CO-OPERATIVES

UNIT 1

CO-OPERATION
May you all have a common purpose, May your hearts to be in unison, May you all be the same hand, So that you can do work off, well.
** RIGVEDA.

CO-OPERATION
Behold how good and how pleasant it is for brethren to dwell together in unity.
- Bible

CO-OPERATION
Derived from Latin word Co together Operari to work Co-operation working together Main principle

EACH FOR ALL AND ALL FOR EACH

DEFINITION OF CO-OPERATION
Mr. W. P. Watkins

Co-operation is a system of social organisation based on the principle of unity, economy, democracy, equity and liberty.
Mr. V. L. Mehta

Co-operation is a vast movement which promotes voluntary association of individuals having common needs who combine towards the achievement of common economic ends.

HISTORICAL BACKGROUND

ROBERT OWEN
By the end of 18th century Industrial revolution completely matured in England Capitalism came into existence The cooperative movement began in Europe in the 19th century, primarily in Britain and France

ROBERT OWEN
Robert Owen (17711858) (England) Father of the cooperative movement Industrialist by occupation Belief - His workers in a good environment with access to education for themselves and their children.

ROBERT OWEN
Started labour exchanges, formed labour colonies and helped them in the production of various things whereby their income increased Demand before parliament of England Separate Act for labour class improvement

CHARLES FOURIER
Franois Marie Charles Fourier(7 April 1772 10 October 1837) A French utopian socialist and philosopher. Tried to find out alternative to capitalism The main evil of capitalism, according to Fourier, was the conflict of individual interests.

CHARLES FOURIER

Designed PHALANSTERE to eliminate conflicts of interest by making each member a cooperative owner as well as a wage earner.

Each member would draw his or her share of income not only as a laborer but also as a capitalist (shareholder) and manager

CHARLES FOURIER


Each cooperative member had a voice in the management of the phalanstere

His

proposals

for

the

establishment

of

phalanxes gained considerable support by practitioners

DR WILLIAM KING


Owen & Fourier were followed by Dr William King (17861865) A British physician and philanthropist from Brighton. Took his ideas and made them more workable and practical.

Started shops using cooperative principles in England but could not succeed in that

ROCHDALE SOCIETY OF EQUITABLE PIONEERS

Put the co-operative efforts in reality by Rochdale villagers in England. 1840 Period of hungry forties Rochdale worst condition of Woolen and cotton milling town

ROCHDALE SOCIETY OF EQUITABLE PIONEERS

In 1844, a group of 28 weavers with an initial capital 28 set up the Rochdale Equitable Pioneer Society under Friendly Societies Act

ROCHDALE SOCIETY OF EQUITABLE PIONEERS

21 December 1844 opened store with a very meager selection of butter, sugar, flour, oatmeal and a few candles. Within three months, they expanded their selection to include tea and tobacco

ROCHDALE SOCIETY OF EQUITABLE PIONEERS

Known for providing high quality, unadulterated goods. Ten years later, the British co-operative movement had grown to nearly 1,000 co-operatives. Considered the first successful co-operative enterprise

DEVELOPMENT OF INDIAN CO- OPERATIVE MOVEMENT

1] First Stage (1904- 1912) 2] Second Stage (1912 to 1918) 3] Third Stage (1919-1929) 4] Fourth Stage (1929- 1939) 5] Fifth Stage (1939-1947) 6] The Sixth Stage (1947-1970) 7] The Seventh Stage (1970- 2000) 8] The Eighth Stage (2000 onwards)

First Stage (1904- 1912)

Beginning Period of Co-operative Movement in India Burden of debts on farmers - famines and droughts Co-operative Credit Society Act passed in 1904 - Sir Daniel Hamilton The way from poverty to plenty Main object encourage thrift, self-help, co-operation among agriculturists, artisans

First Stage (1904- 1912)

Not successful due to
No legal protection for the other co-operatives No provision of financial aid to primary societies Unsuitable classification as urban and rural

Second Stage (1912 to 1918)

Period of Harried Expansion Passed another Act in 1912 remedy for loopholes in 1904 Act Focused not only on the credit aspect of co-operatives but also on all the other functions that co-operatives could carry out Broad layout for formation of all types of co-operatives from agricultural to industrial, and from credit to consumer Co-operative Movement was shooted for expansion.

Second Stage (1912 to 1918)

Essential features of the Act
Registration of any society, credit or otherwise having promotion of economic interest of its members in accordance with the co-operative principles Registration of a federal society like central bank Ltd liability of central societies and unlimited liability of rural credit societies Provision of reserve fund from one-fourth of the net profits

Third Stage (1919-1929)

Period of Unplanned Rapid Development After world war I, by passing Reforms Act 1919 co-operation became a provincial subject Adequate to cope with the various problems. The co-operative movement flourished thereafter in many provinces. Provincial govt. appointed committees to study the co-operative movement.

Third Stage (1919-1929)

Depending upon the situation of the province various acts were passed by the respective provincial govt. to develop the co-operative movements in their provinces.


Bombay 1925 Madras 1932 Bihar and Orissa 1935 Coorg 1937 Bengal -1941

A tremendous development in the no. of societies providing credit.

Third Stage (1919-1929)

Why defined as Unplanned Development. ? Quantitative growth - No proper attention to qualitative growth. Granted loans recklessly Resulting steady increase in overdues causing liquidation Rural families not benefited more

Fourth Stage (1929- 1939)

Period of Consolidation and Re-organization Great depression in 1929 preceding world war II hit the world Steep fall in the prices of agricultural produce Weakened repayment capacity of agriculturist Investment of capital of co-operative credit societies more in agricultural activities Development of co-operative movement in India hampered due to nonrepayment of loans

Fourth Stage (1929- 1939)

The existence of co-operative societies was in danger. Affected the co-operative movement in Punjab, Haryana, Bihar and Bengal. The ratio of loans to arrears was 20% in 1927-28 which increased to 40% in 1932-33. The percentage of arrears went up to 93% in Bombay in 1938-39. During this period about 50% of co-operative societies went into liquidation.

Fourth Stage (1929- 1939)

The Indian Central Banking Enquiry Committee (1931) also stressed on strengthening the co-operative movement 1935 Establishment of Reserve Bank of India. A separate section for providing agricultural credit (Rural Credit Development)
1937 - this section studied various problems of Indian co-operative movement and submitted its report stating that development of co-operative societies should be given priority.

Fifth Stage (1939-1947)

Period of Recovery The atmosphere of World War II proved to be beneficial for the co-operative movement. Started increasing in the price of the agricultural produce thereby increase in the income of the agriculturists Rise in level of their repayment capacity Removed financial depression of Indian co-operative movement Movement again on the path of its development.

Fifth Stage (1939-1947)

Prosperity of consumer co-operative stores due to the restriction imposed during war time. Existence of industrial co-operative societies for the purpose of providing war materials. Developed non-profit supplying societies and multipurpose societies

Fifth Stage (1939-1947)

The development of co-operative movement during 1929 to 1947

Year

No. of societies (in 000s)

Membership (in lakhs)

Capital (in crores)

1939 1943 1946 1947

122.00 146.00 172.00 139.00

53.07 69.01 91.6 90.00

106.47 121.14 104.00 156.00

Sixth Stage (1947-1970)

After independence, the government felt that co-operatives should play an important role in the development of rural areas. The late prime ministers Jawaharlal Nehru and Lal Bahadur Shastri stressed on the importance co-operatives. Co-operatives were included in 5 year plans. Co-operatives encouraged to enter into new sectors of rural economy dairy, food processing, agro processing, etc.

Seventh Stage (1970- 2000)

The government laid more importance on the development of rural banking sectors. Co-operatives were asked to develop rural banks. The formation of NABARD (1982) as an apex bank for monitoring the cooperative banks. The government also took the initiative in replicating the Anand pattern Model for dairy co- operative across the country.

Eighth Stage (2000 onwards)

The rise of the new millennium thrown many challenges to the co- operatives. Growth of the WTO restrictions and the threat from global competition Direct competition from multinationals for co-operatives Adequate support and help from govt to the co-operatives by building brands, distribution network and also in exporting their products to global market.

OVERVIEW
STAGES
FIRST

HIGHLIGHTS
1904 Passed Co-operative Credit Society Act

SECOND

1912 Another act passed to curtail the deficiencies

THIRD FOURTH FIFTH SIXTH SEVENTH EIGHTH

1919 Passed Reform Act entrusting provincial govt. 1935 Establishment of RBI Period of Recovery Co-operatives in five year plan Formation of NABARD Cut throat competition