UNIT 3 STRUCTURE, LAWS AND

MANAGEMENT OF
COOPERATIVES
Structure

3.0 .Objectives
3.1 Introduction
3.2 Cooperative Laws and Bye-laws
3.2.1 Cooperative Laws

3.2.2 State Cooperative Laws

3.2.3 Multi-state Cooperative Laws

3.2.4 Bye-laws of Cooperatives

3.2.5 Cooperative Rules and Regulations

3.3 Cooperative Structure

3.3.1 National Cooperative. Structure

3.3.2 Cooperative Society Structure

3.3.3 Three-tier Structure at.State Level

3.3.4 National Level Federations

3.4 Management of Cooperatives

3.4.1 Typical Management Problems in Cooperatives

3.4.2 Training Needs and Facilities

3.4.3 Cooperative Member Education

3.4.4 Professionalisation Need and Facilities

3.4.5 Democratisation of Cooperatives

3.5 Monitoring and Policies

3.5.1 Monitoring
I

3.5.2 National Policy on Cooperatives - Its Need

3.6 Impact of Economic Liberalization on Cooperatives

3.6.1 Economic Liberalization (Open Market Economy)

3.6.2 Challenges of Liberalization on Cooperative Sector

3.6.3 Impact of Economic Liberalization

3.6.4 Economic Reforms in Cooperatives

3.7 Let Us Sum Up

3.8 Key Words
3.9 Some Useful Books/References
3.10 Answers/Hints to Check Your Progress

4()
 Structure, Laws and
3.0 OBJECTIVES Management of
Cooperatives
After going through this unit, you will be in a position to:

• discuss the cooperative laws, rules and regulations;

• explain the structure, management, monitoring and policies of cooperatives; and

• summarize the impact of economic liberalization on cooperatives.

3.1 INTRODUCTION
Cooperative institutions are those institutions, which, in a formal way, help the
members ofthe community to organise themselves and satisfy their social, cultural
and economic needs democratically and by adopting reasonable professional
methods of management. Cooperative institutions enjoy a legal personality. They
conform to certain principles and observe ethical values in their management.

Cooperatives were formally introduced in India through the Cooperative Credit

Societies Law enacted by. the British Government in 1904 with a view to provide
relief to Indian peasants from the clutches of money lenders. The Law had
undergone changes to meet the requirements of changed times. Cooperation is a
State subject. The Central Government has no jurisdiction over state cooperative
laws. Multi-State cooperatives, with an area of operation of more than two states,
are covered by the Multi-State Cooperative Societies Law Which has been enacted
by the National Parliament. This unit presented you the laws and bye-laws framed
to regulate the activities of cooperatives, management practices for cooperatives,
National policy on cooperatives and challenges and impact of liberalization on
cooperati ves.

3.2 COOPERATIVE LAWS AND BYE-LAWS

This section summarizes the laws and bye-laws framed for the successful operation
of cooperative organisations. It also deals with the amendments made from time
to time to provide more teeth to the laws and bye-laws made in the beginning.
The power and duties of the officials responsible for enforcement of these laws
and bye-laws are also discussed.

3.2.1 Cooperative Laws

The Cooperative Credit Societies Act 1904 was the first cooperative legislation
passed during British regime. It was passed on 25th March 1904. Prior to this
period, the cooperatives were governed by the Companies Act in force in India.
The objectives of the Law were:

1) to provide for the constitution and control of cooperative credit societies with a
view to encourage thrift, self-help and cooperation among agriculturists, artisans
.and persons ?f1imited means, and

-2) to provide for the constitution and control of cooperative credit societies for the
said purpose.

41
Cooperatives
Cooperative is a state subject. The state recognises cooperatives as legal entities.
The state lays down development policies, enacts cooperative legislation and
frames rules and regulations for cooperative institutions,

The Multi-State Cooperative Law is enacted by the Parliament in the case of

multi-state cooperatives, and by the respective state assemblies in the case of
other cooperatives. The law specifies the area of operation of cooperation, its
aims and objectives and defines in detail the institutions, individuals and other
organs relating to cooperatives. The main components of a typical cooperative
law are, among others:

• Registration of cooperatives;
• Recognition of members of cooperative societies and their rights and liabilities;
• Management of cooperative societies;
• Privileges of cooperative societies;
• Properties and funds of cooperative societies;
• Audit, Inquiry, Inspection and Surcharges;
• Settlement of Disputes;
• Winding up of cooperative societies;
• Execution of awards, decree, orders and decision;
• Appeals and revision; and
• Offences and penalties.

The State government also issues a set of Rules, which are the instruments of
regulations for the implementation ofthe Cooperative Law.

3.2.2 State Cooperative Laws

Under the Government ofIndia Act 1919 (Constitutional Reforms Report/Moniague

Chelmsford Report), the subject of Cooperation was transferred to the then
provinces, which were authorised to enact their own cooperative laws. Under the
Government of India Act 1935 cooperatives remained a provincial subject.
Presently, the item 'Cooperative Societies' is a state subject. Cooperative Societies
Acts enacted by State Governments are now in place in the respective states.

In several states of India parallel cooperative acts, called the autonomous

cooperative laws, have been enacted. Under such laws, cooperatives, which do
not have any state participation in any way, financial or otherwise, are totally
exempt from the controls of the Registrar e.g., audit, inspection etc. These two
recent developments have helped in the democratisation of cooperatives.
Government officials who are deputed to manage cooperatives are also heing
gradually withdrawn to leave the management of cooperatives to cooperatives
themselves.

3.2.3 Multi-state Cooperative Laws

During Second World War, the Salary Earners' Cooperative Societies were
organised by employees of organisations, both in government and other
establishments who could be posted anywhere in India. This created a practical
42
 Structure, Laws and
problem to the salaried employees in dealing with the salary earners society in
Management of
which they become a registered member as they could not transact the business Cooperatives
with the salary earners society as and when transferred to another province. In
order to overcome this problem, the Multi-State Cooperative Societies Act was
passed by the British India in the year 1942, which, however, did not affect or
withdraw the law making power conferred upon provincial states through the
Government of India Act 1919.

In order to administer the operations of cooperative societies where membership

was from more than one province, the Government ofIndia enacted the Multi-
State Cooperative Societies Act 1942 which was subsequently replaced by the
M ulti-State Cooperative Societies Act 1984. This was subsequently amended
and enacted as Multi-State Cooperative Societies Act of2002. The Law provided
greater autonomy to cooperatives in their decision-making process. The Law also
reduced the powers of the Central Registrar and enabled the cooperatives to
operate more freely. Nomination of government representatives on the Boards
was also reduced.

3.2.4 Bye-laws of Cooperatives

Each cooperative institution is required to have a constitution or articles of

association, which are called bye-laws. The constituting members adopt the bye-
laws. All members are expected to follow them and these become the guidelines
for operating the business of a cooperative. As and when needed the general
body of the cooperative can amend these bye-laws: The Registrar of Cooperative
Societies registers these bye-laws and amendments and issues a certificate, which
authenticates its legality .

.3.2.5 Cooperative Rules and Regulations

The Registrar of Cooperatives, the principal functionary appointed by the

government to implement the 'cooperative legislation, registers (or dissolve)
cooperative institutions, issues circulars and guidelines for the officials of the
Cooperative Department and cooperative institutions, frames rules and regulations.

a) Registration

In accordance with the procedure laid down in the Law, the founding members
gather together, adopt bye-laws, collect necessary share money and make an
application to the Registrar of Cooperative Societies for registration. After the
examination of the application, bye-laws and other papers and having been satisfied
with their conformity with the Laws, the Registrar issues a Certificate of Registration.
The Certificate confers on the cooperative a legal status and empowers it to
negotiate with any institution for business and present itself before the court of
law. All registered cooperative should use the word 'Limited' in their nomenclature.
No other institution is allowed to use the word 'cooperative' except for those,
which are registered by the Registrar under the Cooperative Law.

The Registrar not only registers the bye-laws, but also registers all amendments
made in the bye-laws. He can also order and make suggestions to cooperatives
[0 make amendments in the bye-laws in order to bring about uniformity and to
assure conformity with the provisions of the Cooperative Law.

43
Cooperatives
In case, the Registrar is not satisfied he can also refuse to register the cooperative.
However, when the Registrar refuses to register a society, he shall communicate
the order of refusal, together with the reasons to the applicant.

In brief the functions and powers of the Registrar are the following:

• Registration of cooperative societies.

• Registration of amendments in the bye-laws.
• Amalgamatiojf, division, reorganisation of cooperatives.
• Conduct elections of management committees at all levels of cooperatives.
• Ensure proper investment of funds.
• Conduct audit, order inspections and punish negligent functionaries.
• Settle disputes through arbitration.
• Function as an appellate court.
• Enforce, execute orders, awards and decrees of various courts.
• Wind up and cancel registration of defunct societies.
• .Operate a fund for training, education and publicity programmes.
• .Frame or amend cooperative society's rules.
• Approve proposals for enrolment, resignation and cancellation of memberships.
~ Frame, execute and monitor various beneficial government approved schemes.

b) Circulars

In order to ensure smooth implementation of the Cooperative Law and in the

interest of cooperative institution, the Registrar issues, from time to time, circulars
on various subjects which are to be observed and followed by all registered
cooperatives and departmental officials.

c) Guidelines

In accordance with the wishes expressed by cooperatives, members of general

public and policy makers and Government policies, the Registrar issues guidelines
to cooperatives. These guidelines are mere suggestions and are not necessarily to
be followed. However, such guidelines are issued in order to strengthen
cooperati ves.

d) Inspection

The Registrar, by general or special order, may inspect a cooperative society. For
the purpose of inspection, the Inspector shall, at all times, have access to all
books, accounts, papers, vouchers, securities, stock and other property of the
society and may in the event of serious irregularities discovered during inspection
take them into custody and shall have power to verify the cash balances of the
society and subject to the general or special order of the Registrar to call a
committee meeting, and a general meeting. Every officer or member of the society
shall furnish such information with regard to the working of the society as the
Registrar or the person making such inspection may require.

44
e) Auditing Structure, Laws and
Management of
Cooperatives
All cooperatives are required to get their accounts audited by the Registrar or by
a person authorised by the Registrar, and place the audit report before their
general meetings for approval. Annual Audit Reports are also required to be
submitted to the Registrar. The audit includes examination of over dues, debts,
verification of the cash balance and securities, and a valuation of the assets and
liabilities of the cooperative. The auditor has free access to the books, accounts,
papers, vouchers and securities and other property of the cooperative and is
authorised to verify its cash balance and securities. The Cooperative Department
collects a prescribed Audit Fee from the cooperatives. The audit places the
cooperative in ditferentAudit Classifications 'A', 'B', 'C' etc. depending upon the
economic strength, democratic management and efficiency.

3.3 COOPERATIVE STRUCTURE

The cooperative structure in terms of governance, performance of-different types
offunctions, political and administrative system and monitoring is discussed under
this section.

3.3.1 National Cooperative Structure

There are two structures of cooperative system in India, one, the governmental
cooperative system and, the other, the Cooperative Movement structure consisting
of its members also known as 'non-official' system. The govemment system is the
creation of cooperative law, while that of the Movement is the evolutionary process.

These structures are explained as under:

Government (Official) System Non-Official System

Enactment of Multi-State Cooperative Law ..... - National Cooperative Union of India
by the National Parliament and Department
- National Cooperative Federations
of Cooperation (Ministry of Agriculture)
Central Registrar - Multi State Cooperatives*

+
I
•I
Enactment of Cooperative Law by State Assemblies - State Cooperative Unions
Cooperation Department and Registrar of
Cooperative Societies - -State Cooperative Federations
I

I •
I
~ I."
~ I
I
••I
District level
Cooperative Registrars
•• I

~ - District Cooperative Unions

•••

And other functionaries - State Cooperative Federations

e.g., Inspectors, Auditors
- Primary level Cooperatives
* Members of multi-state cooperative can he the
primary. district. state and national level - Members
cooperatives and federations

45
Cooperatives
It is important to note that the Central Government Department of Cooperation
and the Registrar has no control over the State Departments of Cooperation and
State Registrars since Cooperation is the state subject. Similarly, the multi-state
cooperatives anywhere in the c.iuntry are not covered by the State Registrars.

3.3.2 Cooperative Society Structure

The organisational structure of a typical cooperative consists of a General Assembly

of Members (also called General Body of Members), a Managing Committee (or
a Board of Directors) elected by the General Assembly of Members, and the
management staff appointed by the Managing Committee.

The organisational sttucture of a cooperative society is explained in the following

illustration: .

Members of Cooperative Society constitute

GENERAL ASSEMBLY OF MEMBERS (GENERAL BODY)

ELECTS

••• •··
•
Chairman, and
Managing Committee ..
··
.......•. ·· L....j Audit Committee
• I
(Board of Director) ~"'~"""""""""':
..•.
APPOINTS ·· ··
,r: ,r ···
General Manager · · .
With the authority of the MC/BOO I Various Other Committees
I
APPOINTS
•••
~,.:
.
Managers, Support Staff of Business Units

Command Line: Reporting Line: •••••••••••••••••

In a cooperative society the General Assembly is the supreme authority. The

policy decisions made by the General Assembly are handed over to the Managing
Committee for implementation. The MC/BOO is given the authority to appoint the
required staff and propose budgets. The General Assembly also elects an Audit/
Supervision Committee which reports only to the General Assembly. Its principal
functions are to CaITYout internal audit of the finances, assets, liabilities and
activities of the cooperative society.

3.3.3 Three-tier Structure at State Level

All primary level cooperatives of all types get federated into their respective
district level federations. The state unions and federations get federated into state
level unions and federations. The State level cooperative unions and federations
get federated into their respective national level unions and federations. It is also
quite possible that primary level cooperatives and district cooperative federations
can become members of other federations in order to secure assistance and
 Structure, Laws and
facilities. Primary Agricultural Credit Cooperative Societies (PACS), for instance,
Management of
are the members of the district central cooperative bank and also M the district
Cooperatives
cooperative unions. The district central cooperative banks are the members ofthe
State cooperative banks. Since Cooperation is a state subject, it can be mentioned
that the Indian Cooperative Movement follows a three-tier system.

3.3.4 National Level Federations

A 11state level unions and federations become members of their respective national
level unions and federations. Multi-state cooperatives are also taken as national
cooperatives. National federations and Multi-state cooperatives are registered
under the Multi-State Cooperative Act. The role ofthe national federation mainly
is to act as spokes persons for their affiliates. They interact with the government
and other cooperative sectors in order to protect and further the interests of
cooperative members.

Check Your Progress 1

Note: a) Use the space given below for writingyour answers.

b) Check your answer with those given at the end of the unit.

I) What are the prevailing cooperative laws in India and who administers them?

2) Name the two structures of cooperative movement in India.

3.4 MANAGEMENT OF COOPERATIVES

There are three principal functionaries responsible for the management of a
cooperative:

• the General Body Meeting of the members which frames general policies, elects
a Managing Committee and receives and approves performance reports;

• the Managing Committee which implements the policies and programmes

approved by the General Assembly of Members and employs management staff
for the purpose; and

• the general manager and his staff who actually performs day-to-day activities,
manages financial matters and prepares reports for the managing committee.

In order to take decisions, the managing comrnit=e needs inrormation and reports
47
and advice from the operational staff, which generally IS, the general manager. It
( 'ooperatives
is the manager who puts up actual financial and business information before the
managing
. committee. Good decisions .are taken based on reliable, authentic, accurate
information and professional advice.

The performance of a cooperative in the functional areas of management, finance,

marketing and accounting may be generally construed as management criteria in
measuring efficiency. The area of management include:

Planning: management should be able to evaluate cooperative ..>:objectives by

taking into consideration the needs of the members, the resources in the community
that could be mobilised the existing socio-political and economic conditions in the
locality in order to set more realistic goals;

Staffing: aside from planning, management must be responsible for recruitment,

training and development of staff;

Internal Control: to exercise control over internal resources of the cooperative.

,
Measure of efficiency will be highly dependent on the ability of the management
and staff to maintain proper controls over all aspects of administration and
management. The area of finance is the lifeblood of the cooperative. Without
financing the cooperative will be unable to achieve the goals for which it was
established. The area of marketing includes estimation and programming, collective
purchasing, elimination of middlemen in the process of marketing to ensure better
returns to the producer-members, obtaining better and accurate marketing
information, making prompt payments, and maximising sales and activating the
procurement operations. The area of accounting includes better maintenance of
books of accounts, reconciliation of accounts with the bank and clients, production
of and adherence to repayment schedules, preparation of accounts in time and
keeping the audit reports readily available for inspection and discussion, etc.

3.4.1 Typical Management Problems in Cooperatives

Some of the main problems relating to the management of cooperatives can be

summarised as under:

• Profit-orientation rather than increasing the income ofmembers.

• Inadequate or inefficient loans, grants and repayment procedures.

• Lack of awareness about maintaining accounts - mixing up society accounts

with personal accounts.

• Improper maintenance of books of accounts and other books, such as minute

books, members' registers members' passbooks etc.

• Absence of job descriptions, and the practice of double-functions.

• Lack of awareness among members and employees about the bye-laws,

objectives, ignorance about balance sheet, and lack of education and training.

In order to overcome the problems faced by cooperatives in various sectors of

management, staff training is essential. It is the responsibility of the cooperative to
sponsor its personnel for professional management training prcgrammes conducted
4R
 Structure, Laws and
by the National Cooperative Union of India (NCUI) and other specialised
Management of
institutions.
Cooperatives

3.4.2 Training Needs and Facilities

In order to serve their members better, cooperatives need well-qualified, dedicated

and efficient managers and other employees who are able to serve the members
well and maintain accounts, assets and liabilities of the cooperative. Different
cooperatives have different needs and, therefore, their personnel need to be
trained at different places.

In the case of agricultural cooperatives and farmers organisations there is a need

to perform the following functions:

• Business planning ofthe cooperative, expanding the business operations by

diversification ofbusiness activities, securing approval of the managing committee
and general assembly of members as to the plans and budgets.

• Supply to the members, in time, in proper quantities, of quality farm inputs. These
items need to be procured in advance based on the requirements ofthe members
and stored in ideal conditions before being supplied to the members.

• Marketing of members' produce, obtaining market information, its dissemination,

assistance in marketing operations, warehousing and shipment arrangements.

• Credit services, management of lending operations, negotiations with the

cooperative and commercial banks and other financial institutions, gathering and
dissemination of information on various credit schemes of the government and
other agencies.

• Management of cooperative financial operations, personnel, assets and liabilities,

getting the accounts audited, submission of audit reports, budget planning etc.

h~ brief, there is a need for the training ofthe following categories of personnel:

• Managers in-charge offinance and book-keeping.

• Managers and staff responsible for input procurements.

• Managers and staff responsible for marketing of produce.

• Managers and staff responsible for warehousing and transportation.

India happens to possess world's largest cooperative education and training

arrangement. The NCUI, which is an apex body of the Indian Cooperative
Movement, runs a full-fledged programme of member education and staff training.
Under the umbrella of the NCUI, there are two wings: one, the National Council
for Cooperative Training (NCCT), and, two, National Centre for Cooperative
Education (NCCE). The NCCT operates 20 institutes of cooperative management
(ICM) including one National Institute of Cooperative Management. The institutes
offer a wide range of training programmes (diploma and certificate courses in
management, accounting etc.) for the personnel of cooperatives. Some of the
institutes also offer Post-Graduate Programmes in Cooperative Business
Management (equal to MBA programmes). The NCCE looks after the education
of members of cooperatives. 49
Cooperatives
The NCUI and its affiliates at the national and state level also conduct, from time
to time short-term training workshop for the personnel of cooperatives.

3.4.3 Cooperative Member Education

The Principles of Cooperation are based on basic cooperative and ethical values.
Cooperatives are based on the values of self-help, self-responsibility, democracy,
equality, equity and solidarity in the traditions of their founders. Cooperative
members believe in the ethical values of honesty, openness, social responsibility
and caring for others. Because of these ingredients firmly established, cooperatives
-are different types of enterprises than those of public and private enterprises.

Creation of awareness among members .of their rights and duties and the importance
and relevance of their cooperatives to create enlightenment among them is
considered of utmost importance. Enlightened members create enlightened
cooperatives. Enlightened members take greater interest in the development of
their cooperatives and participate more and more in the organis.ational structures
and business operations. Enlightened cooperatives strive to serve their members
and the community. Awareness and enlightened is generated through a process of
education of members. This activity is called the Cooperative Member Education.
Member education encourages and strengthens the process of member participation.

Member participation in the organisational and business operations of a cooperative

society is the cornerstone for the success ofthe institution. Since members arc the
owners they also have the right and authority to control and guide the operations.

The importance of cooperative education was realised from the very inception of
the Movement. As early as 1915, a Committee headed by Sir Edward Mac
lagan, observed that most of the defects they had found in cooperative societies'
were due to "lack of teaching both before and after registration".

Another very striking comment on the importance of education was from the
Royal Commission on Agriculture which observed: "there has been lack of
patient and persistent education of members in the principles and meaning
of Cooperation by teachers competent to perform the task efficiently under
the adequate supervision If Cooperation fails. there will fail the hest
hope of rural India ".

Although several State Govemments expanded their training and educational 'acilities
in the early thirties, the first clear-cut programme for training of secretaries and
members of managing committees of agricultural credit and other societies was
taken up by the Govt. oflndia in 1935 on a scheme drawn up by Sir Malcolm
Darling.

In accordance with the Principles of Cooperation member education and training

ofleaders and personnel are the obligations of cooperatives themselves. In addition
to the initiatives at the local level, there is a full-fledged national cooperative
member education programme which is run by the NCU1 and State Cooperative
Unions.

An All-India Comprehensive Cooperative Education Programme for the members,

committee members as well as the secretaries was introduced on a pilot basis in
1956 arid countrywide coverage was achieved in 1960.
50
 Structure, Laws and
The objectives of the programme were:
Management of
Cooperatives
a) Creating an understanding in the members of the role and importance of
cooperative institutions for social and economic development of the community;

b) Acquainting the members, managing committee members and office-bearers

with operational aspects of management of the societies;

c) Developing in members and managing committee members an under-standing

of their rights and obligations;

d) Fostering the required leadership at the primary level; and

e) Improving the personalities ofthe members and employees and help them to
realise their potential abilities and to create awareness of the value of the
cooperative action.

The present-day Cooperative Member Education is conducted by the NCUI

through the State Cooperative Unions and district cooperative unions. While the
NCUl designs the scheme and syllabus of the programme and trains the district
cooperative educational instructors and supervisory staff, the actual implementation
rests with the State and district Cooperative Unions. The NCUI operates a
special training and development facility at the National Cooperative Education
Centre (NCCE). The NCCE provides the following facilities: Full-scale training
facilities, development of teaching material and audio-visual aids for member
education activities, disbursement of funds to state unions, monitoring and evaluation
of the programme.

The funding support for the programme is obtained partly from the govemment
and partly met from own resources, which are raised from state and district level
cooperati ve organisations.

3.4.4 Professionalisation Need and Facilities

Professionalism into cooperatives can be ensured ifthe cooperatives are given the
freedom to select and appoint chief executive officers and other employees based
on their competency, efficiency and suitability.

The needs to professionalize the management of cooperatives have been increasing

as the members wish to receive accurate and transparent accounts of their
cooperatives. In the era of open market economy when cooperatives are faced
with severe competition, members and cooperative personnel need to be prepared
to meet such challenges. Federal structures of cooperatives and several specialised
institutions have also begun to offer training and development programmes for
cooperative personnel:

• Agricultural Cooperative Staff Training Institutes operated by cooperative banks.

• Fertiliser Marketing Development Institute operated by the lFFCO.

• TOPIC-Training of Personnel in Cooperatives operated by the NCDC.

• National Institute of Cooperative Management, Gandhinagar, Gujarat.

• InstituteofRural Management (IRMA), Anand. 51

Cooperatives
A large number of cooperative institutions also sponsor their management personnel -.
to specialised institutions e.g., Indian Institutes of Management. Cooperatives like
the IFFCO have even instituted IFFCO Chairs in 20 State Universities and
institutions of higher learning in order to promote professionalisation.

3.4.5 Democratisation of Cooperatives

Definition of a Cooperative reads thus: "A cooperative is an autonomous
association of persons united voluntarily to meet their common economic,
social and cultural needs and aspirations through a jointly-owned and
democratically-controlled enterprise." The definition emphasizes the following
characteristics of a cooperative: .

a) The cooperative is autonomous - it is as independent of government and private

firms as possible.

b) It is an association ofpersons. Cooperatives are free to define 'persons' in any

legal way they choose - individual and or legal persons.

c) The persons are united 'voluntarily'. Membership should not be compulsory.

Members should be free to join or to leave.

d) Members of a cooperative 'meet their common economic, social and cultural

needs '. Indeed in the future helping to provide a better way oflife - cultural,
intellectual and spiritual- may become one of the most important ways in which
the cooperatives can benefit their members and contribute to their communities.

e) The cooperative is a 'jointly-owned and democratically-controlled enterprise '.

Within the cooperative control is distributed among members on a democratic
basis. The dual characteristics of ownership and democratic control are
particularly important in differentiating cooperatives from other kinds of
organisations.

The primary and dominant purpose of a cooperative is to promote the interests

of its members. Only the members can finally determine what their interests are
in any given situation. A cooperative, therefore, will not in the long run work well '.
and prosper without agreed and effective methods of consulting the members as
a body and enabling them to express their wishes. Moreover, since it is the
members who bring a cooperative into existence and whose loyal support keeps
it alive, those who administer its affairs and, in particular, conduct its day to day
business must be chosen directly by the members and enjoy their confidence.

It follows further that the Board of Directors are accountable to the members.
They must report regularly in a business-like manner on their-activities and submit
the results to the members' judgment. If the members are not satisfied, they have
the authority and the power to criticise, to object and in extreme cases, to dismiss
and replace their officers and officials.

The implementation of democratic control becomes more and more complicated

with the growing size of cooperatives and with the changing world in which
cooperatives find themselves.

In the cooperative the status of all members should be equal and should have
equal opportunities of participating in decisions and expressing views on policy.
52
There is no way of say this, save by giving'each member 'one vote and only one'.
 Structure, Laws and
The right of every member to one vote and only one, enshrined in the principles,
Management of
the Law, and the bye-laws of the cooperatives, is not in itself a guarantee of Cooperatives
effective democratic administration, especially in the larger cooperatives. Much
depends on the circumstances in which the members are caned to vote.

Democratic control of cooperative organisations necessarily implies autonomy in

the sense of independence of external control. In a fully developed cooperative
society the members themselves must take ultimate control, with no external
interference.

As regards the functional autonomy of a cooperative institution, there are a few

other elements to be considered e.g., State control over cooperatives, control of
cooperatives by 'interest groups' etc. State control over cooperatives can be
exercised in several ways and under many pretexts. Some of the examples are
as follows:

Because the government enacts the cooperative legislation, frames rules and
regulations for cooperatives and undertakes audit, the Registrar of Cooperatives
tends to control and direct cooperatives.

In cases where the government participates in the share capital, sponsors projects
for cooperatives and extends concessions and special quotas, the government
assumes the control of the cooperative by nominating its representatives on the
Managing Corpmittee and sending its officers to manage cooperative institutions.

By exercising his vast powers and at the instance of any political pressure or being
influenced by self-interest the Registrar has the authority to remove the duly
elected Managing Committee and assume the control of cooperatives. This is an
undemocratic step which, unfortunately, in many cases, has been taken by
government authorities.

Although the membership is expected to be homogeneous and the objectives of

the cooperative and their members is mutual help, in several cases cooperatives
are controlled by 'interest groups', 'mafia' and inf1uentiallandlordsto take advantage
of various schemes of the government, contracts' etc. Influential people can take
control of the Managing Committee and use the cooperative to their advantage.

lthas been stated by the cooperative leaders and members, time and again, that
cooperative institutionsand the govemment should not interferein their organisational
affairs and business operations. As a consequence the Central Government has
enacted a Multi-State Cooperative Act-2002, as a model cooperative law; under
which the role and powers of government have been drastically reduced e.g.,
removal of and nominations on the managing committees. It has been recommended
by the Central Government that all state governments should also enact similar
laws to grant more autonomy to cooperatives. A trend has also been set up, more
at the behest of the cooperative leaders and members, to make cooperative laws
more liberal.

111 several states of India parallel cooperative acts, called the autonomous
cooperative laws, have been enacted. Under such laws, cooperatives, which do
not have any state participation in any way, ·financial or otherwise, are totally
exempt from the controls of the Registrar e.g., audit, inspection etc. These two
recent developments have helped in the democratisat.t-r, ~[ cooperatives.
Government officials who are deputed to manage l,;vvperatives are also being 53
Cooperatives
gradually withdrawn to leave the management of cooperatives to cooperatives
themselves.' .

Check Your Progress 2

.Note: a) Use the space given below for writing your answers.
b) Check your answer with those given at the end of the unit.

1) Who are the principal functionaries in the management of a cooperative?

......................................... ~ : .

2) How is professional management useful for cooperatives?

3) Why democratic control in cooperatives is important?

..........................................................................................

3.5 . MONITORING AND POLICIES

This section of the unit deals with system of monitoring and evaluation of the
different aspects ofthe cooperatives alongwith the need and objectives of national
policy of cooperatives.

3.5.1 Monitoring

The monitoring and evaluation of cooperatives is done at two levels - Government

level and the Cooperative level. The monitoring of a cooperative institution is
done on account of the following factors:

• Whether the cooperative operates in accordance with the provisions of the

Cooperative Law, and observing the rules and guidelines issued from time to
time;

• Whether the financial and other interests of members are safe and well-
protected;

• Whether the cooperative follows all procedures in respect of book-keeping,

54
cash, inventory and other assets;
 Structure, Laws a~d
• Whether the cooperative is in conflict with individuals and other cooperatives;
Management of
Cooperatives .
• Whether the cooperative has conducted its elections in a democratic and fair
manner;

• Whether the cooperative has conducted its annual general meetings in time
and with adequate notice given to its members;

• Whether some members have obtained more shares than the limits prescribed
. in the Law and Society bye-laws;

• Whether the General Body has received the annual report, audit report and
inspection reports and ratified the same; and

• Whether the cooperative accounts have been audited properly and regularly
and whether proper rati fication of audit objections have 5een adequately met.

For this purpose the Registrar of Cooperative Societies can make use of the
following monitoring devices:

• Get the accounts ofthe cooperative audited by Cooperative Auditors.

• Order convening of General Body Meeting.

• Appoint an Election Officer.

• Order amendment of bye-laws.

• Remove the Managing Committee etc.

For monitoring purposes the Cooperative Law provides for the following personnel:

• Registrar of Cooperative Societies

• Additional Registrars

• Joint Registrars

• Depu~y Registrars

• Assistant Registrars

• Inspectors and Auditors of Cooperative Societies.

The monitoring of cooperative activities is done by the members in the following

manner:

• General Body Meeting: The General Assembly has the authority to remove/re-
elect the Managing Committee/Board of Directors. It can also undertake
amendments in the bye-laws in case the bye-laws need a change or are defective.
Members of the General Body Meeting can also ask for special or extra-ordinary
meetings to discuss the problems ofthe cooperat. yes.

• Managing Committee/Board of Directors: The MC/BOO can propose changes

in the policies, programmes and business lines to the Gel1eJ"~1 Body Meeting
ss
Cooperatives in order to solve the problems of the cooperative. The MC/BOD can also
remove the General Manager and other personnel in order to make the
operations efficient.

• Audit/Supervision and Special Committees: These committees can also highlight

the problems and suggest to the General Body of Members reforms and
improvements to make the operations efficient and responsive to the needs of
the members.

3.5.2 National Policy on Cooperatives - Its Need

. The role of cooperatives has acquired a new dimension in the changing scenario
of globalisation and liberalisation of Nation's economy. Internal and structural
weaknesses of these institutions combined with lack of proper policy support
have neutralized their positive impact. There are wide regional imbalances in the
development ofthe cooperatives in the country. This has necessitated the need for
a clear-cut national policy on cooperatives to enable sustained development and
growth of healthy and self-reliant cooperatives for meeting the sectorallregional
aspirations of the people in consonance with the Principles of Cooperation. In this
connection, it is also imperative to address the issues, which require to be attended
to by evolving a suitable legislative and policy support to these institutions.

The National Cooperative Policy 2002 has recognised the ideology of cooperatives
which is based on the principles of self-help, self-responsibility, democracy, equality
and solidarity in addition to emphasizing the inculcation of cooperative values such
as honesty, openness, social responsibility and concern for one another by all
connected with cooperatives.

• Objective ofthe National Policy

'The objective of the National Policy is to facilitate all round development of the
cooperatives in the country. Under this policy, cooperatives would be provided
necessary support, encouragement and assistance, so as to ensure that they work
as autonomous, self-reliant and democratically managed institutions accountable
to their members and make a significant contribution to the national economy,
particularly in areas which require people's participation and community efforts.
This is all the more important in view of the fact that still a sizeable segment of
the population in the country is below poverty line and the cooperatives are the
only appropriate mechanism to lend support to this section of the people.

The National Policy on Cooperatives to this end would seek to achieve:

• Ensuring functioning of the cooperatives based on basic cooperative values and

principles as enshrined in the declaration ofthe Intemational Cooperative Alliances
Congress, 1995.

• Revitalization of the cooperative structure particularly in the sector of agricultural

credit.

• Reduction of regional imbalances through provision of support measures by

the Central Government/State Government, particularly in the under-developed
and cooperatively undeveloped States/regions.

56
 Structure, Laws and
• Strengthening ofthe Cooperative Education and Training and Human Resource
Management of
Development for Professionalisation of the management ofthe Cooperatives. Cooperatives

• Greater participation of members in the management of cooperatives and

promoting the concept of user members.

• Amendment/removal of provisions in cooperative laws providing for the

• restrictive regulatory regime.

• Evolving a system of integrated cooperative structure by entrusting the

federations predominantly the role of promotion, guidance, information system,
etc. towards their affiliate members and potential members.

• Evolving a system of inbuilt mechanism in Cooperative legislation to ensure

timely conduct of general body meetings, elections and audit of cooperative
societies.

• Ensuring thatthe benefits of the cooperatives' endeavour reach the poorer

sections of the society and encouraging the participation of such sections and
women in management of cooperatives.

• Statement on National Policy on Cooperatives

. The, Government of India in consultation and collaboration with the State

Governments, enunciates the following:

I) While upholding the values and principles of cooperative, it recognizes the

cooperatives as autonomous associations of persons, united voluntarily to meet
their common economic, social and cultural needs and aspirations through
jointly owned and democratically controlled enterprises.

2) Upholds the preservation of the distinct identity of cooperatives, its values

and principles by providing an appropriate environment and taking the required
administrative and legislative measures.

3) Recognizes cooperatives as a distinct economic sector and an integral

component of the socio-economic system ofthe country and an effective and
potential instrument of socio-economic development. It considers them as
essentially community initiatives for harnessing people's creative power,
autonomous, democratically managed, decentralized, need based and
sustainable economic enterprises. Cooperatives will, however, remain the
preferred instrument of execution ofthe public policy especially in the rural
area.

4) The regulatory role of the Government will be mainly limited to the conduct
of timely elections, audit of the cooperative societies, and measures to
safeguard the interest of the members and other stakeholders in the
cooperatives. There shall, however, be no interference in the management
and working of the cooperatives. The Government recognizes the apolitical
nature of cooperatives.

5) Reiterates and reinforces its commitment to the cause of the SC/ST, women
and other weaker sections of the society and their development through the
cooperatives. Wherever members belonging to women or Scheduled Castes/
..57
Cooperatives .
Scheduled Tribes and other backward castes want to have their exclusive
societies provided they find a socio-economic reason to form such a society,
encouragement and assistance wiII be provided by the Government. If they
so decide, Cooperative Societies, can provide for the representation of
such category of persons in their bye-laws for which they are competent to
frame.

6) Accepts the need to phase out its share holdings/equity participation in the
cooperatives. It shall, however, endeavour and extend appropriate support
for improving financial viability and resource mobilization by hamessing local
savings and adequate refinance facility, and to the possible extent providing
a policy framework to ensure that there is no discrimination against the
cooperatives in the matter relating to resource mobilization to attain financial
viability. The cooperatives shall be enabled to set up holding companies/
subsidiaries, enter into strategic partnership, venture into futuristic areas like
insurance, food processing and information technology etc., and shall be .
independent to take the financial decisions in the interest of the members
and in furtherance of their stated objectives.

7) Recognizes the role of the Government in ensuring that the benefits of

liberalization and globalization in the emerging economic environment are
extended to the cooperatives in equal measure through suitable fiscal policies
and pledges to provide support and protection to the Cooperative Movement
through suitably designed investment programmes with a view to providing
the cooperatives a level playing field vis-a-vis other competing enterprises
especiaIIy in the field of agro-processing and marketing.

8) Recognizes the need for more effective regulation of cooperatives operating

in the financial sector and accepting public deposits ..

9) Also recognizes the need for incorporating special provision in the

Cooperative Societies Acts with regard to banking, housing, real estate
development, processing, manufactures' cooperatives, infrastructure
development, etc.

10) Recognizes the need to provide preferential treatment, as far as possible, to

the cooperatives engaged in areas such as credit, labour, consumer services,
housing, development of SC/ST and women and development of emerging
areas as well as sectors requiring p.eople's participation especially in rural
areas.

11) Undertakes to devise and execute suitable programmes and schemes to

build and develop cooperative institutions in the cooperatively under-
developed States/regions with particular reference to the North-Eastern
States-including Sikkim.

12) Recognizes the need to support the cooperative movement to develop

human resources, cooperative education and training, appropriate
technologies and infrastructural facilities so as to promote professional
management in cooperatives particularly at the primary level, for theirgreater
functional and operational efficiency. It may also include the introduction of
cooperatives as curriculum vitae at ~chool·level.

58
 Structure, Laws and
13) Undertakes to initiate structural reforms in order to improve the functioning
Management of
ofthe cooperatives at various levels to ensure greater efficiency and viability. Cooperatives
These may include steps t(),activate idle membership, enhance member
participation and involvement, provision of multi cooperatives approach,
ensure timely conduct of g~neral body meetings and elections, provide for
effectiveaudit, devise suitablemechanism forrehabilitationofthe sick societies
particularly in the processing sector.expedite winding up of defunct societies,
and providing legal framework for voluntary winding up of cooperatives.

14) Undertakes to bestow autonomy to cooperatives to follow appropriate

personnel policies including those relating to recruitment, promotions and
other such matters with due emphasis on quality and transparency .

. 15) Undertakes to introduce the required electoral reforms through legislative

measures. Elections to the cooperative societies should be held through an
independent authority like the State Election Commission.

16) Also undertakes to take other such measures as would be required for
efficient and healthy growth of the cooperative movement.

Check-Your Progress 3

Note: a) Use the space given below for writing your answer.
b) Check your answer with those given atthe end of the unit.

1) Give the essential features of cooperative policy in India..

3.6 IMPACT OF ECONOMIC

LIBERALIZATION ON COOPERATIVES
Cooperatives have played important role in the upliftment of weaker section of
society. However, economic scenario is changing fast with economic liberalisation
in the country, In this section impact of economic liberalisation on cooperative
movement has been discussed. .

3.6.1. Economic Liberalization (Open Market Economy)

In the light of drastic political and economic changes and developments in the
world, the face of business has also undergone a tremendous transformation.
Industrialised economies have realised that theycannot produce everything due to
varying economies of scale. Less industrialized countries have come to agree that
procurement of technologies is not only expensive but the products thus produced
: are hard to sell.
... I. \ .
Almost all the/countries of the world have increasingly adopted the concept of
Open Marketkconomy. The concept has theifollowing basic ingredients: quality .
 .ooperatives
products, environment-fiiendlymethods applied in production, competition, accurate
information on the contents of the produce etc. The World Trade Organisation
(WTO), an international platform, looks after the world trade and ensures that
developing or developed countries do not suffer on account of quality and
misinformation. The entire world has become a small global village where everyone
can sell and buy anything. The world economy has entered an era of new
development when movement of goods, money, people and information across
national boundaries or the' 'globalisation' has been picking up its pace.

Producers now have an access to new markets. The information of the products
is readily available through various media. Business can take place on the basis
of the information publicized and the assurances on quality and after-sales services
given. For this purpose various other instnnnents have been introduced e.g., ISO
Certification which lays down certain efficiency and quality norms.

3.6.2 Challenges of Liberalization on Cooperative Sector

Globalisation involves a privatisation of plants and facilities or freeing them from

the ownership and control of a state, a nation state, be it socialist or otherwise;
thus privatisation of public goods, such as energy, transport, communication and
health services has been spreading in capitalist economies in the era of globalisation.

Large multi-national companies with worldwide procurement, marketing and

financial infrastructure and network have already adapted their operations to new
market trends. Some of the world's large cooperative enterprises have also made
use of the new concepts. In the Indian context, cooperative business enterprises
are not only small but also ill-equipped to meet the challenges of. the Open
Market. Historically they were not prepared to undertake large size business -
restricting themselves to thrift and credit business and distribution of farm inputs.

Having been placed in developed industrial environment, fanners in advanced

countries enjoy better production techniques, acceptable quality standards, systems
of market information and means oftransportation topped with huge subsidies to
the agricultural sector. Farmers in advanced countries cannot dispose off their
huge production surplus in their home countries. European subsidies protect only
the agri-business corporations, large and rich farmers and the nobility class at the
cost of small and marginal farmers and consumers. They, therefore, dump them
in developing countries because, for them, the cost of production has been low
due to heavy input of subsidies from the government. The hefty European subsidies
also depress global prices seriously, placing the farrners in the Third World at a
competitive disadvantage. Cheap farm products present adverse situation for
farmers in developing countries.

The cost of agricultural production, for instance, in India is heavy because the
government does not encourage subsidies and the means of production and farm
products are not superior. The quantity and qualify is low, but the cost of production
is high. The market in India would, therefore, prefer to purchase imported products,
which are priced lower than the home products. A large number of farmers,
therefore, in India have suffered losses leading to high incidences of suicides.

Agricultural cooperatives in India, except in very few cases, have 110tbeen able
to:

,60
 Structure, Laws and
i) protect the interests of their members;
. Management of
Cooperatives
ii) undertake any serious Agricultural ProductionlBusiness Plans;

iii) introduce quality standards in agro-processing and handling;

iv) educate the farmer-members on introducing innovations;

v) taking measures to lower the cost of production;

vi) increasing the quality of products;

vii) introduce. Indian farm products in the world market adequately; and

viii) introduce effective value-addition techniques.

It is also understood that the fanners, as individuals cannot reduce the cost of
production, introduce and strengthen agricultural infrastructure, market the produce,
procure high quality inputs and technology. This is true specifically of agricultural
production and handicrafts. Both these sectors employ a large number of people.
It is, therefore, necessary that the government and the farmers (and farmers
organisations, especially agricultural cooperatives) should wor~ together. There is
a strong need for the two sectors to meet the challenges of open market. Any
delay would spell danger to the Indian agriculture, and agricultural cooperatives.

;- r
3.6.3 Impact of Economic Liberalization

Cooperatives, especially the agricultural cooperatives, have come under a lot of

st~·aindue to the liberalisation of economy. Until the end of '(th five year plans,
the government provided substantial financial and moral support for the promotion
of cooperatives, assistance in the creation of infrastructure for industrial •
cooperatives, institution building, and human resource development. With the onset
ofliberalisation syndrome, the government announced that subsidies in agricultural
sector would be gradually reduced. Grants-in-aid to promotional cooperative
institutions were reduced. The following factors affected adversely the cooperative
institutions:

• Withdrawal and reduction of subsidies to cooperatives, especially in agriculture

sector resulting into higher costs of inputs and services, higher cost of production,
lower economic returns to the producers and to their cooperatives.

• Countries with less expensive farm labour and farm inputs and higher farm
subsidy resorted to 'dumping' their surpluses.in developing countries where
the cost of production was already high. The farm producers in these countries
suffered on two major counts: home production became less remunerative,
and a large chunk of fertile land either became a wasteland or got urbanized.
Consequently, the national farm production suffered.

• Since agricultural cooperatives are mostly patronized by farmers, their business

dwindled and incurred heavy losses in their business.

• Economic liberalisation compelled agricultural cooperatives to educate farmer-

men~bers on the new requ.irements to bl
a~p~ied in a~icul~u~e. These
reuurrements are: group action rather than individvvl f!> ••• n1ng; joint-use of
61
Cooperatives
resources; use of quality and standard inputs like seeds, farm chemicals and
fertilisers; use of environment-friendly methods of cultivation; observing more
professional and technical systems; and adoption of new and improved farm
technology and farin machines. Indian agriculture, therefore, began to adapt
itself to modem methods and machiries and technology.

3.6.4 Economic Reforms in Cooperatives

As a consequence of the introduction of open market economy, the cooperative

structure has been forced to undertake economic reforms. The government has
also taken steps to relieve cooperatives of some pressure on them by reforming
systems which related to agriculture and agricultural cooperatives. Some of the
recent economic reforms in cooperatives are the following:

• Greater autonomy and freedom of action given to cooperatives through reforms

in cooperative legislation, especially, the Multi-State Cooperative Act 2002, in
their organisational and economic matters. Cooperatives can now directly
negotiate with financialand business institutionswithout obtaining prior approval
ofthe government. .
,
• Cooperatives are allowed to enter into contracts and business negotiations
with private enterprises for manufacturing and marketing.

• Greater development opportunities are now available e.g., setting up of grading,

packaging, warehousing, transportation services and facilities by making use
of modem technologies. .

• Cooperative institutions are now encouraged to diversify their economic

activities in order to expand their business and services.

• The governance structure of cooperatives has undergone a substantial change

from the previous traditional models. Cooperatives now adopt better and
improved methods of management by making use of qualified professional
management and operational staff. Agricultural cooperatives have also begun
to make use of IT.

Agro-processing and marketing

The open market economy demandsquality products in sufficient quantities. The

process of competition has also given opportunities to private entrepreneurs to
enter agricultural sector in agro-processing and marketing of agricultural produce.
In several cases, private entrepreneurs have entered into contracts with fanners
organisations and individual farmers, for the supply of raw products. Due to
shortage of funds and lack of technology and initiative, cooperative organisations
have not entered the agro-processing sector sufficiently. Agro-processing is,
therefore, getting slowly into the hands' of private entrepreneurs. However, in
some cases cooperatives, especially in the' dairy sector, have taken bold steps to
diversify their agro-processing activities, resorted to value-addition and expanding'
their marketing operations through their own outlets as well as through private
business channels.

62
 Structure, Laws aDd
Check Your Progress 4 . - -Managfment of
Cooperatives
Note: a) Use the spac~ given below for writing your answer.
b) Check youranswer withthose given at the end of the unit.

I) What are the implications of open market economy for cooperatives?

.•.••••.•.••••••• 1•••••.••••••••.•••••••••••••••••••••••••••••••••••••••••••••••••••••••••
I .

· ... '." ',' ..••.... /. r ••••••••••...•..•••..•••••••.•.•.••.•••••••••.•••••••••••..••••••••••••

• •• ~ ••••••••••• 0·' ••••••••••••••••• , ••••••••••••••••••••••••••••••••••••••••••••••••••••••

• •••••••••••••••.••••••••••••••••••••• : ••••••••••••••••••••••••••••••••••••••••• i.•••••••••

3.7 LET U~S SUM UP

Cooperatives were formally introduced in India through the Cooperative Credit
Societies Law enacted by the British Government in 1904 with a view to provide
rcJief to Indian peasants from the clutches of money lenders. The Law had
undergone changes to meet the requirements of changed times: Cooperation is a
State subject. The Central Govemment has nojurisdiction over state cooperative'
laws. Multi-State cooperatives, with an area of operation of more than two states,
are covered by the Multi-State Cooperative Societies Law which has been enacted
by the National Parliament.

There are three types of Laws. in India i.e., Multi-State Cooperative Societies
· Law, State Cooperative Laws and the Autonomous Cooperative Societies Laws.
Development of cooperatives is overseen by a govemmerit-functionary i.e., Registrar
of Cooperative Societies who implements the cooperative law, guides, inspects
and audits the cooperatives. All cooperatives have their own bye-laws which an:
adopted by the members, and they affirm to abide by them. Members are free
to join and leave their cooperatives. Members can amend the bye-laws and wind
up their own cooperatives. There are three main components to manage a
cooperative i.e., the General Body of Members, a Managing Committee which
is elected by the General Body of Members and the Management Staff appointed
· by the Managing Committee. The General Body is the supreme authority in a
cooperative.

To enable sustained development and growth of healthy and s~f-reliant cooperatives

for meeting the sectoral/regional aspirationsofthe people in consonance with the
Principles of Cooperation a
National Policy on Cooperatives has been evolved.
The National. Policy 2002 has recognised the ideology of cooperative-s; which is
based on the principles of self-help, self-responsibility, democracy, equality and
. solidarity and cooperative values.

Creat ion of awareness among members of their rights and duties and the importance
and relevance of their cooperatives to create enlightenment among them is
considered of utmost importance. Enlightened members create enlightened
· cooperatives. Enlightened members take greater interest in the development of
their cooperatives and participate more and more in the organisational structures
and business operations ..Awareness and enl1~htened is generated through a process
of education of members.
63
Cooperatives.
3.8 KEY WORDS
Cooperative Bye-laws Each cooperative institution is required to have a
constitution or articles of association which are
called bye-laws.

Cooperative Societies Cooperative Societies Law is an act of the"

Law government to give cooperative institutions a legal -
entity.

Economic Reforms As a consequence of the introduction of open

market economy, the cooperative structure has
been forced to undertake economic reforms, The
government has also taken steps to relieve
cooperatives of some pressure on them by
reforming systems which related to agriculture and
agricultural cooperatives.

Farmers Organisations Fanners organise themselves to meet some of their

specific needs and for which they form their OWi1
organisations. The objectives of such organisations
are limited, and, in many cases of a temporary
nature.

Multi-State Cooperative Those cooperatives which cover as their area of

Societies Law operation in two or more states are registered
under the Multi-State Cooperative Societies Law.
This Law is enacted by the Parliament of India
which creates a Central Registrar who supervises
such cooperatives.

Registrar of Cooperative : The RCS is the principal functionary appointed

Societies by the government to implement the cooperative
legislation. His main functions are registration,
inspection and audit of cooperatives.

3.9 SOME USEFUL BOOKS/REFERENCES

Anonymous. (2004). Indian Cooperative Movement - A Profile, 2004. National
Resource Centre of the National Cooperative Union of India, New Delhi.

Anonymous (2002). National Policy on Cooperatives. Department of Agriculture

and Cooperation, Government of India, New Delhi.

Prabhu, P.V. (2004). Third Critical Study on Cooperative Legislation and

Policy Reforms. International Cooperative Alliance Regional Office for Asia and
the Pacific, New Delhi. .

Prakash, Daman. (2004). Human Resource Development in Coope'iatives -

Strategies and Practices to Enhance Member Participation. Rural Development
and Management Centre, New Delhi. Technical Paper.
\

Prakash, Daman. (2005). Enlightened Cooperatives Inculcate Social 'Cohesion

64 \
 Structure, Laws and
and Harmony. Rural Development and Management Centre, New Delhi. Technical
Management of
Paper. Cooperatives

Prakash, Daman. (2005). Professionalisation in Cooperatives Promotes Good

Governance. Rural Development and Management Centre.New Delhi. Technical
Paper. . . ,

Tsuzuki, Chushichi. (2005). The Emergence of Global Citizenship: Utopian

Ideas, Cooperative Movements and the Third Sector. Robert Owen Association
of Japan, Tokyo.

3.10 ANSWERS/HINTS TO CHECK YOUR

PROGRESS
Check Your Progress 1

I) There are three types of cooperative laws: (i) Multi-State Cooperative Societies
Law, (ii) Cooperative Societies Laws and (iii) Autonomous Cooperative Societies
• Law. Coope-ration is a state subject. A government functionary oversees the
development
.
of cooperatives, i.e., the Registrar of Cooperative Societies. The
/"

powers oftlie Registrar are gradually being diluted in order to give more autonomy
and freedom of action to cooperatives.' In the Autonomous Cooperative Law
the interference ofthe Registrar is minimal.

2) Cooperation being a state subject, the organisationalstructure of the Cooperative

Movement in India is three-tired i.e., primary, district and state level. The total
organisational structure in India falls under two categories, official structure and
non-official structure.

Check Your Progress 2

1) There are three principal functionaries' responsible for the management of a

cooperative - the General Body Meeting of the members which frames general
policies, elects a Managing Committee and receives and approves performance
reports; the Managing Committee which implements the policies and programmes
approved by the General Assembly of Members and employs management staff .
for the purpose; and the general manager and his staff who actually performs
day-to-day activities, manages financial matters and prepares reports for the
managing committee.

2). In order to serve their members better, cooperatives need well-qualified,

dedicated and efficient managers and other employees who are able to serve
the members well and maintain accounts, assets and liabilities ofthe cooperative.
Different cooperatives have different needs and, therefore, their personnel need
to be trained at different places. (For further details go through section 3.4.2,
3.4.3 and 3.4.4).

3) Democratic control of cooperative organisations necessarily implies autonomy

in the sense of independence of external control. In a fully developed cooperative
society the members themselves must take ultimate control, with no external
interference. As regards the functional autonomy ofa cooperative institution,
there. are a few other elements to be considered e.g., state
. ~ control over
65
Cooperatives
cooperatives, control of cooperatives by 'interest groups' etc. State control -
over cooperatives can be exercised in several ways and under many pretexts.
(For further details go through section 3.4.5).

Check Your Progress 3

1)/ To enable sustained development and growth of healthy and self-reliant

cooperatives for meeting the sectoral/regional aspirations of the people in
consonance withthe Principles of Cooperation anational policy on Cooperatives
has been evolved. The NationalPolicyZnu? has recognised the ideology of
cooperatives, which is based on the principles of self-help, self-responsibility,
-democracy, equality and solidarity and cooperative values. (For further detai Is
go through section3.5.2).

Check Your Progress 4

•

.1) Almost all the countries ofthe world have increasingly adopted the concept of
Open Market. The concept has the following basic ingredients: quality products,
. environment-friendly methods applied in production, competition, accurate
information on the contents ofthe produce etc. The World Trade Organisation
(WTO), an international platform, .looks after the world trade and ensures that
developing or developed cou\l:tiies do not suffer on account of quality and'
misinformation. The entire world has become a small global village where
everyone can sell and buy anything. the world economy has entered an era of
new development when movement of goods, money, people and information .
across national boundaries or the' globalisation' has been picking up its pace.
(For further details go through section 3.6).

• •

66