Unit 1 - 1 History of Cooperatives

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UNIT 1

CO-OPERATIVES



CO-OPERATION

May you all have a common purpose,

May your hearts to be in unison,

May you all be the same hand,So that you can do work off, well.

** RIGVEDA.



CO-OPERATION

Behold how good and how pleasant it is for brethren to dwell together in

unity.

- Bible



CO-OPERATION

Derived from Latin word

µCo¶ ± µtogether¶

µOperari¶ ± µto work¶

Co-operation ± working together

Main principle

´EACH FOR ALL AND ALL FOR EACHµ



DEFINITION OF CO-OPERATION

Mr. W. P. Watkins

³Co-operation is a system of social organisation based on the

principle of unity, economy, democracy, equity and liberty.´

Mr. V. L. Mehta

³Co-operation is a vast movement which promotes voluntary

association of individuals having common needs who combine

towards the achievement of common economic ends.



HISTORICAL BACKGROUND



ROBERT OWEN

By the end of 18th century Industrial revolution completely matured in

England

Capitalism came into existence

The cooperative movement began in Europe in the 19th century, primarily in

Britain and France



ROBERT OWEN

Robert Owen (1771±1858) (England)Father of the cooperative movement

Industrialist by occupation

Belief - His workers in a good environment with access to

education for themselves and their children.



ROBERT OWEN

Started labour exchanges, formed labour colonies and helped them in the

production of various things whereby their income increased

Demand before parliament of England ± Separate Act for labour class

improvement



CHARLES FOURIER

François Marie Charles Fourier(7 April 1772 ± 10 October 1837)

A French utopian socialist and philosopher.

Tried to find out alternative to capitalism

The main evil of capitalism, according to Fourier, was the conflict of

individual interests.



CHARLES FOURIER

Designed PHALANSTERE to eliminate

conflicts of interest by making each member a

cooperative owner as well as a wage earner.

Each member would draw his or her share of

income not only as a laborer but also as a

capitalist (shareholder) and manager



CHARLES FOURIER

Each cooperative member had a voice in the

management of the phalanstere

His proposals for the establishment of

µphalanxes¶ gained considerable support by

practitioners



DR WILLIAM KING

Owen & Fourier were followed by Dr William King (1786±1865)

A British physician and philanthropist from Brighton.

Took his ideas and made them more workable and practical.

Started shops using cooperative principles in England

but could not succeed in that



ROCHDALE SOCIETY OF EQUITABLE PIONEERS

Put the co-operative efforts in reality by

Rochdale villagers in England.

1840 ± Period of hungry forties

Rochdale ± worst condition of Woolen and

cotton milling town




In 1844, a group of 28 weavers with an

initial capital £ 28 set up the Rochdale

Equitable Pioneer Society under Friendly

Societies Act




21 December 1844 ± opened store with a very meager

selection of butter, sugar, flour, oatmeal and a few candles.

Within three months, they expanded their selection to include

tea and tobacco




Known for providing high quality, unadulterated goods.

Ten years later, the British co-operative movement had grown to

nearly 1,000 co-operatives.

Considered the first successful co-operative enterprise



DEVELOPMENT OF INDIAN

CO- OPERATIVE MOVEMENT



1] First Stage (1904- 1912)

2] Second Stage (1912 to 1918)

3] Third Stage (1919-1929)

4] Fourth Stage (1929- 1939)

5] Fifth Stage (1939-1947)

6] The Sixth Stage (1947-1970)

7] The Seventh Stage (1970- 2000)

8] The Eighth Stage (2000 onwards)



First Stage (1904- 1912)

Beginning P eriod of Co-operative Movement in India

Burden of debts on farmers - famines and droughts

Co-operative Credit Society Act passed in 1904 - Sir DanielHamilton

µThe way from poverty to plenty¶

Main object ± encourage thrift, self-help, co-operation among

agriculturists, artisans



First Stage (1904- 1912)

Not successful due to No legal protection for the other co-operatives

No provision of financial aid to primary societies

Unsuitable classification as urban and rural



Second Stage (1912 to 1918)

P eriod of

H arried

Ex pansion

Passed another Act in 1912 ± remedy for loopholes in 1904 Act

Focused not only on the credit aspect of co-operatives but also on all the other

functions that co-operatives could carry out

Broad layout for formation of all types of co-operatives from agricultural to

industrial, and from credit to consumer

Co-operative Movement was shooted for expansion.



Second Stage (1912 to 1918)

Essential features of the ActRegistration of any society, credit or otherwise having promotion of economic

interest of its members in accordance with the co-operative principles

Registration of a federal society like central bank

Ltd liability of central societies and unlimited liability of rural credit societies

Provision of reserve fund from one-fourth of the net profits



Third Stage (1919-1929)

P eriod of Unplanned Rapid Development

After world war I, by passing Reforms Act 1919 co-operation became a

provincial subject

Adequate to cope with the various problems.

The co-operative movement flourished thereafter in many provinces.

Provincial govt. appointed committees to study the co-operative

movement.




Depending upon the situation of the province various acts were passed by the

respective provincial govt. to develop the co-operative movements in their

provinces.

Bombay ± 1925

Madras ± 1932

Bihar and Orissa ± 1935

Coorg ± 1937

Bengal -1941

A tremendous development in the no. of societies providing credit.




Why defined as ³Unplanned Development.´ ?

Quantitative growth - No proper attention to qualitative growth.

Granted loans recklessly

Resulting steady increase in overdues causing liquidation

Rural families not benefited more



Fourth Stage (1929- 1939)

P eriod of Consolidation and

Re-organization

Great depression in 1929 preceding world war II hit the world

Steep fall in the prices of agricultural produce

Weakened repayment capacity of agriculturist

Investment of capital of co-operative credit societies more in agricultural

activities

Development of co-operative movement in India hampered due to non-

repayment of loans




The existence of co-operative societies was in danger.Affected the co-operative movement in Punjab, Haryana, Bihar and Bengal.

The ratio of loans to arrears was 20% in 1927-28 which increased to 40% in

1932-33.

The percentage of arrears went up to 93% in Bombay in 1938-39.

During this period about 50% of co-operative societies went into liquidation.




The Indian Central Banking Enquiry Committee (1931) also stressed onstrengthening the co-operative movement

1935 ± Establishment of Reserve Bank of India. A separate section for

providing agricultural credit (Rural Credit Development)

1937 - this section studied various problems of Indian co-operative movement and

submitted its report stating that development of co-operative societies should be

given priority.



Fifth Stage (1939-1947)

P eriod of

Recovery

The atmosphere of World War II proved to be beneficial for the co-operative

movement.

Started increasing in the price of the agricultural produce thereby increase in the

income of the agriculturists

Rise in level of their repayment capacity

Removed financial depression of Indian co-operative movement

Movement again on the path of its development.




Prosperity of consumer co-operative stores due to the restriction imposedduring war time.

Existence of industrial co-operative societies for the purpose of providing war

materials.

Developed non-profit supplying societies and multipurpose societies




The development of co-operative movement during 1929 to 1947

Year No. of societies

(in 000¶s)Membership (in lakhs)

Capital

(in crores)

1939 122.00 53.07 106.47

1943 146.00 69.01 121.14

1946 172.00 91.6 104.00

1947 139.00 90.00 156.00



Sixth Stage (1947-1970)

After independence, the government felt that co-operatives should play animportant role in the development of rural areas.

The late prime ministers Jawaharlal Nehru and Lal Bahadur Shastri stressed on

the importance co-operatives.

Co-operatives were included in 5 year plans.

Co-operatives encouraged to enter into new sectors of rural economy ± dairy,

food processing, agro processing, etc.



Seventh Stage (1970- 2000)

The government laid more importance on the development of rural bankingsectors.

Co-operatives were asked to develop rural banks.

The formation of NABARD (1982) as an apex bank for monitoring the co-operative banks.

The government also took the initiative in replicating the Anand pattern Model

for dairy co- operative across the country.



Eighth Stage (2000 onwards)

The rise of the new millennium thrown many challenges to the co- operatives.

Growth of the WTO restrictions and the threat from global competition

Direct competition from multinationals for co-operatives

Adequate support and help from govt to the co-operatives by building brands,

distribution network and also in exporting their products to global market.



OVERVIEW

STAGES HIGHLIGHTS

FIRST 1904 ² Passed Co-operative Credit Society Act

SECOND 1912 ² Another act passed to curtail the deficiencies

THIRD 1919 ² Passed Reform Act entrusting provincial govt.

FOURTH 1935 ² Establishment of RBI

FIFTH Period of Recovery

SIXTH Co-operatives in five year plan

SEVENTH Formation of NABARD

EIGHTH Cut throat competition

Unit 1 - 1 History of Cooperatives

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