In this article we are going to discuss about What are the Definitions of Co-operation, What are the Nature of cooperation, Scope of cooperation – Why is cooperation so important ?, What are the Objectives of Co-operation ?, What are the Characteristics of cooperation ? , Principles of Co-operation – What is the main principle of cooperation?, Strength of Cooperative Movement, Weakness in Co-operative Movement, Problems in Cooperative Sector, Challenges in the Cooperative Sector
Meaning: What is cooperation ?
The word ‘Co-operation‘ is derived from the Latin word ‘Co-operari‘. The common meaning of this Latin word is ‘to work together.’ In short, co-operation is an ideal social system based on the principles of democracy, character, brotherhood, peace, justice and economic and social progress, in which people of common loyalty come together for their common good
What are the Definitions of Co-operation
1) Vaikunthalal Mehta :
“A cooperative is an association formed voluntarily by persons having common needs, united for the attainment of a common economic objective.”
2) P. H. Castleman:
“Economics with social content is cooperation.’
What are the Nature & Scope of Co-operation ?
What are the Nature of cooperation ?
1) Organizational Structure :
Cooperative is known as a form of organization. Co-operative society is its form. Co-operative societies are established for trade, industry, service industry. These organizations include credit unions, cooperative banks, consumer cooperatives, buying and selling federations, sugar factories cooperatives, dairy cooperatives, housing cooperatives, agricultural marketing organizations, etc.
2) Financial Nature :
The principle of cooperation is recognized as the best tool for national development. The principle of co-operation is considered very important as a means of economic development of common people. Co-operation can be found in three forms: a methodology, a system of thought and a broad movement. Just as capitalism, communism and socialism are three economic systems, cooperatives are one economic system.
3) Conceptual Form :
Cooperation is the conceptual basis of this principle. According to thinkers in the field of co-operatives, co-operatives have an ideological foundation and the co-operative movement is on that basis. There are special features and principles of the cooperative movement, system of thought. In short, the philosophy of co-operation is based on a certain system of thought, an ideology.
4) Educational Format :
Co-operation is considered as an effective means of educational dissemination in modern times. Watkinson has expressed that the ability to make literate, well-educated especially rural farmers, laborers, tribals, small business workers, backward classes, weaker sections, women is only in cooperation. The expansion of the cooperative has also boosted the adult education program.
5) Social nature:
Co-operatives are seen as the best means of overall development of the society, according to co-operative experts co-operatives are not an economic movement but a social movement. Because ‘cooperation’ has basically emerged from social necessity. It is the need of the hour to spread the principle of co-operation in order to bring about social enlightenment and development of the society at a fast pace. The cooperative movement has the potential to bring about social change and in this movement there is no discrimination of any kind like religion, gender, caste, residence, creed, various sects.
Scope of cooperation – Why is cooperation so important ?
1) Agricultural sector:
Since the Indian economy is agrarian, cooperatives are most widespread in the agricultural sector. Co-operatives cover the agricultural sector to a large extent. Various agricultural institutions based on cooperative principle have been established to provide crop loans, medium and short term loans, seeds, fertilizers, pesticides, irrigation facilities, transportation of agricultural products etc. for agriculture. Cooperation has been a boon for agriculture sector in India.
2) Manufacturing Processing Sector :
Many co-operative societies have been established for agro-based production and processing. Many sugar factories have been set up in Maharashtra on the basis of cooperative principle. Many institutions like cotton mills, oil mills, milk processing societies, weaving societies, fertilizer factories, pesticide manufacturing, agricultural implements, rice mills have been established on cooperative basis.
3) Small Scale Industries Sector:
The scope of cooperation is also found in the small scale industries sector. Co-operative societies have also been established in the field of rural industries and small scale industries, and cooperative and civil cooperative banks have been established to provide credit to rural and small scale industries. In short, the cooperative principle has been spread in the small scale industries sector as well and many cooperative principle organizations have been established for the development of these industries.
4) Banking Sector :
In rural areas, ‘co-operative’ banking sector is seen working through District Co-operative Banks. Considering the current situation, the banking sector is dominated by co-operatives. Urban co-operative banks are operating on a large scale, especially in big cities.
5) Urban Area :
A large extent of the urban sector is occupied by the cooperative principle. Various types of credit institutions have been established on the basis of cooperative principles, especially housing, home mortgage, flat owner cooperative societies, salaried cooperative societies, civil credit societies.
6) Customer Sector:
Consumer co-operative warehouses have been established with the aim of ensuring that the consumers get essential and household goods at fair prices and not to exploit the consumers. Co-operative societies have also been established to sell agricultural implements, petrol, diesel etc. In short, the cooperative sector covers the consumer sector as well.
7) Service Area :
Various co-operative societies have been established to provide various types of services to the customers and the co-operatives have made their impact in the fields of crop protection, water supply, transport, storage, agricultural commodity buying and selling association, banking etc. In short, the service sector is also covered by cooperative principles today.
8) Cooperative Education :
Co-operative societies have been established at the national and state levels to provide education and training for co-operatives. ‘Vaikunth Mehta Co-operative Management Institute’ has been established by the Central Government in Pune to provide education about Co-operatives and in Maharashtra the State Government has established two colleges and thirteen training centers to provide training in Co-operatives.
What are the Objectives & Features of Co-operation ?
What are the Objectives of Co-operation ?
1) Bringing about social development:
The most important objective of co-operatives is to bring together the weak and marginalized people of the society and empower them economically and morally. This work can be done only by the cooperative sector. There is no break in these works done by the cooperative sector. It helps to inspire the development of strength in the society. It makes a difference in people’s social life by encouraging them to live a self-reliant life.
2) To protect the economic interests of the weaker sections:
The weak and the lower class persons in the society are essentially weak. Economic backwardness makes them weak. In such a case, the cooperative sector works to protect the interests of the economically weaker sections of the society. Since both philanthropy and social welfare are given importance in co-operatives, they supply essential goods or services to economically weaker sections. Business-employment opportunities are created for these entities.
3) Protection against Monopoly :
Monopoly leads to profiteering in the private sector. The black market is boosted. An important objective of co-operatives is to protect the society from such tendencies. Co-operatives are service oriented and provide goods and services to the society at regular and reasonable prices. Tendencies like black market and inflation or scarcity are prevented.
4) Coordinate demand and supply
Another important objective of cooperation is to coordinate supply and demand. For this, the cooperatives either produce themselves or purchase the goods from the manufacturer. Artificial scarcity, adulteration, price gouging have no place in the cooperative. So they can coordinate demand and supply.
5) Creating a cohesive society
All religions, creeds, caste, language, color, gender etc. are included in the co-operative without any kind of discrimination thus making it possible to create a united society. Cooperation makes people forget their differences. An important objective of co-operation is to treat everyone equally.
6) Controlling costs:
Co-operative societies play an important role in controlling various costs by producing goods themselves and purchasing consumer goods from manufacturers. These organizations eliminate middlemen thus reducing costs. The cost of delivery of goods is also kept low. Since the management of cooperative societies is also done on a merit basis, the cost is saved. This objective of cost control is conducive to public interest and cooperative sector development.
7) Employment generation:
Unemployment is a major problem in the country. To overcome this problem, employment generation is also an important objective of the cooperative. The establishment of cooperative societies greatly increases employment opportunities. Employment and self-employment opportunities are available in rural and urban areas.
What are the Features/ Characteristics of cooperation ?
1) Organization of individuals
In any co-operative society the persons who come together come together as individuals; do not come together as a factor supplying capital. A person’s status, position in an organization is not determined by how much capital a person brings. In a cooperative organization all individuals are on equal footing, helping each other to achieve their goals.
2) Voluntary Creation :
Members of co-operatives are self-motivated to achieve their goals. There is no internal or external pressure for people to come together to achieve a goal. Since the formation of cooperative societies is voluntary, the persons working in this organization, who have accepted the membership, work in solidarity.
3) Economically weaker group of persons :
Co-operative societies are established with the objective of reviving the economically weak and empowering the economically weak. Economically weak individuals cannot achieve their goals in isolation. Such persons have meager financial resources. Therefore, organized power is created through cooperatives.
4) The objective is not to make profit:
Since cooperative societies are built for public welfare, service is given priority. The objective of co-operative business organizations is not to make profit. The objective of a cooperative society is to provide a specific financial service to its members.
5) Importance of values:
Ethical values are given importance in the work of cooperative societies. Professional values are considered secondary in co-operatives. Cooperatives work to combine idealism and pragmatism. Exploitation of weaker elements, adulteration, hoarding, false weighing, unreasonable interest are not allowed in cooperatives.
6) Equal Status :
There is no discrimination among members of cooperative societies on any grounds. Irrespective of the financial status of the member, whatever the caste, religion, social and political status of the member, the person in the organization is given the same rights and status as others. Every member is entitled to one vote when elections are held in cooperative societies. In essence, the nature of co-operatives is equal status to all members.
7) Common Objective :
Co-operative societies have a common objective. No individual can meet his needs in isolation from the community. The members of the cooperative have to adopt a policy of helping each other to meet their needs. In short, cooperation is a form of coming together cooperatively to accomplish goals.
8) Self reliance and unity:
Members of co-operative societies adopt the principle of self-reliance and solidarity wherever possible in principle and in practice. They try to achieve their goals through self-reliance. At the same time, service is done in cooperative organizations. ‘All for one and one for all’ is the motto of the co-operative. This motto reflects the spirit of service.
9) Importance of the whole over the individual:
Team spirit is considered very important in cooperation. Individual selfishness is sacrificed in cooperation. All the members of the cooperative organization cooperate with each other for the benefit of the whole group. Achieving collective interest is the nature of cooperation. In short, collective interest is prioritized over individual interest in cooperatives.
10) Goal of social transformation:
‘Co-operation’ is basically a movement for social change. The goal of cooperatives is to create a new society based on equality without exploitation and to bring about revolutionary changes in the social and economic system. Along with financial transactions, cooperative societies do the work of public education.
Principles of Co-operation – What is the main principles of cooperation?
1) Open and Voluntary Membership:
Any person can take voluntary membership in a co-operative society. Membership of the organization is open to all and no person is deprived of membership on the basis of caste, religion, creed, gender, residence. Voluntary membership means that the co-operative society cannot compel any person to accept membership. Open membership does not mean membership with absolute freedom. To be a member of a particular organization one must have the same objective as the objective of the organization.
2) Democratic governance:
All the affairs of the Co-operative Society are carried on according to democratic principle. As in a democracy, every person is considered to be independent and sovereign, the members of a cooperative society are given the opportunity to express their opinions openly. As in a democracy, the final power is in the hands of the people, similarly, the affairs of the cooperative society are run according to the will of the members. In a co-operative society every person has the right to express his opinion freely.
3) Limited Interest on Capital :
Capital is a secondary component of every co-operative society. Therefore, the Rochdale Committee suggested that the members should be given a low rate of interest on the capital invested in the business. It has been theoretically and practically accepted by cooperative societies. Believing that capital is the root cause of class strife and conflict, the co-operative societies have given capital a secondary status. In short, limited modest interest on capital is the basic principle of co-operatives.
4) Equitable distribution of benefits :
The objective of a co-operative society is to provide services to its members. But some co-operative societies are making some profit. The profit margin is decided by taking into account the management costs. The principle of ‘Allocation of Profits’ was advocated to guide how the profits earned by the co-operative society should be distributed.
5) Principle of education of members:
The future of co-operation depends on the spread of co-operation and the spread of co-operation on education. Co-operative society and co-operative movement should be taught to all the members of the co-operative society and all the related parties in order to be strong. What is co-operative? It is suggested by this principle that information should be given. In order for the entire administration and management of the cooperative to remain efficient, it was asserted the need to provide education to the members of the cooperative. Rondel pioneers advocated the principle of educating members in 1844. Ruled that 2.5% of the total profit should be kept as a reserve fund for imparting cooperative education.
What are the Strength, Weakness, Problems, Challenges of Cooperative Movement ?
What are the Strength of Cooperative Movement ?
1) Due to the network of co-operative societies, loans are provided to the people of the rural areas as well as to the farmers at a low rate. So they benefit financially.
2) A large amount of employment has been created through the cooperative movement. Today, societies, credit institutions, urban credit institutions, cooperative banks, sugar factories, milk dairies, yarn mills, buying and selling unions in every village have given employment to people.
3) It can be seen that political leadership has been created in many areas through cooperative movement.
4) Co-operative credit institutions are seen to be working in the forefront in Maharashtra.
5) There has been a positive change in the economic and social conditions of rural areas due to cooperation.
6) Co-operatives are playing an important role in providing updated farming techniques, seeds, fertilizers at minimum cost.
7) Ethical values are seen increasing due to cooperative movement.
8) Co-operative movement is helping to promote national unity and foster brotherhood.
9) Due to co-operative societies there is saving in cost of distribution of goods.
10) Co-operative movement is playing a special role in eliminating economic disparity.
What are the Weakness in Co-operative Movement ?
1) It would be bold to say that various co-operative societies were established during this period under the Co-operative Act of 1904.
2) The recommendations made by the committee under AD Gorwala in 1954 regarding the Rural Credit Board were not implemented and these recommendations became ineffective.
3) Today the number of inactive co-operative societies in Maharashtra is about 35 to 40 %.
4) The financial progress of most of the cooperative credit societies in the state is not very satisfactory.
5) There is lack of consistency between loan supply and recovery. E.g. The government separates the declaration and the co-operatives (in some places) separate the implementation.
6) There is no denying the fact that co-operative societies in India lack financial resources of their own.
7) Debt recovery rate is very low. Non Productive Assets ( N.P.A. ) are increasing day by day.
8) Not all farmers get credit according to their needs and demands.
9) In some Co-operative Societies it has been observed that there are fraudulent/fraudulent transactions by their own office bearers and officials.
10) Many government institutions are becoming financially weak as the mountain of debt continues to mount.
11) Globalization, liberalization and privatization are also having an adverse effect on the cooperative movement.
12) Members are being extorted by office bearers and officers, employees of some organizations.
13) Lack of thrift in expenditure is found in some co-operative societies. Lack of effective management is also noticeable in some places.
14) Due to inefficient management, political interference, increasing amount of arrears, office-bearers-relative interests, increasing arrears, the organization is running at a loss on a large scale.
What are the Problems in Cooperative Sector ?
1) The number of inactive co-operative societies / institutions in financial ruin is increasing day by day.
2) The amount of bad debt of cooperative societies is increasing.
3) The recommendations of the Vaidyanathan Committee are not actually implemented 100%.
4) Many co-operative societies in India do not have sufficient financial resources of their own, so they have to take loans from other senior institutions. E.g. With District Central. Banks State Co. Borrow from Bank / NABARD.
5) Unnecessary interference of political persons and government is increasing day by day in cooperative sector.
6) Office bearers of some co-operative societies commit financial malfeasance with the help of officers and employees / by putting political pressure on them.
7) Adequate political will for development of cooperatives is lacking.
8) Competent management and administration is also partly a problem.
9) Due to loan waiver, the sentiment of the members is not to repay the loan.
10) Due to government policy and changes due to globalization this cooperative movement is also in trouble.
11) Non-Performing Assets (NPAs) of many organizations are seen increasing.
12) Employees working in co-operative societies do not get adequate job/service facilities.
13) Co-operative Societies find it difficult to function as there is no clear policy or policy in government policy. E.g. Regarding loan waiver, different G.R. And the constant change in online information.
What are the Challenges in the Cooperative Sector
1) Many cooperative societies have closed down due to the financial situation of cooperative societies.
2) Depositors’ deposits seem to be vulnerable due to large scale financial malpractices in some cooperative societies.
3) The work of encroaching on the basic principle of cooperation is being done by the government system.
4) There is increasing political interference in the co-operative sector.
5) Demonetisation in 2016 has affected co-operative banks and institutions like nationalized banks.
6) Political interference due to government aid continues to increase as productivity in cooperatives declines to some extent.
7) Changes made in the Cooperative Act in 2012 through the 97th Amendment have created some challenges.
8) It is noticed that some organizations do not audit the financial accounts documents within a certain period.
9) It is becoming a necessity to start management of cooperative societies in a professional way.
10) The challenge has arisen how to keep the amount of NPAs to a minimum.
11) Increasing loan arrears of cooperative societies is a challenge.
12) Dealing with globalization is a challenge.
So these are the detail information of Definitions of Co-operation, What are the Nature of cooperation, Scope of cooperation – Why is cooperation so important ?, What are the Objectives of Co-operation ?, What are the Characteristics of cooperation ? , Principles of Co-operation – What is the main principle of cooperation?, Strength of Cooperative Movement, Weakness in Co-operative Movement, Problems in Cooperative Sector, Challenges in the Cooperative Sector