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Social IssuesFree till Sep 9

Cooperative Movement in India: Types, Reforms, and Challenges

July 19, 2026

Introduction

Cooperatives are voluntary, autonomous organisations formed by people to meet their common economic, social, and cultural needs through a jointly-owned enterprise. India has a long and rich cooperative history — the movement began in 1904 with the Cooperative Credit Societies Act. Today, India has over 8.5 lakh cooperative societies covering 290+ million members, making it the largest cooperative movement in the world. The Ministry of Cooperation was created in 2021, signalling the government's renewed focus on strengthening the cooperative sector.

History of Cooperatives in India

Period	Milestone
1904	Cooperative Credit Societies Act
1912	Maclagan Committee — expansion to non-credit societies
1919	Cooperatives made a provincial subject (Government of India Act)
1945	Cooperative Planning Committee (Saraiya)
1950s	Community Development Programme integrated cooperatives
1965	National Cooperative Development Corporation (NCDC) Act
1984	Multi-State Cooperative Societies Act
2002	Multi-State Cooperative Societies Act (amended)

The caste census debate — dormant for decades — exploded back in 2022-26 after the Bihar caste survey and demands by OBC groups for accurate population data. With the 2026 Census including caste enumeration for the first time, this note covers the constitutional basis of reservation, the Mandal-Indra Sawhney framework, EWS quota, the Rohini Commission, and the emerging 'caste data dilemma'.

Tier	Body	Function
Primary (Village)	Primary Agricultural Credit Societies (PACS)	Short-term credit to farmers
District	District Central Cooperative Banks (DCCBs)	Intermediary, financing PACS
State	State Cooperative Banks (StCBs)	Apex, linking with RBI

Type	Function
Urban Cooperative Banks (UCBs)	Banking services in urban areas
Employees Credit Societies	Credit for employees
Salary Earners' Societies	Consumer credit for salaried workers

Cooperative	Commodity	Example
Dairy	Milk	Amul (GCMMF) — world's largest milk producer
Sugar	Sugarcane	300+ sugar mills (45% of India's sugar production)
Spices	Spices	IFFCO-based spice cooperatives
Fisheries	Fish	MATSYAFED (Kerala), NFDB cooperatives
Handloom	Handloom products	Various state handloom cooperatives
Oilseeds	Mustard, groundnut	IFFCO, KRIBHCO

Type	Examples
Dairy processing	Amul, Nandini, Verka, Mother Dairy
Sugar mills	Cooperative sugar factories (Maharashtra, UP, Karnataka)
Fertiliser	IFFCO, KRIBHCO, IPL
Spinning mills	Tamil Nadu, Maharashtra cotton cooperatives
Food processing	MARKFED, NAFED procurement

Type	Function
Housing cooperatives	Affordable housing, group housing
Consumer cooperatives	Retail stores (Kendriya Bhandar, Apna Bazar)
Health cooperatives	Medical insurance, primary health
Electricity cooperatives	Distribution in rural areas
Labour cooperatives	Contract labour, construction work

Provision	Detail
Article 19(1)(c)	Right to form cooperatives is a fundamental right
Part IXB	Article 243-ZH to 243-ZT — cooperative societies in states
DPSP	Article 43B — state shall promote voluntary cooperatives

Law	Coverage
Multi-State Cooperative Societies Act, 2002	Cooperatives operating across states
State Cooperative Societies Acts	Regulation at state level (different for each state)
Banking Regulation Act, 1949	Urban Cooperative Banks (dual regulation)
Income Tax Act, 1961	Cooperative tax benefits (Section 80P)

Initiative	Description
Computerisation of PACS	Digitalisation of 63,000 PACS across India
Model Bye-laws for PACS	Uniform governance, enabling women/youth membership
National Cooperation Policy (2023 draft)	Comprehensive framework for cooperative development
Cooperative Multi-State Development Fund	₹10,000 crore for cooperative infrastructure
New Multi-State Cooperative Societies Act	Under consideration to replace 2002 Act
Cooperative Export House	Facilitate exports from cooperatives (Amul, NAFED)
Cooperatives as FPOs	Recognising cooperatives as Farmer Producer Organisations
State-Specific Cooperation Missions	Karnataka, Gujarat, Maharashtra model adoption

Challenge	Details
Political Interference	State government appointment of boards; politicisation of elections
Bureaucratic Control	Registrar of Cooperative Societies has excessive powers
Weak Governance	Lack of professional management; board members often ill-equipped
Corruption	Embezzlement, bogus loans, ghost members in some societies
Financial Weakness	NPAs in cooperative banks (especially UCBs)
Dual Regulation	Cooperatives under both Registrar and RBI/banking regulation
Technology Gap	Many PACS still manual; slow computerisation
Scope Limitation	Credit-dominant; non-credit cooperatives underdeveloped
Leadership	Lack of young leadership; dominance of old guard
Audit Delays	Annual audits pending for years in many states

Initiative	Impact
Amul dairy cooperatives	60% members are women; paid equally
Lijjat Papad	45,000 women members — iconic success
SHG-Cooperative Linkage	NABARD promoted; credit access through cooperatives
Model Bye-laws	Mandatory 2 women directors on PACS boards

Country	Cooperative Model	Key Feature
India	Multi-purpose cooperatives	Largest in terms of membership
Japan	Japan Agricultural Cooperatives (JA)	Strong marketing, banking, insurance
Germany	Raiffeisen model	Cooperative banks, dairy, electricity
USA	Agricultural marketing co-ops	Ocean Spray, Land O'Lakes, Sunkist
Italy	Social cooperatives	Welfare, healthcare, employment
Kenya	SACCOs (Savings and Credit)	High financial inclusion

Priority	Action
Professional Management	Recruit CEOs/managers through open market
Technology Adoption	ERP for all PACS; mobile apps for members
Diversification	Health, education, renewable energy cooperatives
Autonomy from Political Interference	Independent regulatory authority
Audit Reforms	Time-bound third-party audits
Youth & Women Inclusion	Reserved board seats; leadership training
Convergence	Link cooperatives with FPOs, SHGs, and MSMEs

Cooperative Movement in India: Types, Reforms, and Challenges

Introduction

History of Cooperatives in India

Read Next

Cooperative Movement in India: Types, Reforms, and Challenges

Introduction

History of Cooperatives in India

Read Next

Types of Cooperatives in India

1. Agricultural Credit Cooperatives

2. Non-Agricultural Credit Cooperatives

3. Marketing Cooperatives

4. Processing Cooperatives

5. Service Cooperatives

Major Cooperative Success Stories

Amul (GCMMF)

IFFCO (Indian Farmers Fertiliser Cooperative)

Other Notable Cooperatives

Constitutional and Legal Framework

97th Constitutional Amendment (2011)

Key Laws

Ministry of Cooperation (2021)

Key Initiatives

Challenges Facing Cooperatives

Cooperatives and Women Empowerment

Global Comparison

Way Forward

Conclusion

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