- Balu Iyer
We have a new Ministry of Cooperation! Now what?
Updated: Feb 14
The creation of the new Ministry of Cooperation has been greeted with euphoria by members of cooperatives across India. The general public was left wondering what ‘cooperation’ was all about and the political class up in arms about usurping of state rights. Therein lies the challenge and the opportunity for the new Ministry - educate the public about cooperatives as a people-centered enterprise model, shed the political and bureaucratic baggage, and create an environment to revitalize the cooperative movement.
Cooperatives have a chequered history
Cooperatives have been in existence in India for 117 years! The first cooperatives (in legal form) were started under British Rule in response to agricultural distress and indebtedness. Since then, they have grown across sectors and today there are around 850,000 cooperatives with over 290 million members (roughly 20% of the population, at least on paper)! Over time, new forms such as Self-Help Groups (SHGs) and Farmer Producer Organizations (FPOs) have been promoted to address internal (governance) and external (interference) deficiencies of cooperatives. Cooperatives worldwide adhere by the Statement of Cooperative Identity (SCI) which carries the definition, values and principles. The International Cooperative Alliance (ICA), which represents cooperatives worldwide defines cooperatives as “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.” However, in India, the autonomy, values and principles of cooperatives, have eroded over the years. The Ministry of Cooperation can start by reinforcing its stated purpose to, “help deepen Cooperatives as a true people-based movement reaching up to the grassroots.”
The 97th Constitutional Amendment enacted in 2011, enshrines the fundamental right of citizens to freely form cooperatives. Article 19 promotes the voluntary formation and autonomous functioning of cooperatives and asks the state to promote democratic control and professional management of cooperatives. In short, the Amendment is in line with SCI than the regular cooperative law. The 97th Amendment is stuck in the Supreme Court on the grounds that it is not within the competence of Parliament to enact the amendments. Cooperatives are state subjects and a fresh start to the spirit of cooperative federalism by bringing the states together and seeking their support in the passage of the law and creating a movement of people-centered, bottom-up cooperatives. The Ministry of Cooperation needs to promote all forms of collectives, be it cooperatives, SHGs, FPOs, self-reliant cooperatives which espouse the values and principles enshrined in the SCI. The laws also need to be amended to make it easy to form and sustain cooperatives, by raising money without diluting their distinct identity and equal treatment on par with other economic actors.
Addressing farmers needs
The three Farm Bills passed by the Government of India aim to free farmers from the shackles of middlemen, provide freedom to trade, and increase their ability to bargain. There is a vociferous discussion on the merits and demerits of the bills. India has hundreds of million farmers, most of them are marginal or small farmers with fragmented landholdings with low productivity and limited in their bargaining power. According to the National Federation of State Cooperative Banks (NAFSCOB), in 2018-19, there were 95,995 Primary Agricultural Cooperative Societies (PACS) with 132 million members. Of these PACS, 68% (65,691) were viable and another 18% (17,904) were potentially viable. Of the 132 million-member, 79% (104,860,000) were from the small and marginal farmer category. The 65,000 readily viable PACS can be immediately mobilized to look at all aspects of farmer services. Cooperatives have the potential as Multi-Service Centres to undertake the collective purchase of inputs, deliver post-harvest marketing, storage and processing, and develop the financial and physical supply chain. The Ministry of Cooperative can ensure NABARD, State Governments and State Cooperatives Banks revive already existing cooperatives and enable them to meet the emerging needs of farmers.
Attracting young and mainstreaming gender
Start-ups are the mantra of the young these days. The Ministry of Cooperation could reform policies to include cooperatives as part of the Start-up India Mission. Millennials rate social and economic inequality as the top challenge the world faces globally and locally. They favour working in a place where they derive a sense of purpose and fulfillment. Where the focus is on people and purpose, not just products and profits. What better model than cooperatives? However, there is hardly any venue for them to learn about cooperatives as it is not taught in our academic institutions. The Ministry of Cooperation needs to work across ministries to create spaces (clubs, textbooks, incubators, laboratories) where models like cooperatives, social economy, social enterprises can be taught.
Many cooperatives in India are male-dominated with limited diversity, especially when it comes to gender. Even when talking about farmers it is the ‘kisan bhai’ who dominates farm discourse. Women account for 33 percent of the farm labor force and as much as 48 percent of the self-employed farmers. Entrenched patriarchy results in women being discriminated against, especially around land inheritance and ownership;. Women entrepreneurs have been disproportionately affected by the contraction in economic activities as their activities are concentrated in consumer-facing sectors (services, hospitality, retail, trade) where demand shock has hit hardest. Cooperatives have played a key role in collectivizing women and increasing their bargaining for productive assets, enhancing financial inclusion, and generating employment. The Ministry of Cooperation can initiate a country-wide drive to get women into self-help groups or cooperatives and strengthen them with advanced skilling in use of technology, along with finances to acquire such technology; enhanced awareness about the quality of seeds and agro-inputs; basics of finance management; education on climate change impact. Similar to the Farmer Producer Organization, the Ministry of Cooperation could look at creating Service Provider Organization, which could be registered as a company based on cooperative values and principles.
Promoting the cooperative legacy
India has a rich legacy of cooperatives – leaders and institutions. Dr. Verghese Kurien whose birth centenary is being celebrated this year along with Sri. Tribhuvan Das Patel revolutionized dairy cooperatives. Dr. Kurien was awarded the first Rochdale Pioneer Award in recognition of his outstanding contribution to the development of dairy cooperatives. The Gujarat Cooperative Milk Marketing Federation (GCMMF) which markets products under the AMUL brand is India’s most recognized cooperative brand and is the first Indian brand to be featured in the top 20 Global list of dairy companies. The Indian Farmers Fertilizer Cooperative ranks number one in terms of turnover per GDP per capita in the World Cooperative Monitor which ranks the Top 300 cooperatives in the world. The Uralungal Labor Contract Cooperative Society (ULCCS) in Kozhikode, Kerala formed by 14 contract laborers in 1925 back has a turnover of ten billion rupees (from Rs.500 million to Rs.10 billion in six years!) and is an ISO 9001:2008 certified cooperative. Saraswat Cooperative Bank started in 1918 has been recognized in the Forbes 2021 list of The World’s Best Banks, for the second year in a row. The Working Women’s Forum, which was founded by the late Padmashree Jaya Arunachalam and the Self Employed Women’s Association by Smt. Ela Bhatt is recognized worldwide for their work with women in the informal sector. The Ministry of Cooperation needs to recognize, educate and promote successful cooperatives and create a robust database in which cooperatives contribute to all sectors of the economy.
Putting voice and choice in the hands of members
It is oft said, “Cooperation has failed. But, cooperation must succeed.” The Ministry of Cooperation can provide a bulwark to nurture, support and strengthen cooperatives. The Ministry needs to ensure that it does not tighten the reins of control but provides the space for cooperatives to self-govern and succeed. The onus is on cooperatives to redouble their efforts to respect the centrality of members; provide space for leaders with a real interest in the cooperative, root out vested political interest, improve governance, professionalize management, strengthen the bottom line, adopt technology, and counter fraud. Cooperatives cannot let down members during their time of crisis and let a few misusing the system to punish the entire cooperative machinery. The Ministry of Cooperation needs to protect the fundamental right of citizens to organize and encourage cooperative institutions that put people at the center and provide them choice and voice!
This blog is written by Balasubramanian Iyer. He is the Regional Director of International Cooperative Alliance Asia-Pacific. Views expressed are in a personal capacity and do not reflect that of ICA.