Cooperatives have been contributing substantially to our economy — accounting for about 30 per cent of sugar, 20 per cent of milk, 30 per cent of fertilisers and 15 per cent of agricultural credit. While there are sterling examples of cooperatives which match the best corporates in transparency and performance, much can be improved as most of the sector just exists.

Importance

• It eliminates social cleavages and calms class disputes.
• It eliminates political factions’ bureaucratic faults and follies; it overcomes agricultural development limits; and it generates a favourable climate for small and cottage companies.
• It is a non-profit organisation for the impoverished who want to work together to address their issues.
• It provides agricultural credits and financing in areas where the public and private sectors have been unable to help.
• It gives strategic inputs to the agriculture sector, while consumer societies are able to satisfy their consumption needs at reduced prices.

Challenges

• Excessive Cooperative Legislation: In India, cooperatives operate in a variety of areas. Under the Indian Constitution, cooperatives are a state matter, therefore state cooperative statutes and their implementation vary greatly.
• Lack of Capital Formation: There is a dearth of capital formation activities, particularly those aimed at increasing member equity and ownership.
• Irresponsibility and Unaccountability: Serious governance flaws, especially those relating to the duties and obligations of boards of directors. Many inconveniences are not held accountable by the board of directors.
• Lack of Recognition: There is a general lack of understanding of cooperatives as economic structures among policymakers and the general public. Inability to attract and maintain qualified personnel.
• People are not properly educated on the Movement’s goals, as well as the norms and regulations that govern cooperative entities.

Way forward

• Encourage Cooperatives: In rural regions, cooperatives play a significant role. Other cooperatives, such as weavers’ and craftsmen’ cooperatives, can be run in addition to milk cooperatives. Farmers’ income and the rural economy can both benefit greatly as a result of this.
• Increasing Overall Dairy Sector Participation: If effectively systemised, the dairy sector may deliver maximum revenue to the rural community. There is a need for policy to promote auxiliary services for the dairy industry, such as accessible veterinary services and large-scale animal feed manufacture and distribution at a reasonable cost.
• Increased Agro-Processing: In India, agricultural produce processing is limited to a few commodities. Starting a food processing business can extend the shelf life of agricultural products, which will help farmers in the long run. The rise of the food processing business has the potential to treble farmers’ income.
• Urban Areas: There are two main areas of attention in this sector: mass housing through cooperative societies in urban areas, as the bulk of the urban poor live in slums. Consumer cooperatives in metropolitan areas are the second option. There isn’t a single respectable job in the country. Consumer cooperatives must be strengthened not just to maintain enough supplies of necessary commodities, but also to function as a balancing sector when inflation is excessive.
• Cooperative Banks Need a New Business Model: Due to the fall in agricultural revenue in the rural sector, cooperative banks require a new business model to function. These banks demand business strategies that provide them more flexibility and regularity.
• Ease of Doing Business (EoDB) Standards for Cooperatives: Ease of Doing Business (EoDB) norms are being applied to a wide range of commercial, manufacturing, and service operations. All cooperatives should get the same level of support so that they may operate without hindrance. New models must be developed in order to overhaul the cooperative loss. Companies that are wholly owned by cooperatives should be encouraged to invest in the cooperative sector so that the sector does not rely solely on government aid or borrowings in the future.
• Funds Access: Providing cooperative banks with capital to meet their cooperatives’ developmental needs.

https://www.thehindubusinessline.com/opinion/invigorating-cooperatives/article65360840.ece

How to structure:

1. Give an intro about cooperatives in India
2. Mention the importance
3. Explain the challenges
4. Suggest measures in a robust cooperative movement
5. Conclude