{"id":64580,"date":"2026-01-19T17:51:49","date_gmt":"2026-01-19T12:21:49","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=64580"},"modified":"2026-01-19T20:32:35","modified_gmt":"2026-01-19T15:02:35","slug":"cooperatives-reforms-india","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/editorial-analysis\/19-01-2026\/cooperatives-reforms-india","title":{"rendered":"Reimagining Cooperatives in India"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/ Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>In Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>With the United Nations declaring 2025 as the <strong>International Year of Cooperatives (IYC) <\/strong>under the theme<strong> \u201cCooperatives Build a Better World\u201d<\/strong>, India\u2019s cooperative sector has gained renewed global attention.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>About<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The cooperative idea in India is deeply rooted in the civilisational philosophy of <strong>Vasudhaiva Kutumbakam<\/strong>, the world as one family emphasising mutual help, shared responsibility &amp; collective prosperity.<\/li>\n\n\n\n<li>According to the <strong>International Cooperative Alliance<\/strong>, cooperatives are member-owned and member-governed enterprises that pursue economic, social and cultural objectives through democratic decision-making.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Historical Evolution<\/strong><\/h2>\n\n\n\n<p>The Indian cooperative movement has transitioned through four major phases, evolving from simple credit providers to multi-sectoral economic engines.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Experimental Phase (1904\u20131911):<\/strong> Initiated by the Cooperative Credit Societies Act, 1904, primarily to rescue farmers from the debt traps of moneylenders.<\/li>\n\n\n\n<li><strong>Expansion Phase (1912\u20131947):<\/strong> The 1912 Act allowed for non-credit societies (marketing, housing, etc.). The 1919 Reforms made &#8220;Cooperation&#8221; a provincial subject, allowing states to tailor laws to local needs.<\/li>\n\n\n\n<li><strong>State-Led Growth (1947\u20132020)<\/strong>: Cooperatives were integrated into Five-Year Plans. Landmarks included the birth of Amul (1946), the establishment of NCDC (1963) for development, and NABARD (1982) for refinancing rural credit.<\/li>\n\n\n\n<li><strong>Structural Transformation (2021\u2013Present):<\/strong> The creation of the Ministry of Cooperation (July 6, 2021) shifted the focus toward professionalization and &#8220;Ease of Doing Business.&#8221;<\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full is-resized\"><img data-dominant-color=\"c4dbea\" data-has-transparency=\"false\" loading=\"lazy\" decoding=\"async\" width=\"604\" height=\"341\" src=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/01\/image-79.png\" alt=\"reimagining cooperatives in india\" class=\"not-transparent wp-image-64581\" style=\"--dominant-color: #c4dbea; aspect-ratio:1.771296338725198;width:445px;height:auto\" srcset=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/01\/image-79.png 604w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/01\/image-79-300x169.png 300w\" sizes=\"auto, (max-width: 604px) 100vw, 604px\" \/><\/figure>\n<\/div>\n\n\n<h2 class=\"wp-block-heading\"><strong>Importance of Cooperatives in India<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Economic Impact:<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>GDP Contribution: <\/strong>Cooperatives drive a significant portion of the rural economy, aiming to contribute significantly to India&#8217;s goal of a $5 trillion economy.<\/li>\n\n\n\n<li><strong>Market Leadership:<\/strong> Major players like IFFCO and Amul dominate their sectors, providing high-quality fertilizers and dairy products while competing globally.<\/li>\n\n\n\n<li><strong>Employment:<\/strong> They provide direct and indirect livelihoods to over 30 crore (300 million) people, particularly in rural areas.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Financial Inclusion:<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Affordable Credit:<\/strong> PACS (Primary Agricultural Credit Societies) provide low-interest loans to small farmers, protecting them from informal moneylenders.<\/li>\n\n\n\n<li><strong>Three-Tier Banking:<\/strong> A robust network of state, district, and primary levels ensures that financial services reach the &#8220;last mile&#8221; where commercial banks often do not operate.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Agricultural Support:<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Input Supply:<\/strong> Cooperatives ensure the timely distribution of seeds, fertilizers, and pesticides at fair prices.<\/li>\n\n\n\n<li><strong>Bargaining Power:<\/strong> By aggregating produce, small farmers gain the scale needed to negotiate better prices with large buyers.<\/li>\n\n\n\n<li><strong>Storage Solutions:<\/strong> The &#8220;World\u2019s Largest Grain Storage Plan&#8221; is creating local godowns at the PACS level to reduce post-harvest losses.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Social Development:<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Democratic Governance:<\/strong> Operated on the principle of &#8220;one member, one vote,&#8221; ensuring that decision-making power remains with the community rather than shareholders.<\/li>\n\n\n\n<li><strong>Women&#8217;s Empowerment:<\/strong> Cooperatives like Lijjat Papad and women-led dairy societies have provided millions of women with financial independence.<\/li>\n\n\n\n<li><strong>Fair Pricing:<\/strong> They act as a market stabilizer, ensuring consumers get fair prices while producers receive a majority share of the profit.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Modernization &amp; Innovation:<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Digital Transformation:<\/strong> Over 63,000 PACS are being computerized to ensure transparency and real-time auditing.<\/li>\n\n\n\n<li><strong>Diversification<\/strong>: Beyond farming, cooperatives are now entering organic exports, seed production, and renewable energy (biogas).<\/li>\n\n\n\n<li><strong>Multi-Service Hubs: <\/strong>Village cooperatives are being converted into Common Service Centers (CSCs) and Janaushadhi Kendras to provide digital services and low-cost medicines.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Major Initiatives Taken For Cooperatives<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Strengthening Primary Agricultural Credit Societies (PACS):<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Model Bye-laws:<\/strong> New bye-laws have been adopted by 32 States\/UTs, allowing PACS to expand from simple credit providers to multipurpose entities involved in over 25 business activities, including fisheries, dairy, and storage.<\/li>\n\n\n\n<li><strong>Nationwide Computerization: <\/strong>A \u20b92,925 crore project is digitizing 79,630 PACS. Currently, 59,261 PACS are using a common national ERP software in 14 languages, ensuring transparency and real-time auditing.<\/li>\n\n\n\n<li><strong>e-PACS Integration:<\/strong> Over 32,119 PACS are now enabled as &#8220;e-PACS,&#8221; digitally linked to NABARD through State and District Cooperative Banks for seamless credit flow.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Diversification as Multi-Service Hub<\/strong>s:\n<ul class=\"wp-block-list\">\n<li><strong>Healthcare Access:<\/strong> 812 PACS are now operational as Pradhan Mantri Bhartiya Janaushadhi Kendras, providing low-cost medicines to rural areas.<\/li>\n\n\n\n<li><strong>Digital Service Centers:<\/strong> More than 51,836 PACS now function as Common Service Centres (CSCs), delivering over 300 e-services (like Aadhaar and bill payments) to villagers.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Global Scaling &amp; Specialized Apex Bodies<\/strong>:\n<ul class=\"wp-block-list\">\n<li><strong>NCOL (Organics): <\/strong>Markets certified organic produce under the \u201cBharat Organics\u201d brand, featuring 28 pesticides-tested products.<\/li>\n\n\n\n<li><strong>BBSSL (Seeds)<\/strong>: An apex society for the production and branding of high-quality \u201cBharat Beej\u201d seeds.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Major Livelihood &amp; Storage Projects:<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>World\u2019s Largest Grain Storage Plan:<\/strong> A pilot project has already created 68,702 MT of storage capacity in 112 PACS, reducing post-harvest losses and improving food security.<\/li>\n\n\n\n<li><strong>White Revolution 2.0: <\/strong>A 5-year plan to increase milk procurement by 50%. So far, 20,070 new Dairy Cooperative Societies have been registered.<\/li>\n\n\n\n<li><strong>Atmanirbharta Abhiyan: <\/strong>Ensures assured procurement of pulses and maize at MSP through digital platforms like e-Samyukti and e-Samridhi.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Financial &amp; Legislative Reforms:<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Tax Relief: <\/strong>The cooperative surcharge was reduced from 12% to 7%, and the Minimum Alternate Tax (MAT) was lowered to 15%.<\/li>\n\n\n\n<li><strong>Sugar Sector Revival: <\/strong>Provided tax relief of over \u20b946,000 crore to cooperative sugar mills and disbursed \u20b910,005 crore for ethanol and cogeneration units.<\/li>\n\n\n\n<li><strong>Banking Support:<\/strong> Launched the \u201cSahkar Sarathi\u201d shared service entity to support Rural Cooperative Banks with digital and audit services.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Education &amp; Mobility:<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Tribhuvan Sahkari University (TSU):<\/strong> Established in April 2025 as India\u2019s first national university for the cooperative sector to build a professional workforce.<\/li>\n\n\n\n<li><strong>Sahkar Taxi: <\/strong>Launched India\u2019s first cooperative-led mobility platform (supported by Amul and IFFCO), currently trial-running with 1.5 lakh drivers.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Challenges Facing the Cooperative Sector<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Regional Imbalance:<\/strong> Western India dominates and North-East and eastern states lag.<\/li>\n\n\n\n<li><strong>Governance Deficits:<\/strong> Politicisation, nepotism (\u201cUncle Judge Syndrome\u201d), weak accountability.<\/li>\n\n\n\n<li><strong>Infrastructure Gaps:<\/strong> Storage, logistics and processing still inadequate at scale.<\/li>\n\n\n\n<li><strong>Financial Stress<\/strong>: NPAs in cooperative banks; limited access to long-term capital.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Way Ahead<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Balanced regional expansion: <\/strong>Replicate successful models of Gujarat and Maharashtra in lagging regions<\/li>\n\n\n\n<li><strong>Technology deepening:<\/strong> Use AI, data analytics and blockchain for audits, traceability and fraud prevention<\/li>\n\n\n\n<li><strong>Credit-plus model: <\/strong>Convert PACS into sustainable multi-service business centres<\/li>\n\n\n\n<li><strong>Global branding:<\/strong> Scale \u201cBharat\u201d brands in seeds, organics and agri-exports to access high-value global markets<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Conclusion<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India\u2019s cooperative movement has evolved from a narrow rural credit mechanism into a multi-sectoral pillar of inclusive growth. Backed by digital reforms, institutional innovation and policy support, cooperatives today play a vital role in strengthening rural livelihoods, deepening democracy and promoting sustainable development.&nbsp;<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background has-fixed-layout\" style=\"background-color:#fff2cc\"><tbody><tr><td><strong>Daily Mains Practice Question<\/strong><br><strong>[Q]<\/strong> Digitisation and professionalisation are critical to the sustainability of the cooperative sector in India.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Source: <a href=\"https:\/\/www.newindianexpress.com\/nation\/2026\/Jan\/19\/india-top-global-leader-with-85-lakh-cooperatives\" target=\"_blank\" rel=\"noopener\">IE<\/a><\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.nextias.com\/ca\/wp-content\/uploads\/2026\/01\/Daily-Editorial-Analysis-19-01-2026.pdf\"><strong>Download PDF<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong>Published on:<\/strong> 19 January, 2026<\/p>\n<p>With the United Nations declaring 2025 as the International Year of Cooperatives (IYC) under the theme \u201cCooperatives Build a Better World\u201d, India\u2019s cooperative sector has gained renewed global attention.<\/p>\n","protected":false},"author":4,"featured_media":64585,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[22],"tags":[],"class_list":["post-64580","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-editorial-analysis"],"acf":[],"jetpack_featured_media_url":"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/01\/Editorial-Analysis-900-600-16.webp","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/64580","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=64580"}],"version-history":[{"count":3,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/64580\/revisions"}],"predecessor-version":[{"id":64612,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/64580\/revisions\/64612"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media\/64585"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=64580"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=64580"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=64580"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}