India's Cooperative Movement

How cooperatives in India began as a response to rural debt in 1904 and grew into one of the world's largest cooperative sectors.

India has one of the largest cooperative sectors in the world, with around 8 lakh cooperatives and crores of members.

Origins

In the late 19th century, Indian farmers were deeply indebted to moneylenders charging very high interest. The colonial government passed the Cooperative Credit Societies Act in 1904 to create village credit societies. A broader Cooperative Societies Act followed in 1912.

After independence

India’s planners saw cooperatives as a middle path between capitalism and state control. Cooperatives expanded in:

Rural credit.
Dairy, after Amul and Operation Flood.
Sugar, especially in Maharashtra and Gujarat.
Fertilisers, through IFFCO and KRIBHCO.
Housing, fisheries and handloom.

Constitutional status

The 97th Constitutional Amendment, in 2011, made forming cooperatives a fundamental right and added provisions on cooperative governance. In 2021, the Supreme Court struck down parts of it relating to state cooperatives, as cooperatives are largely a state subject.

Strengths and weaknesses

Successes like Amul show cooperatives can compete.
Many cooperatives suffered from political interference, poor management and dependence on government.

Revival efforts

The central government created a Ministry of Cooperation in 2021 to strengthen the sector.

The village credit society

In the early 1900s, farmers in a village form a credit society to borrow at fair rates instead of paying a moneylender's high interest. Similar societies spread across India over the following decades.

Thinking cooperatives are a new idea in India

India's cooperative movement began with a 1904 law and grew for over a century.

Key takeaways

India has around 8 lakh cooperatives.
The 1904 Cooperative Credit Societies Act responded to rural debt.
Cooperatives spread into dairy, sugar, fertilisers and housing.
A Ministry of Cooperation was created in 2021.