(GIST OF KURUKSHETRA) Cooperatives and Rural Livelihood

(GIST OF KURUKSHETRA) Cooperatives and Rural Livelihood


Cooperatives and Rural Livelihood


  • The three major challenges faced by rural people are poverty, unemployment, and inequality. In this direction, cooperatives can play an important role in helping rural people achieve sustainable livelihoods.
  • The cooperative sectors provide adequate, affordable, and timely credit for the production, processing, storage, and marketing of agricultural crops, milk, fish, vegetables, fruits, flowers, and other products. 
  • Cooperatives work on the principle of ‘Production by masses’ instead of mass production which is crucial for sustainable and inclusive growth and development.

Cooperative Movement in India

  • Cooperative movement in India was started primarily for dealing with the problem of rural credit.
    The formal era of co-operative movement in India began with the enactment of "Cooperative Credit Societies Act" in 1904. The objective of this Act was to establish cooperative credit societies to encourage thrift, self-help and cooperation among farmers, artisans and persons of limited means. 
  • The Reserve Bank of India also played a pioneering role in guiding and supporting the cooperatives. After the country attained Independence in 1947, the responsibility for the development of cooperative sector was entrusted mainly upon the State Governments.
  • During the planned era of development cooperatives became an integral part of Five-Year Plans. Eventually with the advent of the era of LPG and the policy changes at the national level, emphasis was laid on building up the cooperative movement as a self-managed, self-regulated and self-reliant institutional set-up by giving it more autonomy. 
  • In 2002, the Government of India enunciated a National Cooperative Policy with the objective to ensure more autonomy, accountability and self-reliance in the functioning of cooperatives by providing necessary support, encouragement and assistance to them. 
  • The 97th Constitutional Amendment Act, 2011 granted protection to cooperative societies by giving Constitutional status to them. It aimed at encouraging economic activities of cooperatives in rural India.

Challenges faced by Cooperative Sector

  • Many cooperative societies are not aware of rules and regulations, thereby not actively involved in their proper functioning.
  • A large number of cooperatives are not financially viable and have either become defunct or are on the verge of becoming defunct.
  • Most of the societies are confined to a few states with limited spread and small membership.
  • The participation of Scheduled Castes, Scheduled Tribe, women, and other vulnerable sections is extremely low.
  • The top posts are usually occupied by richer sections that often manipulate members for their own benefit.
  • There is a shortage of trained, skilled, and experienced personnel.

Way Ahead

  • It is urgent to infuse transparency, accountability, and efficiency in the entire cooperative ecosystem along with modernity and professionalism.
  • They must emerge as economic entities capable of competing with the private corporate sector.
  • The activities should be diversified by incorporating new sectors like health, real estate, insurance, power, tourism, communication, etc.
  • The defunct cooperatives should be revived.
  • Synchronization with the current business environment is also required to boost the competitiveness of the cooperative sector.


  • Cooperative societies can provide necessary credit for Micro, Small, and Medium Enterprises which are the backbone of rural economic development. They have the potential to encompass all activities of rural areas and uplift the lives of weaker sections. Revitalizing the cooperative sector is important to sustain rural development. All the stakeholders should come forward to put combined efforts into rural development.



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Courtesy: Kurukshetra