Cooperatives: Dream and Reality

Sukanta Sarkar

This is 2023. But Rabindranath Tagore realised the necessity and importance of cooperatives in a backward country like India a hundred years ago. Although the co-operative movement started during Rabindranath's lifetime, it was mainly carried out by the Swadeshi activists with the encouragement and inspiration of Gandhiji. Initially started by weaving khadi cloth on spinning wheels or charka, the cooperatives gradually started producing other cottage and rural goods as well. After the partition of the country many cooperatives were formed in different regions and especially in West Bengal, through which the rationing (Public Distribution System) scheme was also run in rural areas. But there should be no hesitation in saying that they were not carried out with much care or tenderness either. As a result, most of these cooperatives have either collapsed or remained in a very poor condition. The fact that cooperatives can be a real poverty alleviation tool, neither socialist nor leftist intellectuals and politicians thought seriously about the movement. They never tried to convince or encourage the common people regarding the importance of cooperative economy.

Currently cooperative means a grey area before the eyes of common people. Except for a handful of cooperatives, most cooperatives have become an extremely neglected sector in the entire country, including this state. However, the Centre and many states have cooperative ministries. It goes without saying that these Ministries at the Centre and the States have failed. Because the persons in power are generally indifferent to the cooperative movement. The central government never gave any serious thought to cooperatives in their programme of eradication of poverty.

No doubt the first Prime Minister of the country, Jawaharlal Nehru, gave great importance to agricultural cooperatives because India was basically an agrarian economy. Although Nehru spoke of cooperative as one of the most important means of poverty alleviation, Nehru did not have a separate minister for cooperatives in his cabinet. Cooperatives were included in his cabinet with the Ministry of Community Development. However, some explanation of this can be found in Nehru's speeches and writings on cooperative movement at various times. In the case of cooperatives, Nehru gave more importance to common people or social enterprises than government initiatives. He wanted people to voluntarily build cooperatives by maintaining social harmony at their own request. Secondly, he wanted to emphasise on the autonomy of the cooperatives. Thirdly, that the cooperatives should work independently and above all with flexibility in the way of working. Nehru never wanted the government to control the cooperatives. Rather, the government will assist cooperatives in everything from infrastructure development to training. Nehru very clearly said, 'Cooperatives will be never run by the government. The cooperative will be run by the members of the cooperative. The government will not interfere in any way in the working of cooperatives but will provide the necessary assistance to the cooperatives.' He did not think that cooperatives could run under government control. Besides, he also understood how difficult it is for the common people, especially the village people, to run cooperatives and assumed that the cooperatives would face many problems in the beginning. In that case, Nehru's clear statement, 'Man will learn from his own mistakes and stand on his own feet.' Nehru believed that government funding should never be given to cooperatives because then the people, i.e. the cooperatives themselves, would not take initiative and the cooperatives would be nothing and will not stand on their own feet or be independent. For one thing if the common people form a cooperative using their own resources, they will develop a spiritual and emotional relationship with it. Therefore, he did not want the co-operatives to be nationalised in any way. He felt that the autonomy of cooperatives would be hampered by government financial support and that cooperatives would not be able to get out of the confines of government.

Nehru's thinking on cooperatives seems to be the main reason for the politicians’ passive attitude to cooperatives. In Nehruvian model, a rough outline of the role of the government in cooperatives was drawn up. But, surprisingly, in the post-Nehru era, his successors gradually reduced the emphasis on cooperatives significantly. It remained a secondary issue to the central government. However, it was during Nehru's tenure that states were asked to set up Cooperative Departments to assist cooperatives at the local level. That is, cooperatives are registered with the state government. This legal binding is still in operation. There are cooperative offices in almost every state of the country. But the unfortunate thing is that almost no state government gives much importance to the cooperative department, which is easily seen when one looks at the overall cooperative scenario of the country. Today, with two or four exceptions, the country's co-operatives remain in a shambles. Due to the lack of Ministry of Cooperatives at the central level, the State Cooperative Departments did not take care of cooperatives in their own states as they did not get any financial support. Most of the states have not encouraged the common people to form cooperatives. On the contrary, various states have at different times complicated the area of formation and operation of cooperatives in the name of amendments to the Cooperative Act. Despite Nehru's wishes, the government continued to try to impose its own control over cooperative activities at the state level. As a result, on the one hand, there was no work to raise awareness about cooperatives among the common people, on the other hand, due to various complications of the cooperative law, the cooperative movement has lost momentum overall. The few cooperatives that have a bright presence in the economy do not have the participation of the country's farmers and workers. Therefore, it will not be an exaggeration to say that the workers-farmers remain deprived of the benefits of those cooperatives. It would be safe to say that some of these large co-operatives today are more corporate than co-operative in character.

The first co-operative in the country was formed in Karnataka in 1904-05, said to be the first co-operative in Asia, which was originally a co-operative credit society. Subsequently, several co-operative credit societies were formed, especially in South India and subsequently in different parts of the country. These enterprises in fact continued to function as a kind of paid money lending system to save the farmers from rural moneylenders. The number of such cooperative credit societies continued to grow before and after independence. These societies continued to expand their scope of work in cities and even in the metropolises of the country. These co-operative credit societies became popular among a section of middle-class and lower-middle-class people. Workers and officials of various government and private organisations are still associated with such cooperatives. These cooperatives provide loans to the members for various purposes i.e. buying land or house and providing family treatment or daughter's marriage at somewhat lower interest rates than banks or private financial institutions. According to a government survey, the number of such cooperative credit societies was 1 lakh 48 thousand in the financial year 2009-2010. 18 crore 12 lakh people are associated with these societies. Almost all of them are middle class and lower-middle class and most of them are employees or small businessmen. Just 10 years ago, the number of such societies was 1 lakh 43 thousand and the number of members was 15 crore 29 lakh. The statistics shows that the number of cooperative credit societies is increasing. It should be remembered that majority of such societies are urban centric. Besides, during the same period i.e. in the financial year 2009-10, the number of non-lending primary cooperative societies was 4 lakh 58 thousand and the membership was 6 crore 82 lakh. In truth these co-operative credit societies have no role to play in wealth creation and growth. Apart from this, there are co-operative banks. It is at the state and district level. There are also several Urban Co-operative Banks, Rural Co-operative Banks in the country. Although there is an opportunity to get loans for business and trade through cooperative banks, in reality most of the cooperative banks are said to be poor. There are many reasons for that. Notable among them are unprofessionalism in planning and management, corruption and nepotism.

But the co-operative credit societies were the basis of the co-operative movement in this country. Apart from this, the presence of another type of co-operatives is noticed which is the buyers' co-operative society. Basically, these cooperatives are formed for the purpose of selling essential commodities to the general public at fair price or slightly below the market price. After independence, ration or public distribution system was also started in many places through such cooperatives, called Consumers’ Cooperatives. Unfortunately, this system did not last and today the Consumers' Cooperatives known as 'Samabayika' in cities and suburbs, charge prices little below market rates. All these co-operatives do not generate wealth and people associated with them do not have the opportunity to prosper. But it is also important to recognise that buyers' cooperatives are really needed because such cooperatives can provide some 'relief' to consumers. Also, in this era, markets such as 'co-operatives' seem to be able to counter the invasion of private segregated stores (malls) to a great extent. But, even if there are such cooperatives, their number is not enough and there is not much initiative to form new buyers or consumers cooperatives. Apart from this, one more thing that should not be overlooked in any way is the lack of skills, technology and modern management in these cooperatives.

Even after one hundred years, the co-operative thought has not made any deep impression on the so-called educated masses of the country. Therefore, it is easy to imagine that the majority of the backward people who are 90 percent farmers will have a great lack of co-operative spirit. To be honest, neither the government, nor the political organisations, nor the social organisations of the country have taken the slightest initiative to bring cooperative awareness among the agricultural and working people of the country. This explanation will not be accepted by the government. The government will present various facts and figures to refute this accusation. Even today, no one can deny that India is dependent on agro-economy. At different times, various thinkers and political leaders of the country also believe that rural India is the real India, so the country cannot become financially self-sufficient if the rural economy, i.e., the agrarian economy, is not strengthened. The rural economy in this country is mainly dependent on agriculture, cow-breeding i.e. milk production and fisheries. To what extent has the cooperative path been used in agriculture? According to the official data, 1 lakh 1 thousand 285 Primary Agricultural Cooperative Societies [PACS] have been formed since independence in the country for the development of farmers. There are more or less 13 crore farmers belonging to PACS. Currently the number of people related to agriculture in the country is about 90 crores. But only 13-14 percent of farmers are under the umbrella of co-operatives. There are 1 lakh 38 thousand 347 cooperatives focusing on cow rearing or milk production. About one and a half crore rural people are associated with these cooperatives. There are about 25 thousand fishing cooperatives in the country. About 38 to 40 lakh fishermen are associated with them. In this case it is also important to note that according to the official estimates, there are about 1.45 million fishermen in the country. Apart from these 3 sectors, there are numerous unorganised hand and cottage industries in rural India which have not been exploited by cooperatives. A few scattered handicraft cooperatives have sprung up, but actually they are by no means significant. In Eastern India, several states, including West Bengal, have developed weaving industries through cooperatives, but most of them are in a very poor condition. Primary Agricultural Credit Cooperatives and Dairy and Fishery Cooperatives provide loans to farmers for purchase of seeds, fertilisers, cattle feed, fish feed, seedlings in some cases and beyond these cooperatives any other aspect of overall livelihood of farmers, cattle breeders or fisher-folk cooperatives do not play a role. As a result, rural resource producers do not benefit as much from such cooperatives. Hence, it can be said that not only insufficient number of co-operatives are at the very marginal level in the development of rural economy, but also the main function of the co-operatives that exist is lending. These cooperatives play almost no role in wealth creation, empowerment of the rural masses or generation of rural employment in their own work and marketing of produce.

The most important agro-based industry in the country is the sugar industry. Over 5 crore farmers are directly involved in Ankh (sugar cane) cultivation. There are about 700 sugar mills in the country. A NITI Aayog report in 2020 says that 5 lakh workers are directly involved in sugar production. In that report, it is said that family members are dependent on 5 crore Ankh farmers. In the same way, their families depend on the 5 lakh workers working in the sugar mills. That is, in a word, more than 20 crore people are involved in sugar production. A report by the National Federation of Cooperative Sugar Factories Limited or NFCSFL says, there were 525 cooperative sugar mills in the country in 2017-18. The report claims that 35 percent of the total sugar production in the country comes from cooperative sugar mills. Most of the cooperative sugar mills are in Maharashtra. Out of 525, only 24 cooperative sugar mills are in Uttar Pradesh. Most of the Ankh cultivation is also done in Maharashtra and it is also pertinent to note that Maharashtra has the highest number of farmers’ suicides every year. A large part of them is associated with sugarcane cultivation. In most cases, many farmers commit suicide in Maharashtra due to not being able to repay their loans to the moneylenders without getting fair price for the produce. In Maharashtra, Uttar Pradesh or Gujarat sugar mills have been formed through co-operatives, but no co-operatives have been formed with regard to Ankh cultivators. As a result, farmers in these states did not get any benefit of cooperatives. But, do the workers get any benefit at all from the cooperative sugar mills that have come up in Maha-rashtra or neighbouring states or are they just as deprived as the sugarcane farmers. Almost all cooperative sugar mills are controlled by politically supported sugar merchants. Workers' participation in all these cooperatives is minimal and nominal. As a result, it is seen that even in this case, the cooperatives are not really protecting any interest of the farmers-labourers.

 For the first time the present central government launched a Ministry of Cooperation 2 years ago, more precisely on July 6, 2021. This decision is a very important step in the Samabay Andolon or Cooperative Movement across the country. Even though the co-operatives were not jointly registered, the state co-operative offices were running in a directionless manner as there was no relevant ministry at the centre. Financially, the State Governments cannot allocate much to the State Cooperative department. It has also been announced by the Ministry of Cooperation that the state cooperative offices will have the opportunity to receive various project-based financial assistance as a result of the formation of the Ministry at the Centre.

This new ministry of the central government has taken several schemes to revamp the co-operatives of the country, especially the Primary Agricultural Credit Societies or PACS. The Ministry has framed a by-law for that. Until now, PACS did not do much other than giving loans to farmers for agricultural work. The model by-law calls for these PACS to be multipurpose. That is, PACS are now MPACS. Apart from lending money, these MPACSs are said to facilitate 25 business activities. From now on any PACS can do different business according to local demand. Not only loans for cultivation, but also PACS will be able to trade fertilisers and seeds. They can also do business related to agriculture and farmer's life. For example, MPACS can take up Warehousing, LPG, Petrol, Diesel dealerships. As a result, on the one hand, farmers will get fuel for irrigation at a much lower price, on the other hand, the income of MPACS will increase and there will be an opportunity to increase rural employment. The model by-law states that women, Dalit and tribal farmer families will be given preference in providing LPG, Petrol, Diesel dealerships. The Union Ministry of Cooperation has decided to build another 2 lakh MPACS within a short period.

 The Model Bye-law calls for MPACS to form a Follow-on Public Offer or FPO. The National Cooperative Development Corporation or NCDC has decided to allocate an additional 11,000 FPOs to PACs. A financial assistance of Rs 33 lakh will be given to each FPO and Rs 25 lakh will be given to each cluster-based business organisation. Apart from this, PACs will henceforth be able to engage in the business of manufacturing agricultural machinery, packaging and transportation of agricultural produce, the Model Bylaw said. In this way, if the business activities of PACs increase, the rural economy will improve the Union Ministry of Cooperation feels.

 The Ministry of Cooperation also announced the decision to form three new National Multi State Cooperative Societies namely, National Multi State Cooperative Organic Society, National Multi State Cooperative Export Society and National Multi State Cooperative Seed Society. Ministry of Cooperation has already planned Rs10, 000 crore assistance for the Cooperative Sugar Mills. The Union Government has also announced this allocation for Cooperative Sugar Mills (CSMs) in the budget. The Central Government has given a grant of Rs. 1,000 crore to the National Cooperative Development Corporation or NCDC under the Ministry of Cooperation and in this sector NCDC can borrow Rs 10,000 crore from the market and lend to the CSMs. That is, a total loan of Rs 10,000 crore will be given for strengthening and modernisation of CSMs. 500 Crore has been provided to CSMs in this sector in the financial year 2022-23. In this case, it has been informed that NCDC will also give money to build new cooperatives in the Sugar sector.

While these initiatives are laudable on the face of it, the question that needs to be raised is whether it can really lead to the development of the cooperative sector? There is no question of opposing the initiative to strengthen the sector by forming cooperatives in the industrial sector of the country, especially in the agro-based industry. But why the sugar industry chosen? Why can't the Central Co-operation Ministry even give a hint of any effort to revive the sector by modernising it by forming co-operatives in the case of the dilapidated iron and steel industry in the eastern region, especially in West Bengal, Assam and Bihar? Paper industry is also an agro-based industry. At one time, this industry had a huge impact on the country's economy. Even today, from jute cultivation to production of jute products, more or less 5 crore people are involved in West Bengal alone. The Ministry of Cooperatives is strangely silent on using the cooperative system to build cooperatives to save or strengthen these agro-based industries. But there is no dearth of initiative by the Ministry of Cooperation in the sugar industry to allocate huge sums of money to set up co-operatives in this industry. Not because almost all cooperative sugar mills in Maharashtra, 90 percent or more are still controlled by Congress or NCP leaders, and as mentioned earlier, the sugar lobby plays a controlling role in Maharashtra politics.

However, it is difficult to say how much the cooperatives will grow even if a separate Ministry for Cooperation is opened at the Centre. The real thing is the cooperative movement. In all the countries of the world where the cooperative movement has been successful, regardless of whether it is socialist or capitalist, the autonomy or self-governance of cooperatives has been introduced everywhere, and in all countries where the state or government has interfered in the management of cooperatives, the cooperative movement has finally failed. Prime examples are the now-defunct Soviet Union and the socialist countries of Eastern Europe. Another major obstacle to the cooperative movement in this country is politics. No matter how much it claims on the books or in government documents that the cooperatives do not have political control, it is mostly empty. The reality is just the opposite.

If the Central or State Co-operative Ministries 'force' the law on the co-operatives, it will be counterproductive. Therefore, although the early benefits of cooperative farming were great, later cooperatives could no longer exist in the Soviet Union or the socialist countries of Eastern Europe. Because the common people of those countries had no right to make any movement, negative or positive. Thus, non-movement co-operatives also collapsed in all countries. Even so, there is hope that there is fertile ground for building cooperative movements in India.

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Vol 56, No. 17-20, Oct 22 - Nov 18, 2023