lakh cooperatives exist in different parts of the country, comprising 1.5 lakh dairy and housing societies, 97000 Primary Agricultural Credit Societies (PACS), 46000 Honey Cooperative societies, 26000 Cooperative societies, fisheries, and cooperative sugar mills.
• Nearly 94% of farmers are associated with cooperative societies in some form or the other. 
• As per Ministry of Cooperation data, the cooperative sector offers approximately 20 percent of the total agricultural credit of the country, 35 percent of the fertilizer distribution, 31 percent of sugar production, 10 percent of milk production, 13 percent of procurement of wheat, and more than 20 percent of the procurement of paddy. 

Women and Youth Participation

• Cooperatives are ideal institutions to formalize women and youth participation in economic activities.
• The workforce participation rate of Rural Women (24.8%) is significantly higher than that of Urban Women(14.1%) in the Census 2011.
• Despite an increase in the Female Worker Population Ratio from 28.7% in 2019-20 to 31.4% in 2020-21, only 2.52% of the cooperatives solely comprise women (as per International Cooperative Alliance Asia Pacific 2021).
• Some of the successful Women Cooperatives of India are:
  • Self-Employed Women’s Association (SEWA) Cooperatives
  • Swashrayi Mahila SEWA Bank
  • Sangini Child-Care Workers Cooperative
  • Mahila Super Bazar
  • Bhramaramba Mahila Cooperative Banking Society
  • Usha Cooperative Multi-Purpose Store Limited etc
• Lijjat Cooperative Movement and Amul Cooperatives are the most successful examples of engaging a large number of women in cooperatives. For instance, Lijjat engaged approximately 45,000 women.
• As rural women are primarily engaged in agriculture and allied activities, cooperatives should take up gender-responsive initiatives like parity in payment, promoting local products of rural women’s associations, enhancing knowledge and awareness, and ensuring favourable cooperative legislation.
• India has one of the largest youth populations in the world with an average age of 29. Thus the youth can steer the cooperative development of the country if provided with Knowledge, Skills, and Opportunity.
• Cooperatives can enable the younger generation to pool financial resources, skills, and knowledge to establish successful enterprises.
• A cooperative education budget of about 55 crores is allocated for cooperative education.

Conclusion

Cooperatives generate a significant source of employment and support the formalization of informal sectors through collective voice, economies of scale, and extension of social protection. Women and youth can be mainstreamed in the economy through cooperatives to transform society at large.

Chapter 3: Cooperative Entrepreneurship

Introduction

• Cooperatives are successful in mobilizing resources and utilizing them for productive purposes.
• They rest on the triple tenets of democracy, economic development, and social mobilization.
• In India, the first example of financial inclusion was the adoption of the Cooperative Societies Act 1904.
• Entrepreneurship is defined as the creation of an economic organization for the purpose of profit under the conditions of risk and uncertainty.
• It has been highlighted by several researchers that local participation in different developmental activities can have a positive impact on shaping the progress of low-income communities.

Existing Framework

• The legal framework of a cooperative society is governed by Cooperative Societies Act 1912, the Mutually Aided Cooperative Thrift Society Act, and Multi-State Cooperative Societies Act, 2002. 
• Cooperatives with members from one State are registered under the corresponding State Cooperative Societies Act and are regulated by the State Registrars of the Cooperative Societies. 
• Cooperative societies with members from more than one State are registered
• by the Central Registrar of Cooperative Societies under the Multi-State Cooperative Societies (MSCS).

Government Initiatives to strengthen Cooperatives

• All India project to computerize 63000 PACs at an estimated cost of Rs 2516 crores.
• Preparation of draft model bye-laws to transform them into multi-purpose and multi-dimensional economic entities.
• Modernization of cooperative education and training.
• A New National Cooperation policy was formulated.
• Establishment of a National Cooperative database.
• The National Cooperative Development Corporation (NCDC) is implementing Yuva Sahakar- Cooperative Enterprise Support and Innovation Scheme.

Way Ahead

The following steps can be taken to strengthen cooperatives:

• Convergence of the schemes of Micro, Small, and Medium enterprises (MSMEs) and the cooperative sectors.
•  A common interactive portal with all information on cooperatives, potential employer-employee mapping, credit accessibility, etc should be formulated.
• A national level University dedicated to cooperatives is under consideration, which is a good step in spreading awareness and backing cooperative entrepreneurship as a career option.
• Training and skills development is also essential for capacity building.
• Technology upgradation has become an absolute necessity in today’s fast-changing world.
• Timely, adequate, affordable, and collateral-free finance facilities will also help in achieving the desired targets.
• Marketing of products and services has remained a challenge for cooperatives. In this direction, a holistic approach helping them through tariff, non-tariff, and digital solutions would go a long way in both domestic and international markets.
• Bigger cooperatives should mentor small and weak cooperatives to make them competitive and maximize community development.
• Subsidized participation of cooperatives in regional, state, and national fairs should be considered.
• There is a need to deepen cooperative movement in the northern, northeastern, and eastern parts of the country, as their spread is considerably low.

Chapter 4: Cooperative and Rural Livelihood

Introduction

• The three major challenges faced by rural people are poverty, unemployment, and inequality. In this direction, cooperatives can play an important role in helping rural people achieve sustainable livelihoods.
• The cooperative sectors provide adequate, affordable, and timely credit for the production, processing, storage, and marketing of agricultural crops, milk, fish, vegetables, fruits, flowers, and other products. 
• Cooperatives work on the principle of ‘Production by masses’ instead of mass production which is crucial for sustainable and inclusive growth and development.

Background Details

• The primary objectives of cooperative acts in India were to encourage self-help and cooperation among farmers, fishermen, artisans, etc.

Figure: Growth of Cooperatives in India

Source: Kurukshetra

Challenges faced by Cooperative Sector

• Many cooperative societies are not aware of rules and regulations, thereby not actively involved in their proper functioning.
• A large number of cooperatives are not financially viable and have either become defunct or are on the verge of becoming defunct.
• Most of the societies are confined to a few states with limited spread and small membership.
• The participation of Scheduled Castes, Scheduled Tribe, women, and other vulnerable sections is extremely low.
• The top posts are usually occupied by richer sections that often manipulate members for their own benefit.
• There is a shortage of trained, skilled, and experienced personnel.

Way Ahead

• It is urgent to infuse transparency, accountability, and efficiency in the entire cooperative ecosystem along with modernity and professionalism.
• They must emerge as economic entities capable of competing with the private corporate sector.
• The activities should be diversified by incorporating new sectors like health, real estate, insurance, power, tourism, communication, etc.
• The defunct cooperatives should be revived.
• Synchronization with the current business environment is also required to boost the competitiveness of the cooperative sector.

Conclusion

Cooperative societies can provide necessary credit for Micro, Small, and Medium Enterprises which are the backbone of rural economic development. They have the potential to encompass all activities of rural areas and uplift the lives of weaker sections. Revitalizing the cooperative sector is important to sustain rural development. All the stakeholders should come forward to put combined efforts into rural development.

Chapter 5: Modernisation and Competitiveness in Cooperatives

Introduction

• The new policy aim to deepen the cooperative culture in India and develop an economic model that focuses on Make in India.
• Cooperatives have made significant contributions to India’s growth story in past several decades. It has been stressed by the government that cooperatives are vital in making India a $5 Trillion economy.

Ensuring Transparency and Accountability

• The government of India introduced Multi-State Cooperative Societies (MSCS) (Amendment) Bill, 2022, in Lok Sabha on 7 December 2022. 
• The Bill will establish a Cooperative Election Authority to conduct elections, supervise, direct and control the preparation of electoral rolls and perform other associated functions.
• The bill also has the provision to appoint directors with experience in the field of banking, finance, and management to establish a professional management structure.

Professionalising Cooperatives

• At present there are 65000 PACS and the government is aiming to establish Three Lakh PACS in the next five years. These PACS will be set up in sectors like Farmer Producer Organization(FPO), dairy, water, and gas distribution, biogas generation, and storage.
• As per the government, PACS should be made multi-purpose, computerized, and available in all languages for seamless working.

Skill Development

• The government is planning to open one affiliated college in every state so that manpower can be trained.
• Large cooperatives like Amul, IFFCO, KRIBHCO, NAFED, and NCDC will be forming multistate export houses to export agricultural, handicrafts, and Khadi products to the world market.

Schemes adopted by different Ministries to expand cooperatives

• Ministry of Agriculture and farmers welfare adopted the Agriculture Infrastructure Fund that provides interest subvention of 3 percent and a credit guarantee for establishing infrastructure projects.
• Department of Animal Husbandry and Dairying implements Dairy Processing and Infrastructure Development fund.
• Department of Fisheries provides a concessional support facility through the Fisheries and Aquaculture Development Fund.
• Tribal Cooperative Marketing Development Federation of India implements the Van Dhan programme.
• Government e-Marketplace was expanded to allow cooperative societies to register as buyers on the GeM platform.

For more information on GeM, read here: GeM: Government e-Marketplace – UPSC Government Schemes Notes for GS2

Chapter 6: Cooperatives to FPOs: A paradigm shift

Introduction

• The cooperatives have contributed significantly to agriculture development through White and Green Revolution.
• Agriculture in India is dominated by small and marginal farmers, accounting for 86.66 percent of the total operational land holdings.
• Farmer Producer Organizations/ Farmer Producer Companies are viewed as beneficial alternatives to cooperatives. The main goal of these entities is to encourage smallholder commercialization, increase the bargaining power of farmers, and boost farm incomes.

Agriculture Cooperatives

An agriculture cooperative or farmers’ cooperative is an institution through which farmers pool their resources for farming activities. 

Source: Kurukshetra

Farmers Organizations

They are farmers’ collectives that enable farmers to integrate themselves into the value chain, decrease transaction costs and increase their income. They can be classified as:

• Community-Based, Resource-Oriented: These are small village-level associations that deal with inputs and resources.
• Commodity-Based, Market-Oriented: These are specialized in a single commodity, value-added products.

Farmer Producer Organizations and their promotio

• These are modeled as an interface between small and marginal farmers and markets by creating and strengthening the forward and backward linkages.
• It differs structurally from Cooperatives in governance, membership, and strategy. They emerged as separate entities in 2003 under the provisions of the Companies Act.
• The goal of the Farmer Producer Organizations is to organize farmers for
  • Backward linkages of inputs like seeds, fertilizer, credit, insurance, information, and agriculture extension services.
  • Forward linkages for marketing, processing, market-led agricultural production, etc.
• The promotion of FPOs was launched as a pilot programme in 2011-12 through two subschemes of Rashtriya Krishi Vikas Yojana namely the National Vegetable Initiative for Urban Clusters and the programme for Pulses development for 60,000 rainfed villages.
• A National Policy and guidelines were also released for FPOs in 2013.
• The Government of India has developed a special central sector initiative called “Formation and Promotion of 10,000 FPOs” for nationwide implementation during 2021 with a total budgeted outlay of Rs. 6865 Crores.
• For product specialization, a cluster-based approach will be followed through “One District One Product”.
• The dedicated Credit Guarantee Fund managed by NABARD and NCDC offers adequate credit guarantee coverage to speed up the credit flow to FPOs by reducing the financial burden.
• Various civil society organizations and national and international funding institutions are working to support the development of FPOs into viable farmer companies.

Conclusion

FPOs are the most suitable institutional structure for energizing farmers and enhancing their ability to pool their resources. However, a high calibre of representative and enlightened leadership will be required among the grower members for building a prosperous and sustainable agriculture sector.

Chapter 7: Broadening Outreach of Cooperatives

Introduction

• According to the data published by the International Cooperative Alliance in the ‘World Cooperative Monitor’, out of the 300 largest cooperatives in the world, around 30 percent of cooperatives are engaged in the agriculture and food sector. 
• The share of agriculture in cooperatives was 83% in the Netherlands, 55 % in Italy, and 31% in Finland in 2015. 
• The United Nations designated 2012 as the International Year of Cooperatives. 
• Moreover, the Food and Agriculture Organization(FAO) states that cooperatives are a pillar for agricultural development and food security in the world.

For more information on FAO, read here: Food and Agriculture Organisation: Learn about FAO Functions and FAO Council

Ways to broaden the outreach of Cooperatives

• Information and communication technology(ICT):
  • Use of innovative ICTs like the Internet of Things (loT), big data analytics, machine learning and Artificial Intelligence (Al) have great potential to improve the working of the agriculture cooperatives. 
  • They can support complex decision-making. 
  • Deployment of smart technologies enhances final productivity, reduces costs, and optimizes the decision­ making process.
  • They also provide the facilities for on-farm management, efficiency, and quality control tools.
• Data Aggregation:
  • Use of digital technologies in agriculture help in creating information wealth and can immensely help in planning agriculture operations.
  • The cooperatives can thus use methods like GIS geospatial analysis, map analytics, etc to maximize their profits.
• Digital Technologies:
  • Cooperatives can become crucial players in the digital revolution and garner benefits for the farmers.
  • They are important agents for necessary knowledge transfer and reducing barriers like lack of awareness.
  • For instance, in Spain a cooperative used the Internet of Things for Olive and Tomato production. Similarly, the Italian cooperative APOFRUIT is making use of smart technologies in grape cultivation.
  • In India, all the 1200 village-level milk producer societies of the Amul dairy have been covered under digitalisation and it has become the country’s first cooperative to adopt digital tracking and monitoring system for artificial insemination.

Need for regulations and policies

• The use of digital technologies creates several concerns around privacy, data security, data ownership, competition, etc.
• These concern thus mandates the creation of desired rules and regulations.

Conclusion

With the use of emerging technologies in the cooperative sector efficiency, productivity, and quality of services can be increased manifold. They can also help in effective and efficient decision making thereby boosting the profits for the members of the cooperatives.

Gist of Kurukshetra January 2023:- Download PDF Here