Coo Operatives Full Notes

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Contents

Section ICh 1: IntroductionCh 2: Historical Perspective in Indian Context Ch 3: Cooperative Movement in the World ContextCh 4: Organisational Structure of a CooperativeCh 5: National Level & International Cooperative OrganisationCh 6: Role of State Government Ch 7: Professionalisation of Management Ch 8: Various types of CooperativesCh 9: Problems of Cooperatives & RemediesCh 10: Problems of Democratic Control & Corrective MeasuresCh 11: Positive Points of Co-operatives

Conclusion

Section IICo-operative MarketingIndia's White Revolution In Milk Production

Dr. Verghese KurienAmul SagaArticle I

Section IIIUniversity Nov 2001Prelims 01Suggested Q's
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A Question asked by the TYBMS students is that what is the need to have this subject"Management of Co-operatives" in Vth Sem for BMS?

Management of Co-operatives is about management of co-operative forms of

organizations such as co-operative banks, co-operative credit societies, co-operativesugar industries, co-operative housing societies etc.

The objective behind this subject is to highlight various form of economic systems suchas capitalism, socialism, communism and compare them with co-operation.

Cooperation is an ideology for not only economic but for social and political one.Cooperatives in Maharashtra have been providing leadership to the state in the way of leaders such as late Shri Vasantrao Dada Patil, Mr Sharad Pawar, Mr. VilasraoDeshmukh etc.

India being a developing economy is ridden with problems such as poverty, low per capita income, unemployment, illiteracy, superstitions, casteism, religiousfundamentalism etc. Cooperation as an ideology has the power to remove these hurdlesand create a just society on the principle of social justice.

Service motive is the Primary motive of cooperatives. Cooperation is not an economicideology but it is the way of living.

The syllabus prescribed for the subject includes,

The historical perspective in the Indian context from Ancient times to the era of

Globalization in the 1990s. The world historical context is aimed at two countries,England with its Rochdale pioneers and Germany with its Reiffeisen principles. Thevarious acts such as 1904, 1912, 1960 are to be covered with recommendations of 1954committee.

The organizational structure is about the formation of a co-operative, Role of cooperatives such as

1. Co-operative credit societies and Banks2. Sugar cooperatives, Milk / Dairy cooperatives3. Housing cooperatives

4. Consumer cooperativesThese topics are to be covered in detail on their formation to their economic activitieswith their role in the development of social, economic and political life in India.

Cooperatives have distinct identify in comparison to joint stock companies or partnership / sole proprietorship. These factors are to be highlighted in context of ownership, business, management, liability, division of surplus etc.


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The role of cooperatives in the Indian economy, Governments role especially inaccordance with 1960 Maharashtra Cooperative State Act, the co-operation departmentand the role of Registrar is quite important.

Problems and challenges before cooperatives is a very important topic. Problems such as

corruption, Dual Control, Politicization, mismanagement, lack of funds,unprofessionalism etc are to be highlighted well as they are important from the point of view of the case study.

Understanding the role and functions of various boards such as NDDB, NCCF, NABARD, NAFED, NCDC, ICA, KVIC, would be helpful.


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Syllabus

Part I1. Historical Perspective of Cooperative Movement

2. Different Types of Cooperativea. Credit b. Consumer

c. Agro Processingd. Food Processinge. Industrial &f. Housing

3. Commonality of approach in respect of Cooperative & corporate sectors

4. Specific Problems related to CooperativesPart II

5. Problems of Democratic Management and itsrelationship management clear cut delineating of role of the law
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Chapter 1. Introduction to Co-operatives

Contents1. Concept2. Nature and Substance3. Definitions4. Special Features Of Co-operative Movement In India5. Characteristics6. Beneficaries Of Co-operation7. Formation8. Relevance Of Co-operation Today.. & Tomorrow !!9. Conclusion

Concept"A co-operative is a user owned and user-controlled businessthat distributes benefits on the basis of use

The concept of co-operation and mutual help is not new to Indians, since ancient timesJoint family system has been a practical ideology for Indians. Principles of co-operationare the find of Joint family system.

Co-operation is a movement of people. It is essentially an activity of the people for mutual help and collective progress.

Co-operation is an activity, where groups of people having common interests cometogether and work for mutual benefit. The groups can organize themselves to cater todiverse interests, from housing societies, to industrial production to co-operative credit tomassive co-operative banks.

It is fundamental right of a citizen to form an association. At the same time voluntarymembership is essence of Co-operation, Co-operative Society is not for earning profits.Beneficiaries are the members, who work together and share together.

Thus co-operation is a form of organization wherein persons voluntarily associate

together on the basis of equality for the promotion of their social and economic growth.

Co-operation: Nature and Substance

The word co-operation is quite familiar to a common man. For him co-operation issimple working together in any sphere of human activity. In this sense, the roots of co-operation can be traced as far back as the beginning of human civilization. Themodern biologist have claimed that co-operation are the group instinct in man which
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enabled him to live together, work together, and help one another in times of difficulty,has been biologically one of the most important and vital instincts.

It is true that some experts have highlighted man's progress in terms of aggression.However, we have also evidence available from the writings of great authorities like

Propotkin who have stressed sociability to be as important a law of nature as mutualstruggle. In his Mutual Aid, he asserts that, the human society has been sustained on the basis of mutual aid. H. G. Wells observed co-operative action in nature while Nietzschefelt that there was antagonism at the heart of the world. Broadly, on the basis of nature of things and course of development, one can certainly conclude that despite competitivestruggle for existence among men, co-operation has contributed significantly as a force inthe voluntary development of man. E. R. Bowell has rightly stated, "Co-operation is auniversal instrument of creation .

Both co-operation and competition have a role to play in the development of humansociety and civilisation. However, it would be still correct to conclude that co-operative

forces have contributed to development much more substantially as a result of group lifeand group activity. Mill, in his book Principles of Political Economy (1876), hasobserved Co-operation transforms human life from a conflict of class struggle foropposite interests to a fair rivalry in the pursuit of common good of all.

Charles Gide considers co-operation as An Economic system to supersede Capitalismby Mutual-Aid.

Thus, attempts to explain the nature of co-operation can be noticed in the writings of eminent philosophers, economist, sociologist, etc. from the old times up to this date.

DefinitionThe International Labor Organization (ILO) points out that A Co-operativeSociety is an association of persons, usually of limited means whohave voluntarily joined together, to achieve a common end, throughthe formation of a democratically controlled business organization,making equitable contribution to the capital required, and acceptinga fair share of risks and the benefits of the undertakings.

According to International Co-operative Alliance A Co-operative is anautonomous association of persons united to meet their common,economic, social, cultural needs and aspirations through a jointlyowned democratically controlled enterprise.

According to Lambert A Co-operative Society is an enterprise formedand directed by an association of users, applying within itself therules of democracy and directly intended to serve both its ownmembers and community as a whole.

The Mac lagan Committee in India (1950) has defined co-operation as Thetheory, which maintains that an isolated and powerless man can, by


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Special Features of Co-operative Movement in India

1. It is a voluntary organization. It is an association of persons (one person onevote)

2. It is democratic, every individual has a say in the co-operative society.

3. It is an undertaking

4. Less stress on Profits because the main objective is to meet common economicends through mutual help.

5. It is not based on Exploitation

6. There is no place for middlemen

7. Common objective of people

8. Concept of equality

9. Wider interest of Community

10. No outside interference

11. Each for every one (self help through mutual help)

Characteristics

1. An association of persons: Like a joint stock company a co-operative society is anassociation of many people who associate together, contribute capital in for of shares,

but the basis trust is not on capital but on man.

2. A business enterprise: A co-operative society is not a charitable organization, butaims at business with a profit and risk.

3. A voluntary Enterprise: The admission and retirement of member in the society iscompletely voluntary.

4. Democratic Enterprise: With every member having a right to vote, irrespective of the number of shares he holds, lays the foundation of a democratic management.

5. The motto is to serve rather than to earn: Inspite of the fact that an element of profit is attached; the main aim is service, which is the prime objective of the co-operatives.


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Conclusion

The Co-Operative Approach Implies:

Treating people as origins of action, not as objects to be manipulated or serviced

Encouraging people to work together and help one another solve mutual problems

Designing useful structures, processes, products and services so as to meet people'sneeds rather than for profit-making purposes alone.

Messages

Co-operation is a movement of people.

It is essentially an activity of the people for mutual help and collective progress.

Co-operation is an activity, where a group of people having common interests come,together and work for mutual benefit.

The groups can organize themselves to cater to diverse interests, from housingsocieties, to industrial production to co-operative credit to massive co-operative

banks.

Co-operation helps you to organize your own group. You can select the people withwhom you wish to interact (this is, however, difficult in case of housing societies,where societies may be formed after everybody has acquired their houses).


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Chapter 2: Historical Perspective in Indian Context

Contents1. Development Of Indian Co-operative2. Recommendations of Co-operative Movement3. Co-operation In Maharashtra

1. Development of Indian Co-operatives

The Co-operative Movement, which has an ultimate goal of strengthening the position of economically weaker sections, can make a real contribution towards the progress of national community. Over 96 yrs co-operative activity has been undertaken and since, itgot a legal acceptance after the co-operative credit society act was passes in 1904.

The main objective was to combat indebtness and provide credit to the agriculturalist.With reference to the agro based of Indian economy the co-operative sector has played asubstantial role in the process of lending a helping hand for economic upliftment.

With the passing of time, the co-operative act was amended, with a net result that co-operation, expanded its role, from a mere agriculture credit provider to helping, in other inputs, like seeds, fertilizers, pesticides, storage, marketing and processing. It alsoexpanded into wholesaling and retailing trade, consumer distribution, rural and small-scale industries, urban credit, training of co-operative personnel etc.

The Co-operative Movement has left no sector of the economy untouched. But inspite of its existence, for almost a century, it has definitely not shown an outstanding growth. Tostudy the growth and progress of co-operative movement we have to look back in thehistory.

The first legislation in the field of Co-operation in India was on the Co-operative CreditSociety for releasing the farmers from the clutches of moneylenders. It was Co-operativeCredit Societies Act 1904, thereafter came the Co-operative Societies Act 1912. In order to suit the circumstances existing in different provinces, need was felt to have separatelegislation for the particular province .The Bombay province then enacted the BombayCo-operative Societies Act 1925. It is then replaced by Maharashtra Co-operativeSocieties Act 1960 and Rules 1961.

The entire Co-operative Movement can be divided in 3 phases:

I Period prior to the enactment of the 1 st co-operative society act 1904

II Period between 1904 1951 before the beginning of planning in India
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III Growth of co-operatives during the planned period (5 yr. plans)

Present Situation

1. Phase I : Co-operative Movement prior to 1904

The credit of initiating the co-operative movement as seen earlier goes to the RochdalePioneers from England. The policies of organizational setup adopted by them, havesurvived the test of time and have become the principles of co-operative movement.

Co-operation is not new to India, but the versions were different. In ancient India, it was

in form of 4 principles like the Kula, Gram, Sreni and Jati.

(hierarchy based on units)

Kula Family Jati Caste Gram Village Sreni Classification at different levels

The Kula was the 1 st form of a co-operative activity; it was both a political and socio-economic activity. As the society stabilized and expanded the aspects of economic andsocial co-operation narrowed to the limits of joint family. Where the land is owned andcultivated commonly and the adult members share the duties of the family and live under one roof. Co-operation at the Gram (village) level emerged after the Kulas werestabilized. The gram sabha was a co-operative engine which undertook, the works for economic and social progress of the village commons such as land, pastures, roads,highways, paths, common gardens, etc.

The artisans and cultivators often combine for the purpose of co-operative working andthe members jointly undertook, the use of selling of tools and implements of production.The Sreni has been a development of the post Vedic era.

The co-operative and economic organization in this time was more of artisans, industrialand handicrafts workers, merchants, traders, bankers, agriculturists, house builders, etc.The Sreni worked basically as bankers and merchants guilds but also extended their roleas charitable institutions.

The co-operation at Jati level was mainly for achieving social goals such as education,charity, and relief work.

2. Phase II : Co-operative Movement (1904 1951)
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Co-operation became legalized and was introduced as official movement in 1904. Thiswas considered as a turning point in the economic and social history of India. The period

between 1904 1951 can be studied better if it is divided into the following stages.

I. Between 1904 1912

1904 act provided an impetus for organization of primary credit societies and stress waslaid on promoting agricultural credit. There were 8187 societies by 1912, which had amembership of 4lakhs and working capital of 3357.7lakhs. One of the major features wasthat the government was the prime mover of this movement but the credit was marked byinsufficiency and delay, and the recoveries were far from satisfactory.

The loans system was also defective. Mr. C.S. Campbell, the registrar of co-operativesociety Bombay had correctly pointed out that, the lazy secretary of a dull sort, willcollect and pay out again to the same person by the book of transaction.

The worse of the system is lump on another day, meanwhile a guest comes, a cow dies,etc are some of the excuses.

II. Between 1912 1919

1912 saw the amendments, where another co-operative societies act was enacted and thedefects of the 1904 act were removed. Some important changes of the new act were:

a. It enabled the registration of non-credit societies so as to ensure all round progress of the movement and the economy. The original act confined the registration, only to

primary, credit society.

b. Registration of Central societies was now possible.

c. A provision was made for the distribution of profits in order to protect the interests of the investors.

This period saw a rapid growth in the number of co-operative credit societies but also of

non-agricultural credit societies. Though the development was uneven in different

provinces. By 1919 the number of seats had gone upto 28,000

III. 1919 1929

With the introduction of reforms act of 1919, it gave an option, of modifying the existingact 1912, at the provincial level. Certain provinces did enact their own acts, which gaverise to a rapid growth of the movement in this time. This is referred as the period of unplanned expansion.


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IV. 1929 1939

The great economic depression gave a serious set back to the co-operative sector. Thefalling prices of the agricultural products threatened the existence of some societies anddisturbed the economic stability of others.

Other major causes of the failure where, lack of requisite education and adequatesupervision and guidance. During this period of stress, rectification and rehabilitation wasthe main aim of the co-operative departments. Rather than expansion one of thesignificant development was the establishment of Reserve Bank of India in 1935. Itsagricultural credit department was entrusted the responsibility of studying the problemsof the agricultural credit.

V. 1939 1947

The Second World War and the rising prices made it possible to recover the over dues,

with the scarcity of resources due to war, lot of control were imposed on the distributionof essential commodities.This helped the consumer co-operatives for a better organization. The co-operative movement, which was till then, confined more or less as acredit movement started diversifying its activities. The important landmark was thesetting up of co-operative planning committee under Mr. R.G. Sargiya, who suggestedthat the credit supply covered only one aspect in the life of a cultivator, but should extendits cover to his entire life. This period is treated as the period of recovery.

3. Phase III : Co-operatives in Independent India (5 Year Plans)

The most important event in the post independence era was the appointment of rural

credit survey committee, by the RBI 1951. The report submitted by the committee,revealed that, inspite of a co-operative effort, over the last 50 yrs. Rural credit is stillconsiderably controlled by the private agencies, whereas the institutional agencies playeda significant role. The co-operatives provided 3.5% of total borrowings by theagriculturist and that too was taken up by the wealthy members of the credit society.

The committee recommended for an integrated scheme of rural credit, which will havestate partnership, creation of special funds with RBI, today called national agriculturalcredit stabilization, national agricultural relief and guarantee funds.

It is also recommended, establishment of large sized credit society, linking credit with

marketing, training and co-operative personnel and effective supervision and audit.

The 1 st plan recognized (1951 56) co-operative as an instruments of planned economicaction in democracy. It also stated that since the purpose of the plan is to change theeconomy from individualistic to socially regulated economy co-operation could be aneffective tool, to implement this ideal.


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The 2nd plan (1956 61) was based on the recommendations of the All India RuralCredit Survey committee. The RBI acts was amended thereby, the rural credit facilitiescould be improved. There were provisions made for the creation of special funds asrecommended by the committee. The national co-operative development andwarehousing board and state warehousing co-operatives were setup. This plan also gave

attention to the marketing and processing co-operatives. This period saw a rise in thenumber of societies from 2.4lakhs between (1953 56) to 3.32lakhs in (1960 61),18,000 primary marketing societies, 390 processing units, 30 co-op sugar factories and anintensive program for co-operative training was implemented.

The 3 rd plan 1961 66 saw the use of co-operative movement in implementing, theschemes of economic development. By the end of the plan, primary agricultural creditsocieties covered 89% of villages and total number of societies was 1.92lakhs. Theemphasis was more on making the societies more viable than expansion. Inspite of theefforts of revitalizing 31% societies still work, at loss. This period also saw as emergencyand development of agro based processing industries e.g. sugar factories, butter

processing, rice mills, oil crushing, fruit and vegetable co-operatives etc. where as the co-operative stores raised from 7058 in 1960 61 to 13077 in 1965 66. There was also anattention paid to the formation of consumer and industrial co-operatives.

The 4 th plan 1966 71 had a keynote of growth and stability. The agricultural andconsumer co-operatives occupy a central position in the co-operative movement. Acommittee was setup by the governor of RBI to review the supply of rural credit andintensive agricultural program, which gave a series of recommendation like

Reorganizing of rural credit in RBI

Setting up of SFDA (Small farmers development agencies)

Rural electrification

The 5 th plan 1971 had a keynote of growth and social justice. More attention wastherefore given to consolidate and strengthen the co-operatives so as to make them,viable, democratic institutions. An attempt to establish stable and fair price shops,through the consumer co-operative was made.

The same trend of strengthening continued in the 6 th and 7 th plan in which the dairy andfishery co-operatives were initiated along with development of professional management

in co-operative institutions and development of managerial levels were also touchedupon.

4. Present Situation

Today there are 14 national level co-operative federations, there is also a co-operativeunion and a national council for co-operative training and 24 states level co-operativeunions. Pune has a national level training institute for co-operative management i.e.


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1. There should be mergers of primary co-operatives to make them financially sound2. The purpose of the loan should be taken into account while sanctioning the loan3. No money lender/Commission Agent should be provided credit. Care should be

given to give credit only to the weaker sections of the society4. Primary co-operative society should be provided with more finances by the National

Credit Institutions5. Members who dont pay arrears in time should be dismissed from the society onlegal grounds

6. There should be a link between Agricultural Credit Societies and MarketingSocieties

( III ) Co-operative Credit Committee (1960)

In May 1960 the committee under the chairmanship of Dr. Vaikunthbhai Mehta gave itsreport to suggest recommendations on strengthening the co-operative credit structure.

Recommendations

1. Service co-operative should be organized on the basis of the village community asthe primary unit. Number of villages within a radius of 3-4 miles should be groupedtogether

2. The society should have sound management to enhance the deposition confidence3. RBI should liberalize its Credit limits for the central co-operative banks4. The credit limit of a member should be fixed keeping in mind his repaying capacity5. Care should be taken to see that the loan given is applied to agricultural productive

purpose only

6. Co-operation In Maharashtra

Maharashtra is one of the major States of India. It is also the most urbanized andindustrialized State. Co-operative movement is widespread and has a long history inMaharashtra and even today it plays an important role in the economy of Maharashtra.The genesis of the co-operative movement in Maharashtra can be divided into six stages.

1. The pre-co-operative stage (1870-1903) with the Deccan Agriculturists Relief Act,The land Improvement Loan Act 1883 and the Agricultural Loans Act, the NickolsonReport.

2. The Initial Stage (1904-1911) from the Agricultural Credit Co-operative Societies Act1904 to the creation of the Bombay Central Co-operative bank.

3. The Evolution Stage (1912 to 1924) After the Co-operative societies Act of 1912, themovement passed through a new phase of re-organization, formation of co-operativefinancing agencies, formulation of co-operative educational schemes and organization of non-credit societies.


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4. The Stagnation Stage (1925-1947) The enactment in 1925 of the Bombay Co-operative Societies Act widened the scope of the movement in the Bombay province bothhorizontally as well as vertically. The Bombay Co-operative Insurance Society wasestablished in the year 1930. In the same year the Co-operative Land Mortgage Bank wasalso formed for long term financing for redemption of debts, land improvement and

purchase of land.

5. The Growth Stage (1948-1961) There was an all round progress during these twodecades after India attained Independence from the British Rule. The movementdiversified especially in the rural area where sugarcane was grown. The agriculturists

pursued this concept of self-help and made the best use of the credit facilities given tothem for augmenting the production. Examples like the Pravaranagar Sugar Co-operativeinspired many to organize co-operatives in the sugar sector with long-term goals in mind.Significant attitudinal changes had occurred at the grass root level.

This was also the period of emergence of rural leadership through co-operative

movement.The Apex Bank also started to strengthen its organization and the working of thesecondary level central financing agencies. This was also the period where institutionalfoundation was strengthened.

6. The Diversification Stage (1962 onwards) Expansion, accompanied by extensivevertical and horizontal diversification embraced all fields of socio-economic activity withgains varying from 2 to 6 times.

The State government initiated policies and programs to strengthen the co-operative

effort. Some of the noteworthy features of the movement during this period were theincreased mobilization of resources, strengthening the co-operative effort in the sphere of agricultural production and the building of rural leadership.


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Chapter 3: Co-operative Movement inthe World Context

Contents1) Introduction2) Rochdale3) Co-operative Movement in Germany

Reiffeisen Schulze Societies

4) Co-operative Movement in Denmark5) International Co-operative Alliance

1. Introduction

Man is a social animal. For him co-operation is a necessity rather than a choice. Worldover the co-operative movement started in order to bring people together for a commoncause.

Primitive concept of Co-operation

Right from the don of civilization, the concept of co-operation has existed. In a primitivesociety, a mans life was simple with only a few wants. As the civilization grew, insteadof an individual, the villages emerged with a large number of farmers and a fewcarpenters, cobblers, goldsmiths, etc. Co-operation was in those days a means to lead alife better. There was a mutual aid and collaboration among different individuals and

society. There is a mention of the co-operative movement in the Rig Veda and also co-operative bodies managed the temples in South India.

Modern concept of Co-operation

The modern concept of co-operation is altogether different from the primitive one. Itdenotes a special method of doing business. It is an off-shoot of the industrial revolutionwhich is a name given to the series of changes that came about in the method of

production (18 th Century) in Europe, especially in Great Britain.

The end of 18 th century, gave rise to capitalism. This resulted in concentrating the tools of

production in few hands, which gave them a complete control over the labor class, whichwas although very large in number, but was poor and weak.

Dishonesty, capitalization, rising rates and black marketing, was the rule of the day tomaximize profits. The workers were exploited and were becoming poorer day by day.The Capitalist Class in its greed to make more profits started exploiting the working classlike payment of low wages, increase in working of working hours, insecurity inemployment etc. This led to frustration and discontent among the working class. They


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therefore looked about for an alternative to save themselves from the grip of inhumanemployers. Few learned people came forward to encourage the labor class and one of them was Robert Oven . Social reformists like Robert Owen and Dr. William King, gavea thought to the formulation of a new philosophy. As a result the co-operative movement

began on the world stage.

Although Robert Oven was an industrialist he also lived a laborious life with the risingexploitation and plight of workers there was a change in Robert Ovens thinking aboutthe labor class, and in an attempt to improve the condition he reduced working hours andrising wages in his factory. He initiated labor colonies and helped them to producevarious things where by they could raise their income.

In an attempt to find out a solution against capitalism, Robert Oven and his friend CharlesForea wanted to find an alternative to capitalism. They were concentrating on an ideawhere instead of co-operation and exploitation a policy of mutual co-operation andmutual help could be used.

The new organization and the idea was no definite program, even then unity, spontaneousco-operatives, control by general public and social cause became the main principles of this alternative arrangement against capitalism. A series of shops started by Robert Oven,could not really succeed.

To study the co-operative movement in the world perspective, it would be important tomake a study in the countries of England and Germany, because these are the twocountries where the co-operative movement started.

2. Rochdale Founders

England the birthplace of many new things was also responsible for presenting the co-operative movement to the world as an alternative philosophy to trade unionism, for fighting capitalistic exploitation.

In 1844, a group of 28 weavers met in the Chartist Hall and decided to establish a co-operative store. The members of this store would purchase the requirements collectivelyto economize on their expenditure, for they knew that it would be difficult for them to geta raise in their wages. They were greatly influenced by the writings of Robert Owen, Dr.William King and William Thompson.

Thus Robert Ovens dream of an alternative to capitalism was brought into reality by thevillages of Rochdale, 28 weavers came together and established Rochdale equitable

pioneers society 1844 contributing 1 pound each. Thus gathering a capital of 28 poundsand registered it under the Friendly Society Act. It was a consumer co-operative. Theyhired a place and started a shop and sold items of daily necessities such as candles, tea,

butter, soap etc in bulk and sold them to consumer at reasonable prices. It opened with alegal amount under unfavorable circumstances but slowly made good progress in the


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years to come. The membership raised to 74 in 1 year and by 1888 it had 1123 memberswith a capital of 3.4lakhs pound and declared 2.5lakh ponds as a profit.

Objective of Rochdale Model

1. To take up production and distribution of the commodities required by the members.

2. To make available houses to its members to improve their living conditions and to better their status.

3. To meet the clothing requirements of its members.

4. To arrange for education to its members.

5. To manufacture articles, so as to generate employment to its members.

The rules and regulation followed on the transaction of the Rochdale stored where:

Open Membership

Business on demonstration basis

Limited Interest on capital

Division of profits as per transactions by members

Cash payment

Supply of best quality goods

Educating Members

Religious Neutrality.

The Rochdale Pioneers of England framed the principles based on their experience on aconsumer co-operative store; popularly know as the Rochdale Principles. These

principles have been adopted in almost all countries, which have same or other type of co-operatives.

Principles

Co-operative Principles govern the life activity of a co-operativeenterprise. The Principles are as follows:

1. There should be democratic control


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2. All should be welcomed in it3. Limited interest should be paid on capital4. All trading should be made in cash5. No politics should be allowed6. Co-operation should be kept free from religion

7. There should be no faults in co-operation education

3. Co-operative Movement in Germany

The co-operative movement in the world started in Germany. Intolerable adverseconditions for the poor in the country led to the growth of a new economicorganization known as the Co-operative Credit Society. The emergence of the co-operative credit movement in this country was the result of an enormous amount of work done by two great men Reiffeisen & Schulze.

In the middle of the 19 th century in Germany the life of an average German wasmiserable both in the village and town. In rural areas the Jews controlled andregulated the economic activities of many people they purchased the excess surplus of the farmers by paying them very low prices and sold their purchases at high prices.The economic condition of the villagers went on deteriorating. They had to sourcemoney from the Jews at exorbitant rates of interest.

A. ReiffeisenB. Schulze Societies

Reiffeisen Principles

Herr, F.W. Reiffeisen (1818 1888) was an official, holding the position of a mayor inGermany. He saw the sufferings of the poor and set up a poor peoples committee tomake bread for the poor. With a view to promote relief to Agricultural workers in 1862Reiffeisen started agricultural society in the country based on the principle of EACHFOR ALL ALL FOR EACH.

The members of this society known as HEDDESDROF CREDIT UNION, were theneedy persons who required were given its services. The Grand Union Co-operativeSocieties was set up in 1877, which is generally know as Reiffeisen Union. This was afederation of Reiffeisen Societies.

Principles

1. Organization should follow principle of self-help2. Area of operation should be limited3. Surplus should be used for community services4. All should be accepted as members5. Assistance should be given to members6. Liability should be limited7. Board members should be on a voluntary services
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Schulze Delitzsch Banks

This model is named Schulze Delitzsch model because the first co-operative societyfounded by Schulze was in the city of Delitzsch. Heer Fran. W. Schulze (1809 1883) was a judge by profession. As a chairman of the Famine Commission, hemoved by their bitter struggle for survival. He attempted to relieve suffering. In 1849in association with his friend, Dr Bernhard, he started a friendly society for relief sickness. In 1850, the first credit association was founded. Schulze published a book in 1856, which contained principles formulated by him. His efforts paid him richdividends in the form of an increase in number of Schulze Banks.

The Schulze Banks were started for the fulfillment of the main objectives:

1. To cater to the credit requirements of traders, artisans and middle class peopleresiding in urban areas.

2. To run the bank as a business organization.

When Schulze died in 1883, there were 1926 co-operative credit banks of this type inGermany. Till his death, he tried hard to serve the under-privileged sections of thesocieties in Germany.

4. Co-operative Movement in Denmark

Denmark is an agriculture country and the co-operative movement was startedspontaneously by the Danish people. These societies are self-reliant and Danishgovernment did not give any help to this movement. It is free from any governmentcontrol and therefore it is called co-operative Denmark.

The main feature of the co-operative movement in Denmark was that there are separatesocieties for different type of activities. There are wholesale milk-eggs, exporting, breadmanufacturing, building and productive types of co-operative society. All the societieshave their own organization, which decides on their product price, dealing with the

public, companies, appointment of auditors etc.

Features of Milk Co-operative in Denmark

1. Formally Denmark was an agricultural country but shifted later to dairy business atthe beginning of 19 th and has been a leading producer of dairy products, since then.

2. Dairy business is of prime importance in the export of Denmark. More than 70% of its products are exported. The farmers and people engaged in dairy business haveformed their local co-operatives. They not only collect milk but also process them andhave an organization at the district and state level.

3. The working of society is democratically based and the representation of the societyis given according to the milk supplied by them.


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4. The members have an agreement for supplying milk for a period of 15-20 yrs andcash payments are made to the proportion of milk supplied.

5. The principles of government are followed by the dairy society of Denmark.

5. International Co-operative AllianceDefinition: A Co-operative is an autonomous association of personsunited to meet their common, economic, social, cultural needs and aspirations through a jointly owned democratically controlled enterprise.

The International co-operative Alliance had appointed commission under thechairmanship of Shri D.G.Karve, which enunciated following principles of Co-operation.

1) Open and Voluntary membership.

2) Democratic administration.

3) Self help and mutual help.

4) Principles of service.

5) Distribution of surplus.

6) Political and religious neutrality.

7) Principle of education.

8) Co-operation amongst co-operatives.

These Principles of co-operation were amended in the Manchester Congress of theInternational Co-operative Alliance held in September 1995 as follows.

In the words of International Co-operative Alliance Principles are those practices, which are essential for the achievements of the purpose of co-op movement. Thus principles give the way for organizing and conducting the co-operative activity, which is the inherent and indispensable corollary of the ideal or objective of the co-operativemovement

Principles

1. Voluntary and opened membership:


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The element of compulsion is absent, as stated by the ICA, the membership of a co-

operative society shall be voluntary and available without artificial restrictions or any

social, political, radical or religious discrimination. This voluntary membership also

means that a person is free to joining as a member and also has a free will, to withdraw

whenever he wants.

Open membership implies that there shall be no restrictions on the admission of

members, open to all persons who are able to use their services and willing to accept the

responsibilities of members, without gender, social, racial, political or religious

discrimination. It seeks a homogenous interest of the members who come together for a

mutual benefit.

This principle is undergoing changes with time. A little amount of compulsion and

restriction is imposed for the smooth working and speed of the movement. The gates of

membership cannot be kept open for persons with vested interests e.g. Moneylender, as a

member of credit society.

A person can be compelled to join or withdraw, from such a co-operative in largerinterest.

2. Democratic member control:Such a control is a cardinal principle of co-operation, which will definitely have a healthy

influence in the political and economic structure in a country like India. It has been

pointed out rightly that if democracy is to be attained it will come not by voting, not by

taxing nor by a revolution but by putting into operation, the co-operative democracy,

beginning with a smaller scale and inter-expanding it on a larger scale.


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The main purpose of a co-operative is to promote and protect the interests of the

members and nobody can protect the interests, of a person than he himself and therefore

it becomes necessary that the administration of co-operatives must be carried out

democratically by the members themselves.

According to the ICA co-operative society is a democratic organization and their affairs

shall be administered by the persons appointed/elected in a manner or process agreed

upon by the members and are accountable to them.

The members will enjoy equal rights of voting and participation in the decision making

process. The principle of democratic control implies the following:

A general body meeting of the members of the society is the supreme authority inconducting affairs of society.

1 member 1 votes irrespective of the individual share holding.

The rule of majority and control of board of management in accordance with, thedemocratically expressed will, of the members.

The board of management elected through a process agreed by the members and the board is accountable to the members.

3. Member Economic Participation:Members contribute equally and also democratically to control capital of their co-operatives. The capital is the common property of co-operatives. Members usually receive limited compensation, if any on the capital subscribed as a condition for membership.Members allot surplus for the following purposes:

Development of infrastructure Setting up of reserves Allied activities relating to the co-operatives

4. Autonomy and Independence:Co-operatives are autonomous self-help organization, controlled by their members. If they enter into agreements with other organization, including government or raising capital from external sources they do so on terms that ensure democratic control by themembers to maintain co-operative autonomy.

5. Education, Training and Information:The co-op education becomes a prime factor to make a co-operative successful.

According to the ICA all the co-operative societies are supposed to make provision for


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educating their members, officers and employees and lastly the general public. The

principle technique of co-operative is both economic and democratic. There are 3 aspects

of co-operatives.

Education for its members

Since most members are poor and illiterate they are more or less unaware about the principles and practices of co-operatives. Therefore, for an active participation it isnecessary to evolve a system, which will educate these members and keep in formedabout the decisions and activities of the society.

Education for office bearers

The office bearers are the elected members of the co-operatives and as they are interestedwith the responsibility to conduct the business on co-operative lines, it is necessary for them to acquire the technical skill and thorough knowledge of co-operatives. Right fromthe elementary level to the advanced technique.

Education for prospective co-operative members

To bring in more participation from the general public it is necessary that the peopleshould have faith and for this it is the responsibility of the office bearers, to keep thegeneral public involved about the principles, aims, achievements and future plans of theco-operative movement.

Co-operatives also provide training for their members, elected representatives, managersand employees so that they contribute effectively to the development process. They alsoinform the general public on the nature and benefits of the Co-operatives.

6. Co-operation among Co-operatives:Its a new concept that concentrates on developing and strengthening of different co-operative sectors by making them inter dependent. Co-operatives serve their members most effectively to strengthen their co-operative movement by working together through Local, Regional, National and International Structures.

7. Concern for community:

Co-operatives work for their sustainable development of communities through various programs and policies approved by their members.

8. Values:

Co-operatives are based on the values of Self-help, Self-responsibility, Democracy,Equality and Solidarity. In the tradition of their founders the members believe in theethical values of honesty, openness, social responsibility and caring for others.


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9. Limited interest on capital (No profit motive):

It is a unique principle where capital is treated as subsidiary where as the prime and

ultimate objective is service to members, the economic outcome arising out of the

operations of a society. The member will be benefited in a manner where it would avoid

one member gaining at the expense of others. Capital is a factor of production and is also

entitled a fair rate of return. In co-operatives capital cannot dominate, rather it serves in

return for a limited interests as service being the supreme.

The motive of earning a profit is absent in co-operatives otherwise it will mark the basic

motive of co-operation i.e. service.

10. Equitable distribution of surplus:

A profit earned by a co-operative is to be distributed according to the decision of members. A limited interests or dividend, can be paid in proportion to their transactionswith the society after making provisions of business and social welfare activities.

In a joint stock company the surplus is distributed on the number of shares held by anindividual irrespective of their transactions with the company, but in a co-operative thesurplus is distributed on the basis of the number of dealings with the society.

It is not obligatory to pay dividend out of surplus as the members may divert the use of these funds for overall development of the society and its members. It is not obligatory to

pay dividends out of the members entitled for logically it also means they are obliged to bear loses if any, Usually any such loses are adjusted from the reserve funds.

11. Self help and Mutual help:

As the co-operative enterprise is meant for the economic weak, they come together; forma co-operative, pool their resources, work together for mutual benefit and the benefit isshared by all the participants.

Individually a person may not be capable to withstand the market forces andexploitation, but together they can strengthen their position and pursue their economicinterests.


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Chapter 4: Organizational Structure of a Co-operative

Contents1. Organizational Structure of Co-operative Institutes2. Meetings3. Board of Directors4. Chairman5. Distinguishing factors of Co-operatives

1. Organizational Structure of Co-operative Institutes

With 70% of the population engaged in agriculture of which majority of them being poor,the co-operative movement in India was more or less confined to agricultural credit thusforming the oldest and the mist important forms of co-operative movement.

The credit co-operatives can be classified as either

1. Agricultural credit co-operative2. Non-agricultural credit co-operative

Agricultural Credit Co-operative

The first co-operative legislation in respect to credit was the co-operative credit societyact 1904. The society was then known as Agricultural Co-operative Credit Society , whichengage themselves mainly in the disbursement of credit to their members, following theReiffeisen pattern of organization.

Agricultural Credit Co-Operative Structure

1. Short term and medium term: It is basically a 3-tire system with primary creditsociety at village level, central co-operative banks at district level and also the stateco-operative banks at the state level. (They are also the APEX banks)2. The long-term agricultural co-operative structure: is of 2-tires. The primary co-operative land


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development bank at sub-divisional level and the state co-operative land development bank at state level.

3. Short term and medium term co-operative credit: Its a 2-tire system with primary co-operative credit society at the village level affiliated to the district central co-

operative bank which is also APEX co-operative bank.

Features:

A. A village is to be the limit for societies membership and area of operation.B. Members must know each other personally and admit no new member whom they

dont trust.C. The local members on voluntary basis carry out administration of the society.D. Liability of members is unlimited.E. All profits to be carried in the visible reserve fund.F. Loans to be given to members for definite objectives.

Non Agricultural Credit Co-operative Society

I. Short term credit: Duration is 12-15 months and is provided for meeting the seasonalagricultural purchase of manure implements seeds etc. The credit is provided at the

beginning of the season and is collected after the harvest is sold. This is known ascrop loan.

II. Medium term: Loans ascending from 15 months to 5 years for purchasing farmanimals, carts and other heavy implements. It is also given for digging wells, land or consolidation of land holdings.

III. Long Term: Loans granted for a period of more than 5 years to make permanentimprovements of land declaiming waste lands, tube wells, purchase of tractors etc.Such loans are to be repaid within 20 years maximum. The short and medium termloans are provided by the agricultural credit societies but co-operative landdevelopment banks provide the long-term loans.

Urban Co-operative Banks


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The urban co-operative banks are co-operative banks, which are situated in the urbanareas. They play an important role for the benefit of small industrialist, trader, middleclass population etc.

The Role

1. They organize and bring together middle and working class population in urban andsemi-urban areas and inculcate in them the habit of thrift and self-help and acquaint

them with the elements of banking principles.2. Mobilization of savings and fulfilling the needs of finance for rural, industrial and

other development functions.

3. Providing credit on reasonable terms to protest them from exploitation by the handsof moneylenders and unscrupulous agency.

4. To make available essential banking facilities to remote areas and to provideexperienced and effective leadership to the co-operative movement.

Dual Statutory Control

The urban co-operative banks are subject to a dual statutory control of:

The Registrar of the co-operative society (state government)

The RBI

Co-operative Banks are governed by the respective state co-operative act and also the banking regulation act 1949. Matters such as registration of banks, approval of theamendments of the byelaws, amalgamation and division of banks, explosion of members, appointment of an administrator, audit, and liquidation etc., fall within thestatutory jurisdiction of the registrar under the provision of the co-operative law.

Matters like issue of banking license, banking transaction and business, supervision, policy matters fall within the statutory authority of the RBI under the provision of the

Banking regulation act 1949.

G.Meetings

1. General Body Meeting:

It is the general meeting of the shareholder after the registration of the co-operative. It isobligatory on the part of the society to hold its first general meeting within 3 months after


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the registration of the society. It is the duty of the chief promoter to convene such ameeting. If the chief promoter fails to do so it shall be called by any person authorized todo so by the registrar.

Agenda for the First Meeting:

A. Election of a president for the co-operative.B. Admission of new members.C. Receiving statement of accounts and reporting all transactions entered into by the

promoters upto 14days before the meeting.D. Constitution of a provisional committee under regular election is held.E. Any other matter as decided by the chair.

2. Annual General Meeting (AGM):

These meetings are held annually to enable the members who are the real owners to

exercise ultimate control over the affairs of the co-operative. In the case of the co-operative the interval between 2 Annual General Meetings shall not exceed 15monthsunless extended by the registrar.

Procedure:

1. The meeting shall be convened by the secretary under intimation to the registrar whomay depute his representative to attend.

2. The meeting shall be presided over by the president or a member who will be electedto preside in their absence.

3. The secretary shall read out the agenda for the meeting and the items of discussions.

4. Voting can be undertaken for any particular cause, which will be conducted by the president.

5. If all items in the agenda cannot be finished on the same day, the meeting may be postponed to a suitable day not exceeding 30 days or as decided by the members present.

3. Extra Ordinary General Meeting (EOGM):

Extra Ordinary General Meeting may be called at any time by the chairman or by amajority of the committee and has to be called within 1 month. It is called when:

a. A requisition in writing of 1/5 th of the members of the society or by that number of the members mentioned in the byelaws.

b. At the instance of the Registrar.


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c. At the instance of the committee of the Federal Society of which the society is amember.

F. Board Of Directors: (Democratic through election)

Functions1. Admission of new members and allotment of shares.

2. Approval for transfer of shares.

3. Preparation of guidelines for the conduct of the operation as per byelaws, rules andacts.

4. Approval of annual budget and its submission to general body.

5. Sanction of the expenditure for the management in the allotted budget.

6. Ensuring maintenance record and its submission to the registrar.

7. Raising resources for managing the day-to-day affairs.8. Sanctions of investment of funds.

9. Appointing staff and agencies.

10. Appointing sub committees or exclusive committee and delegating necessary powersto them.

11. Electing the chairmen amongst themselves.

Relations between Board Of Directors and the Executives

The Board Of Directors are elected representatives of the members who are the real

owners of the organization. The main function of Board Of Directors is policyformulation and deciding the overall objective and goals of the organization. Theimplementation or execution of the policies is carried out by the managerial hierarchylead by the general manager. The duties of the Board Of Directors are to see that the

policies formulated are implemented properly. But many times it happens so that theBoard Of Directors interference in day to day functioning of the executive due towhich conflict situation is created as the executive feels that they lack in independentdecision making capacity and have been treated as mere clerks.

The Chairman of the Board has to perform a crucial function of co-ordination becausehis main task is to provide necessary guidance and also to give the executiveautonomy in the implementation of the decisions by the board.

Steps to control/handle conflicts

1. The board while taking decisions on policy matters should involve the chief executive.

2. The executive and the board should hold combine meetings for mutual understandingand respect.

3. The board should consider practical difficulties of the executive.


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4. The objective of service to the members should be given prime focus.

5. The Chairman should achieve co-ordination between the professional and the non- professional group.

6. The executive should not keep the Board Of Directors in dark while implementing

decisions.Responsibility of the Board Of Directors/Managing Committee

1. It should be cost conscious.

2. All members should be given equal opportunity to discuss and voice their views.

3. Decision taken should be collective and no members must be allowed to jeopardizethe decisions.

4. Decisions taking should be with full consent and proper understanding of the problem.

5. The Board Of Directors should be responsible towards:

a. Responsibilities towards Employees

b. Responsibilities towards Consumer

c. Responsibilities towards Government

d. Responsibilities towards Shareholder

e. Responsibilities towards Environment

f. Responsibilities towards Society

G.Chairman

The chairman is responsible for the overall management and guidance to the co-operatives. He performs all such duties and exercises all such powers as may beconfined on him by the respective state co-operative act. His role is most crucial as he

performs the leader of the top management, which is the board of directors.

The powers of the Chairman:

1. To conduct and regulate the proceedings in the meeting.

2. To decide the priority of the speakers.

3. To regulate their speeches.

4. To order and conduct poll.5. To exclude certain matters from the minutes if they are irrelevant or detrimental to

the society.

Duties of the Chairman

1. To see that the meeting is duly and properly constituted in accordance with the rulesand regulations


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2. To see that the business is conducted in accordance with the agenda unless willingchanged by the members.

3. To maintain order and discipline in the meeting.

4. To act impartially.

5. To accept valid demand for election and make arrangements for it.6. To declare the meeting closed.

7. To ensure that correct minutes are entered by the secretary in the minute book and tosign them.

Duties of the Secretary

1. To fix the date and time of the meeting in consultation with the chairman or onrequisition from the director.

2. To prepare the agenda and notices and dispatch them to the directors.

3. Keep all documents and necessary statements available for the meeting.

4. Make necessary arrangements for the conduct of the meeting.

5. To take down the notes of the proceedings and finalize the minutes in the minutes book.

6. Carry out the orders and instructions of the board.

H.Distinguishing factors of Co-operatives

According to Mr. D. Braton (D. Barton, 1988, Chairman of American Institute of Co-operation.) co-operative is distinguished from other business by three concepts of

principles: -

First, the user-owner principle: Persons who own and finance the co-operatives arethose use it.

Second, the user-control principle: Control of the co-operative is by those who usethe co-operative.

Third, the user-benefits principle: Benefits are distributed to its users on the basis of their use. The user benefits principle is often stated as business-at-cost

1. Distinguish between Co-operative Organization and Joint Stock Company

1. Definition:

Co-operative Organization This is an association of persons who have come together on a voluntary basis to promote their economic interest.


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Joint Stock Company It is an artificial person, recognized by law with a distinctivename, common seal, common capital, consisting of transferable share, carrying a limitedliability and having a perceptual succession.

2.

Basic Objective:Co-operative Organization The primary objective of a co-operative society is to

provide basic or essential service to its members. Profit earning is a secondary motive.

Joint Stock Company Basic objective is to earn profit out of the business, since it is a purely commercial organization.

3. Minimum Members

Co-operative Organization A minimum of 10 adults are required to form a co-operative organization.

Joint Stock Company For a Pvt. Ltd. Company minimum 2 members are required andfor a Pub. Ltd. Company minimum 7 members are required.

4. Share List

Co-operative Organization It is always kept open for new members. A person can become a member of the society by purchasing a share. Co-operative shares are not sold beyond their face value and hence they are not subject to speculation.

Joint Stock Company The share list is closed as soon as issued capital is subscribed.Thus shares of a company are subject to speculation and normally the face value and

market value differ.

5. Voting Rights

Co-operative Organization They are based on the principle of One Man One Vote.

Joint Stock Company They are based on individual holdings. The principle is OneShare One Vote.

6. Transfer of Shares

Co-operative Organization Shares are non-transferable. A member of the society canwithdraw his capital by giving a notice.

Joint Stock Company A Share holder cannot withdraw his capital during the lifetimeof the company. Shares are freely transferable in the market.

7. Distribution of Surplus


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Co-operative Organization Co-operative provide a certain amount of Interest onCapital. Surplus is not distributed in proportion to the capital contribution. The return tothe members are called as Bonus

Joint Stock Company Distribution of surplus is in the form of dividend dependingupon the holding of the individual.

8. Privileges

Co-operative Organization The basic objective being service they enjoy lot of incentives from the Government and also have exemptions from Income Tax,Registration Fees, Stamp Duty etc.

Joint Stock Company Since the basic objective is profit they dont enjoy and privileges.

9. Area of OperationCo-operative Organization Generally co-operatives operate in a limited area such as aTown, Locality, Tribe etc.

Joint Stock Company The shareholders are scattered in the various parts of thecountry. Thus joint stock companies have a vast area of operation.

10. Members Interest

Co-operative Organization Members take personal Interest in the working of thesociety.

Joint Stock Company Members do not take personal interest in the day to day affairsof the company.

11. Capital Holding

Co-operative Organization An individuals holding is generally limited. Dividend on ashare cannot exceed 12% of the net profit of the current year.

Joint Stock Company An individuals capital holding is not limited. Dividends are paid on the basis of net profit of the current year.

12. Management

Co-operative Organization Election by democratic process. Management isresponsible to the members.

Joint Stock Company Management composed of elected Board of Directors.


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13. Financial Resources

Co-operative Organization They are limited because they dont have the capacity toraise and borrow funds.

Joint Stock Company They are unlimited, since the capacity to borrow and raise funds

is very high.

2. Distinguish between Proprietorship, Partnership and Co-operatives

1. Proprietorship Formation is easy without legal formalities.Partnership Formation of Partnership is very easy.Co-operatives Formation is not as easy as it is an association of people.

2. Proprietorship Not controlled by any special act or law. Partnership The Indian Partnership Act governs it.Co-operatives It is governed by the Maharashtra State Co-operative Society Act1960.

3. Proprietorship It need not be registered Partnership Registration is optionalCo-operatives It has to be registered

4. Proprietorship Only One member is required to form. Partnership Minimum number of members is 2.Co-operatives Minimum number of members is 10.

5. Proprietorship Unlimited Liability Partnership - Unlimited LiabilityCo-operatives Liability is Limited

6. Proprietorship It is not separate from the proprietor. Partnership It has no separate legal entity. There is no distinction between

partners and their firm.Co-operatives The identity is separate.

7. Proprietorship It comes to an end at the death of the Proprietor. Partnership It comes to an end at the death of any of the Partner.Co-operatives It does not come to an end by the death of any of the members.

8. Proprietorship Surplus is enjoyed by the Proprietor Partnership Surplus is shared by the Partners in agreed Ratios.Co-operatives Not more than 12% of the net profit can be distributed as bonus.


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Chapter 5: National & International Level Co-operative Organization

Contents1. National Co-operative Development Corporation (NCDC) 2. Khadi And Village Industries Commission (KAVIC) 3. National Dairy Development Board (NDDB) 4. National Bank for Agricultural And Rural Development (NABARD) 5. National Co-operative Consumer Federation (NCCF) 6. National Co-operative Housing Federation (NCHF) 7. National Federation Of Industrial Co-operatives (NFIC) 8. International Co-operative Alliance (ICA)

1. National Co-operative Development Corporation (NCDC)

NCDC was set up in 1963, with the purpose of the development of the co-operative

movement and to increase the scope of it at the national level.

In 1962, the National Development Corporation Act was passed and it began its

functioning in March 1963.

Role and Functions of NCDC

1. To provide Loans and Grants to various co-operative societies.

2. To provide latest technical facilities to agricultural co-operative society through the

respective state governments.

3. To participate in the share capital of the different co-operatives societies working at

the National level.

4. To utilize the National Co-operative Development Fund for various development

activities of co-operative societies.

5. To prepare annual programs and to facilitate the implementation nation wide.
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6. To develop co-operative fields like processing, warehousing, import-export of

agricultural commodities etc.

7. To assist state government in Human Resource Development.

8. To assist the marketing federation for establishment of promotional cells in order to

provide financial and technical support in installation of processing units and

marketing activities.

2. Khadi And Village Industries Commission (KAVIC)

KAVIC was setup in 1957.

The main Objective of setting up this commission was: -

1. To reduce the unemployment problem in India.

2. To boost the Rural Economic Development through promotion of small villageindustries.

3. To create awareness about the hidden struggle through promotion of GandhianValues.

Activities

1. To prepare programs on promotion of Khadi and Village Industries and implementthose on a National scale.

2. To help in training and development of village artisans and managers involved in thisindustry.

3. To make arrangement for raw-material storage and to facilitate in the distribution of finished goods.

4. To study the problems of village economies and to suggest recommendations.

5. The commission provides assistance to industries like Tanning, Pottery, Paddy,Processing, Khadi Sari, Sugar and Jaggery.

3. National Dairy Development Board (NDDB)


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The successful program undertaken by Anand Milk Producer Union Ltd. encouraged thegovernment of India to setup a National Level Board. Thus NDDB was setup in 1965.

The main objective of the board is to replicate the Anand type all over the country. TheWorld Food Program in 1970 helped the board with financial assistance of Rs120crores.

This fund was for the development of Milk Supply Co-operatives. Finally this programwas named Operation Flood.

Objectives

1. To introduce the development program for development of dairy operation andalso prepare program for agro-based industries by providing financial andtechnical aids.

2. To assist setting up of Milk Societies under the Co-operative Sector.3. To conduct research on development of agriculture and horticulture.4. To provide necessary technical support for societies collecting, storing, selling

milk and also producing various milk products.5. NDDB helps in construction of buildings, provision of machinery etc. in respectto dairy development.

6. To provide consultancy services for management of co-operative milk producerssocieties.

7. To advice the Government of India on Rural Development Programs.8. To help in export of dairy products and also to import technical goods.

4. National Bank for Agricultural And Rural Development (NABARD)

NABARD is an apex institution accredited with all matters concerning policy, planning and operations in the field of credit for agriculture and other economicactivities in rural areas in India.

The committee to review arrangements for institutional credit for agriculture and ruraldevelopment was setup by RBI under the chairmanship of Shri. Sivaraman to studythe scope of rural finance. It recommend the establishment of a national bank whichwill deal exclusively for agriculture and rural development. Thus the IndianParliament through the act 61 of 1981 approved the setting up of NABARD.

The bank came into existence on 12 th July 1982 and it was dedicated to the nation bythe then Prime Minister Mrs. Indira Gandhi on 5 th November 1982.

NABARD took over the function of the erstwhile Agriculture Credit Department andRural Planning and Credit Cell (RPCC) of RBI and the Agricultural Refinance andDevelopment Corporation (ARDC).

Its subscribed and paid up capital was Rs. 100 crores which was enhanced to Rs. 500crores which was contributed by the Government of India and RBI in equal

proportion. Today the subscribed and paid up capital is Rs. 2000 crore.


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1. NABARD is an apex institution, which performs the refinance function for theinstitution providing investment and production credit for promoting the variousdepartmental activities in rural areas.

2. It takes measures towards institution building for improving capacity of the creditdelivery system, monetary, formulation of rehabilitation schemes, restructuring of credit institutions, training of personnel etc. It co-ordinates the rural financingactivities of all the institutions engaged in developmental work at the field level andmaintains liaison with the Government of India, RBI and other national levelinstitutions concerning with policy formulation.

3. It prepares on annual basis, rural credit plans for all districts in the country.

4. It promotes research in the fields of rural banking, agriculture and rural development.

Mission

Promoting sustainable and equitable agriculture and rural development througheffective credit support, related services, institution building and other innovative

initiatives.Functions

1. To develop policy and plans with respect to matters relating to agriculture andallied activities.

2. To undertake developmental activities in the rural areas.3. To undertake programs for training, consultancy, research in respect to credit of

agriculture and rural development.4. To provide refinance facilities to the RRB (Regional Rural Bank) and various co-

operatives.5. Inspection of Banks.

6. Coordination.

5. National Co-operative Consumer Federation (NCCF)The National Co-operative Consumer Federation is the highest body of consumer co-operative in India. It was formed in the year 1966.Its headquarters are located inDelhi with branches in various cities such as Mumbai, Chennai, Kolkatta, Nagpur etc.

Chief Function

1. To help and guide state federations in their operations.

2. To act as the chief spokesman of consumer co-operative in India.

3. To procure and distribute consumer products such as:

a. Pulses, spices, food grains, tea and other agricultural goods.

b. Controlled cloth.

c. Non-controlled textiles and readymade garments.

d. Imported and confesticated goods.


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The federation maintains a consultancy and promotional cell, which is entrusted withthe responsibility of farming operational and business procedures, administrativenorms etc. It also publishes a monthly news bulletin, which contains information onthe market rates of goods supplied by the consumer co-operatives.

6. National Co-operative Housing Federation (NCHF)The National Co-operative Housing Federation (NCHF) was formed in the year 1969 as

per the recommendations of a study group on co-operative housing. The state level anddistrict level housing societies as well as the state level institution financing the housingsocieties can become a member of the National Co-operative Housing Federation(NCHF).

Objectives

1. Publicity and propaganda of co-operative housing movement by publishing

books, brochures etc.2. To undertake research and development work for reduction in the construction

cost.3. To establish financial institution at state level to help the primary co-operative

housing in getting loans at lower rate of interest.4. To involve institution like LIC and other central level financing institution in the

co-operative housing movement.

7. National Federation Of Industrial Co-operatives (NFIC)

NFIC was established in the year 1966 with the objective of studying industrial co-operatives in relation to the problems they face and to suggest solutions. The NFIC also

plays a major role in formulating and implementing programs relating to the developmentof industrial co-operatives. It also undertakes import, purchase and distribution of rawmaterials, equipments and components to the industrial co-operatives. It also helps inrendering marketing services to the members. The head quarters of NFIC is situated in

New Delhi.

8. International Co-operative Alliance (ICA)

International Co-operative Alliance is an independent non-governmental association

which unites, represents and serves co-operatives worldwide. The ICA was founded inLondon in 1895. Its members are National and International Co-operative Organization inall sectors of activity including agriculture, banking, energy, industry, fisheries, housing,tourism and consumer co-operatives: ICA has more than 230 member organization fromover 100 countries representing more than 730 million individuals worldwide.


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In 1946, the ICA was one of the 1 st Non-governmental organisations to be accordedUNs Consultative Status. Today it is one of the 41 holding-holding category of consultative status with the UNs economic and social council.

Aims of ICA

The major objective of ICA is to promote and strengthen autonomous co-operatives

throughout the world. ICA seeks to: -

1. Promote and Protect Co-operative Values and Principles.2. Facilitate the development of economic and other mutually beneficial relations

between its member organisations.3. The economic and social progress of its members and their communities.

Specialized Organization under ICA

1. International Co-operative Agricultural Organization (ICAO) 2. International Co-operative Banking Association (ICBA) 3. Consumer Co-operative International (CCI) 4. International Co-operative Energy Organization (ICEO)


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Chapter 6: Role of State Government Contents - Role of State Government - Registrar

1. Role of State Government

The responsibility of making co-operative movement a success is with the respectivestate government because co-operative is included in the state subject list.

Co-operative Department

1. Co-operative Education and Training: The department helps in the training anddevelopment of members. The various co-operative schools and colleges have beenstarted in Maharashtra. Eg. Pune, Nagpur, Satara etc.

The Training of highest cadre of personnel is provided by the Vaikuntbhai Mehta National Co-operative Management Institute at Pune.

2. Financial Assistance: Direct financial assistance is provided by the co-operativedepartment to the cotton mills, sugar factories, co-operative banks and co-operativeunions in the way of: -

a. Purchase of shares of co-operative societies.

b. To take underwriting

c. To allow raising of loans beyond stipulated limit.

d. To provide facilities for repayment of loans.

3. Guidance to new co-operative societies: The department provides guidance to newlyregistered societies and motivates them in their functioning.

4. Administration Expenditure: The co-operative department has the power to frame therules and according to the various laws to help the co-operatives function efficiently.The department issues circulars, directions from time to time to guide the co-operative.

5. Co-operative development also takes over inefficient and economically weak societies and help in the reconstruction process.

2. Registrar

The Registrar occupies crucial position in the co-operative system. He is thefacilitator in the implementation of the declared policy of the state-government


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towards rural development through the co-operative sector. He is the most importantmedia through which a democratic government fulfills the social and economicaspirations of the people. He has also to co-ordinate between the government and thenon-official leadership. He has also to maintain administration realism and thus givecorrect advise to the popular government.

The Registrar of the co-operative society executes the co-operative law. The powers in regard to Formation/Registration, to widening up of co-operatives

remain with the Registrar, while the financial help and other assistance is done by theco-opera

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