discuss the challenges faced by cooperatives in india


Cooperatives are a voluntary association of individuals having common needs, who join hands for the attainment of common economic goals and interests. Through the formation of cooperatives, people come forward as a group, pool their individual resources, utilize them in the best possible manner, and derive some common benefit out of it.

Importance of cooperative societies in economic development:

  • Generating employment: Cooperative societies help in generating employment and eliminate exploitation. For e.g., there are about 30,000-35,000 Weavers Cooperative Credit Societies functioning in various states such as U.P, Andhra Pradesh, etc.
  • Educating people: Cooperatives educate people about the principles of equality, mutuality, and cooperation. They accord their members opportunity, protection, and empowerment and help in uplifting them from degradation and poverty.
  • Development of the agriculture sector: Cooperatives provide strategic inputs for the agricultural sector and meet their consumption requirements at concessional rates. They also provide agricultural credits and funds where state and private sectors have not been able to do much. For e.g., AMUL and Co-operative Rural Development Trust (CORDET).
  • Skill development: Cooperative provide their employees opportunities to upgrade their skills through workshops and courses.
  • Creating equality: Cooperatives are an association of persons and not of capital. They promote the “fullest participation of all people” and facilitate more equitable distribution of the benefits of globalization.
  • As cooperatives foster economies of scope and scale this increases their bargaining power. They provide their member’s benefits like higher income and social protection.

Challenges faced by cooperative:

  • The politicization of Cooperatives: Many cooperative societies are dominated by locally powerful members of the society, with strong political affiliations.
  • Regional imbalance in growth: The cooperatives in northeastern areas and in states like West Bengal, Bihar, and Odisha are not as well developed as the ones in Maharashtra and Gujarat.
  • The dominance of single-purpose societies: For this reason, these societies are unable to take a total view of the people seeking help, nor can they analyse and solve problems from different angles.
  • Operational challenges: Lack of fair audit mechanism; Lack of coordination among cooperatives existing at different levels.
  • Redundant laws: State cooperative laws are not in tune with the current socioeconomic situation. They need to be upgraded/rewritten in certain parts.

The success of cooperatives would mean the success of best hope for the marginalized section of India particularly rural India. Therefore, it is necessary to ensure the autonomous and democratic functioning of co-operatives, by ensuring the accountability of management to the members and other stakeholders.


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