Rebuilding India through the power of cooperation

The famous phrase, ‘Cooperation has failed, but cooperation must succeed’, originates from the report of the All India Rural Credit Survey Report set up in 1954 by the government of India. The committee, which noted the failures of the cooperative movement at the time, strongly asserted that a successful cooperative model was essential for rural development, leading to a call for state partnership and reform to ensure its future success.

Burra Venkatappaiah, a distinguished civil servant, who also served as the Chairman of the State Bank of India (SBI) and a Deputy Governor of the Reserve Bank of India (RBI), was the Committee’s First Executive Director.

The whole world celebrates, this year, the International Year of Cooperatives a global event recognizing the vital contributions of cooperatives to sustainable development, social inclusion, and economic prosperity worldwide, apart from addressing pressing global challenges, advancing the Sustainable Development Goals of the United Nations.

India proudly took center stage in the celebrations by hosting the Global Cooperative Conference 2024 at New Delhi. United Nations General Assembly on June 19, 2024, chose for it the theme ‘Cooperatives Build a Better World’.

Driving the initiative in India, the Ministry of Cooperation has assumed a leading role in furthering the cause of enhancing transparency, strengthening cooperative institutions, and extending cooperative membership to individuals across all regions of India.

The government of India also unveiled the National Cooperative Policy 2025, designed to resolve systemic challenges in the cooperative sector and chart its development trajectory for the next 25 years. Workon establishing“TribhuvanSahkari University” a national level Cooperative University at Anand in Gujarat, has also commenced, marking an investment in cooperative education and innovation.

Cooperative societies are a community led system, based on mutual economic benefit and backed by a spirit of an equitable, and profitable, approach to the activities in which they are engaged, which include dairy, fisheries, sugar, textiles, industrial, consumer, labour, housing, hospitals, services, processing, producer, marketing.

It was the pioneer of the cooperative movement, Frederick Wilhelm Reiffeisen, social reformer, and the Mayor of a German town in early 19th century, who first developed a model of cooperatives, during a severe famine in the country, to distribute food and provide loans to the rural poor.

A later revised version of that model was a sustainable society based on the principles of self-help, self – responsibility and self governance. It proved to be the inspiration for India’s cooperative movement and was in adapted into India’s Cooperative Credit Societies Act of 1904 primarily to provide presents with an alternative to exploitative money lenders.

India is home to 8.14 lakh cooperatives, 54 per cent of which are engaged in three major sectors-housing, dairy and credit - with a membership-base of 29 crore, the largest in the world. Agriculture and rural cooperatives play significant roles in supplying timely and adequate credit and fertilizers and in supporting procurement of crops. It is estimated that the share of cooperatives in total direct employment in India is 13.3 per cent, by engaging communities in growth processes.

I had, in 1997, as the Joint Secretary dealing with the subjects of Credit and Corporation in the Department of Agriculture and Corporation of the Ministry of Agriculture, government of India, initiated the task of formulating the “National Cooperative Policy 1997” which aimed to promote a more active role for cooperatives in the country's economy.

It emphasized the government's role as a facilitator, focusing on providing information, education, and training to cooperatives. Its key features included encouraging women's participation, introducing cooperative education in schools and colleges, and focusing on sectors like credit, consumer services, and housing.

Some of the key aspects of that version of the policy were to restrict the government's role to acting as a facilitator and catalyst, primarily through functions such as information provision, education, training, inspection, and supervision.

The policy recognized the need to promote various cooperative sectors, including credit, consumer, industrial, and housing cooperatives and recommended that all government departments follow a policy of building up cooperatives.

Other objectives included encouraging women’s involvement in cooperatives by removing traditional and customary barriers,introducing cooperative education in schools and colleges to prepare the youth for self-help and employment.

I was, at that time, also working on the initial draft of a Model Cooperative Law, a sample template legislation and bylaws to provide for a framework for creating and governing cooperative societies in India. The idea was to circulate it to the states for adoption with a view to ensuring consistency with national standards and accommodating local needs while promoting autonomy and professional management.

Dr V Kurien, Father of the white or milk revolution in the country and the man who revolutionised the functioning of the dairy cooperatives in India had dropped in one day tomeet the Secretary of the Department. Naturally, I joined too. I had known Kurien on the earlier as RCS as well as Secretary Food and Agriculture, in Andhra Pradesh state.

Also, subsequently, as Secretary to ‘Governor’ of the state, I had had lunch with him and his very gracious wife while on a visit once to Anand to study the AMUL pattern. We exchanged pleasant greetings. It transpired thatDr.Kuriendesired to take a look at the Cabinet Note which I had prepared. I had regretfully to point out, that, as the circulation was limited to a fixed list that would not be possible. I told Dr.Kurien that Ms. Amrita Patel, the Managing Director of National Dairy Development Board (NDDB), of which was the Chairman, was an Additional Secretary, ex-officio, in the Department, and the note would be sent to herin the normal course.And she would probably share it with him. He was furious and even suggested that I was carried away by the power and authority that went with being the Central Registrar of Cooperative Societies, the Secretary intervened to the air, and all was well again.

One of the earliest forward-looking reforms conceived by the newly formed Telugu Desamgovernment, led by the legendary matinee idol turned politician NTR, was the need for integrating the systems in the cooperative credit structure which purveyed credit needed by the farming community for short-term and long-term purposes. And also integrating into that structure, those which were dealing already with marketing and consumer functions. The system was designed to simplify the process for farmers, making credit more accessible.

A Committee, known as the Mohan Kanda Committee, was constituted by the government to give shape to the idea, following the recommendations of which, the system was introduced by the government of Andhra Pradesh in 1985. It was first launched on an experimental basis in three districts before being accepted by the central government and implemented across the state. The government of India gave its approval in principle for the system to be implemented state-wide on September 4, 1985.

The reform helped boost the flow of credit for both production and investment purposes. It however, faced issues such as poor governance and a decline in profitability, leading to financial instability in some units.

Another major boost was provided to the cooperative movement by the state government, was the of decaderisation of the Paid Secretaries of Primary Agriculture Cooperative Societies (PACS)s, by abolishing the common cadre system that had governed their service conditions since 1973, a system that had originally been put in place to ensure that societies were staffed with qualified personnel, by piloting an amendment to the Andhra Pradesh Cooperative Societies Act.Decaderisation removed this system, making the paid secretaries direct employees of the individual PACS, meaning the paid secretaries ceased to be as of 1985 part of a state-level cadre. This move transferred the administrative control of these secretaries from the government to the PACS themselves, empowering the societies to manage their own staff. The decision led to large scale unrest among the Paid Secretaries, who went on a strike demanding its reversal. I recollect with amusement how while on a tour to a town in the state staying in guest house, with my family my wife and children thoroughly enjoyed hearing the slogans outside in the street, saying ‘RCS down down’!

(The writer was formerly

Chief Secretary, Government of Andhra Pradesh)