Co-operation सहकार

Quick summary

Co-operation means people with common needs joining together voluntarily to help each other. It grew as an answer to exploitation by moneylenders, middlemen and capitalists. This chapter covers the meaning and definitions of co-operation, its history in the world, India and Maharashtra, its features and its importance.

Key points

• H. Calvert: co-operation is a form of organisation in which persons voluntarily come together as human beings, on the basis of equality, to promote their economic interests.
• Vaikunthlal Mehta and the Indian Co-operative Societies Act, 1912 also define a co-operative society.
• The Industrial Revolution in England led to exploitation of workers. Sir Robert Owen set up workers' societies and is called the Father of the Modern Co-operative Movement.
• In 1844, 28 weavers of Rochdale, England, formed the Rochdale Equitable Pioneers Society and started a consumer co-operative store.
• India's first co-operative, "Annyonya Co-operative Society", was started on 5 February 1889 at Baroda by Vitthal Laxman Kavathekar.
• First Co-operative Act 1904 (only credit societies); second Act 1912 (all types of societies).
• 1951: Gorwala Committee (All India Rural Credit Survey). Its 1954 report said co-operation has failed, but it must succeed.
• Maharashtra: Mumbai District Co-operative Society started in 1923. It is now the Maharashtra State Co-operative Bank. The first co-operative sugar factory came up in 1951 at Pravaranagar (Ahmednagar) through Prof. D. R. Gadgil and Dr. Vitthalrao Vikhe Patil. Maharashtra Co-operative Societies Act, 1960.
• Features: association of persons, voluntary, common aim, democratic, equality, service motive, self-help through mutual help, removal of middlemen.
• Importance: develops agriculture and industry, creates jobs, checks monopoly, fair distribution of surplus, trains people in democracy.

Important terms

• Co-operation (सहकार) – working together voluntarily for a common aim.
• Self-help through mutual help – each member gains by helping the others.
• Surplus – the profit of a co-operative society.
• Three-tier structure – credit through primary society, district bank and state apex bank.

Important dates and people

• 1844 – Rochdale Pioneers, England.
• 1889 – first society at Baroda.
• 1904 and 1912 – first and second Co-operative Acts.
• 1960 – Maharashtra Co-operative Societies Act.
• Sir Robert Owen – father of the modern movement.

5 important questions

Q1. Give H. Calvert's definition of co-operation.

A form of organisation in which persons voluntarily associate as human beings, on the basis of equality, for the promotion of their economic interests.

Q2. Who is the Father of the Modern Co-operative Movement?

Sir Robert Owen, who set up workers' co-operative societies in England.

Q3. Write a short note on the Rochdale Pioneers.

In 1844, 28 weavers of Rochdale formed the Rochdale Equitable Pioneers Society. They ran a consumer store on co-operative principles. It became the model for co-operatives worldwide.

Q4. Explain any four features of co-operation.

Voluntary membership; democratic control (one member, one vote); service motive instead of profit; equality of members.

Q5. Explain the importance of co-operation.

It frees farmers from moneylenders, supports agriculture and small industry, creates employment, removes middlemen, gives fair prices to consumers and teaches democracy.

Exam tip

Learn the dates as a timeline (1844, 1889, 1904, 1912, 1960). "Arrange in chronological order" questions are common.

Quick summary

A business can be run as a sole trading concern, a partnership firm, a joint stock company or a co-operative society. This chapter explains the first three forms and compares each of them with a co-operative society.

Key points

• Sole trading concern: one person owns, invests, manages and bears all the risk. It is like a "one-man show".
• Sole trader features: easy to start (no special law), own capital, quick decisions, business secrecy, close contact with customers, unlimited liability.
• Partnership firm: governed by the Indian Partnership Act, 1932. It is based on an agreement (partnership deed). Registration is not compulsory but is useful.
• Partnership features: minimum 2 and maximum 50 partners (as per the textbook), mutual agency, joint management, unlimited liability, profits shared as per the deed.
• Joint stock company: registered under the Companies Act, 2013. A private company has 2 to 200 members; a public company needs at least 7, with no upper limit.
• Company features: artificial person, separate legal entity, limited liability, perpetual succession, transferable shares, ownership separate from management.
• Co-operative society: registered under the Maharashtra Co-operative Societies Act, 1960. It needs at least 10 members from different families. Its aim is service. It follows one member, one vote.

Important terms

• Unlimited liability – the owner's personal property can be used to pay business debts.
• Partnership deed – written agreement setting the terms between partners.
• Artificial person – a body created by law that can own property and sign contracts.
• Perpetual succession – the organisation continues even when members change.

Formats and formulas

5 important questions

Q1. What is a sole trading concern?

A business owned, financed, managed and controlled by one person who bears all profit and loss.

Q2. Under which Act is a partnership firm governed?

The Indian Partnership Act, 1932.

Q3. State any four features of a joint stock company.

Separate legal entity; limited liability; perpetual succession; transferability of shares.

Q4. Distinguish between a joint stock company and a co-operative society.

Company: Companies Act 2013, profit motive, one share one vote, shares transferable. Co-operative: MCS Act 1960, service motive, one member one vote, shares not freely transferable.

Q5. Compare a partnership firm with a co-operative society.

Partnership: 2–50 members, unlimited liability, profit motive, ends easily. Co-operative: minimum 10 members, limited liability, service motive, perpetual existence, open membership.

Exam tip

"Distinguish between" questions carry high marks. Use a table with 6–8 clear points.

Quick summary

Co-operative principles are the guiding rules on which every co-operative society works. The International Co-operative Alliance (ICA) has restated them from time to time. This chapter explains the seven reformulated basic principles of 1995 and the general principles of co-operation.

Key points

• In October 1964 the ICA set up an expert committee under Dr. D. G. Karve to restate the principles.
• At the ICA congress in Vienna (1966) the principles got worldwide acceptance.
• On the study of a group led by Dr. Ian MacPherson, the Manchester (1995) congress accepted seven principles.
• The seven principles (1995):

1. Voluntary and open membership – open to all, with no discrimination of caste, religion, gender or wealth.
2. Democratic member control – one member, one vote; elected leaders answer to members.
3. Member economic participation – members contribute capital; surplus is used for growth and member benefit.
4. Autonomy and independence – the society is controlled by its members, not by outsiders.
5. Education, training and information – for members, office-bearers and staff.
6. Co-operation among co-operatives – societies help each other from local to international level.
7. Concern for community – work for the sustainable development of society.

• General principles: self-help through mutual help, cash trading, religious and political neutrality, service motive, thrift (economy), equitable distribution of surplus.

Important terms

• Co-operative principles (सहकाराची तत्त्वे) – guiding rules for running co-operatives.
• ICA – International Co-operative Alliance, the world body of co-operatives.
• Neutrality – staying away from religion and party politics.
• Surplus – the profit of a co-operative.

Important dates and people

• 1964 – Dr. D. G. Karve committee.
• 1966 – Vienna congress; principles accepted worldwide.
• 1995 – Manchester congress; seven principles (Dr. Ian MacPherson group).

5 important questions

Q1. When and where were the seven reformulated principles accepted?

In 1995, at the ICA congress held in Manchester, England.

Q2. Who chaired the ICA expert committee of 1964?

Dr. D. G. Karve.

Q3. Explain the principle of democratic member control.

Members control the society. Each member has one vote, whatever his shares. Office-bearers are elected and are answerable to the members.

Q4. Explain the principle of voluntary and open membership.

Anyone who can use the services and accepts the responsibilities may join, without discrimination. Members may also leave freely as per the bye-laws.

Q5. State the general principles of co-operation.

Self-help through mutual help; cash trading; religious and political neutrality; service motive; thrift; equitable distribution of surplus.

Exam tip

Memorise the seven principles in order with one line each. Many questions ask you to "explain any four".

Quick summary

A co-operative society gets legal existence only after registration under the Maharashtra Co-operative Societies Act, 1960. Formation has two stages: the promotion stage and the registration stage. The person who drives the whole process is the promoter.

Key points

• Promotion stage: (1) the idea of a society; (2) detailed study of the idea (capital, viability); (3) informal meeting of likely members; (4) collecting resources – place, furniture, forms, and at least 10 members from different families; (5) preparing a financial plan; (6) preparing documents.
• The Registrar registers only a society that looks viable.
• Registration stage: (1) first formal meeting; (2) bank account in the proposed society's name; (3) application in the prescribed Form 'A'; (4) registration fee paid by challan; (5) Registrar enters the application in Form 'B' register; (6) scrutiny; (7) registration and classification; (8) certificate of registration.
• Documents with the application: list of members, bye-laws, bank certificate of share capital paid, financial plan, name of chief promoter.
• The certificate shows name, registration number, date and class, with the Registrar's seal and signature. After it, name or bye-laws cannot be changed without the Registrar's permission.
• Promoter: a person or group who gets the idea and does all the work until registration and the start of business. Qualities: leadership, initiative, patience, creativity, ready to bear early expenses.
• Functions of promoter: call meetings, fix aims, prepare project report and financial plan, open bank account, file the application, get the certificate, call the first general meeting and write its minutes.

Important terms

• Promotion – all the groundwork before a society is formed.
• Registrar (निबंधक) – officer who registers co-operative societies.
• Bye-laws (उपविधी) – internal rules of the society.
• Certificate of registration – proof that the society legally exists.

Formats and formulas

5 important questions

Q1. Who registers a co-operative society?

The Registrar of Co-operative Societies, under the MCS Act, 1960.

Q2. What is the minimum number of members needed to form a co-operative society?

At least ten members, belonging to different families.

Q3. Explain the steps of the promotion stage.

Idea; study of viability; informal meeting; collecting resources and members; financial plan; preparing documents.

Q4. Explain the procedure of registration.

Formal meeting, bank account, Form 'A' with documents and fee, entry in Form 'B', scrutiny by Registrar, registration and classification, issue of certificate.

Q5. Explain the functions of a promoter.

Gets the idea, calls meetings, fixes aims, makes the project report and financial plan, opens bank account, applies for registration, obtains the certificate, calls the first general meeting.

Exam tip

Write the steps in the correct order. Mention Form 'A' and Form 'B' by name for full marks.

Quick summary

In villages, farmers used to borrow from moneylenders at very high interest and stayed in debt. Credit co-operative societies were started as a strong alternative to moneylenders, and the Co-operative Credit Societies Act, 1904 gave them a push. This chapter covers their meaning, features and functions.

Key points

• Meaning: a co-operative that gives short-term and medium-term loans to economically weak members (farmers, labourers, artisans) against available security, to raise farm output and living standards.
• Features:
• Voluntary and open membership.
• Aim: give farm loans and recover them.
• Area of work is usually one village.
• Limited capital, as members are poor.
• Loans for seeds, fertilisers, pesticides and tools.
• Affiliated to the District Central Co-operative Bank.
• Forms the base of the rural credit structure.
• Loans against security and within limits.
• Functions: accept deposits (current, savings, fixed, recurring); give loans; check use of loans and recover them; build capital; run government and NABARD schemes; give financial advice; help small and cottage industries and agro-based units; spread co-operative education; help in marketing.
• Three-tier credit structure in Maharashtra: primary credit society (village) → District Central Co-operative Bank (district) → State Co-operative Bank (apex, state).

Important terms

• Short-term loan – for seasonal farm costs like seeds and fertiliser.
• Medium-term loan – for a few years, for tools, animals, etc.
• Security (तारण) – property kept as a guarantee for a loan.
• Loan recovery – getting the loan back with interest.

Formats and formulas

5 important questions

Q1. What is a credit co-operative society?

A co-operative that gives short and medium-term loans to its weak members against security, mainly for farming.

Q2. To which bank is a primary credit society affiliated?

The District Central Co-operative Bank.

Q3. State any four features of a credit co-operative society.

Open membership; village-level area; loans for farm inputs; affiliated to the district bank.

Q4. Explain the functions of a credit co-operative society.

Accepting deposits; giving loans; controlling use of loans and recovery; capital formation; government schemes; advice; helping small industry and marketing; co-operative education.

Q5. Explain the three-tier structure of co-operative credit.

Primary society at the village gives loans to farmers; the District Central Co-operative Bank finances the primary societies; the State Co-operative Bank at the top finances the district banks.

Exam tip

Draw the three-tier structure as a simple flow chart; it earns easy marks.

Quick summary

Early primary credit societies only gave loans. Farmers also needed seeds, fertilisers, tools, daily goods and advice. To meet these needs, service co-operative societies grew in India from 1958. This chapter explains their meaning, features and functions.

Key points

• From 1904, primary societies gave only credit. The idea grew to turn them into multi-purpose societies.
• The All India Rural Credit Survey Committee (1954) pointed out weaknesses of multi-purpose societies; M. L. Darling argued for societies of a viable size.
• In 1958 the National Development Council encouraged service co-operatives.
• B. Mukherjee: a society formed by villagers through mutual co-operation to meet common needs and raise farm production.
• Features: open membership for farmers of the area; limited liability; low face value of share (about ₹10); democratic management by a managing committee; capital from shares, deposits and loans; supply of daily goods; advice on farming and allied work; promotes modern farming.
• Functions:

1. Short and medium-term loans, often in kind (seeds, fertiliser) rather than cash; advances against crops.
2. Farm inputs at fair rates; machines on hire and their repair.
3. Daily necessities through fair price shops.
4. Rural development.
5. Running farm development and government schemes.
6. Encouraging savings of members.
7. Recovery of loans.
8. Acting as agent of the primary marketing society.
9. Helping small industries.
10. Checking malpractices in the market.

Important terms

• Service co-operative (सेवा सहकारी संस्था) – village society giving credit plus farm and other services.
• Multi-purpose society – a co-operative with many aims.
• Face value – the value printed on a share.
• Advance (उचल) – money given early against the security of crops.

Formats and formulas

5 important questions

Q1. What is a service co-operative society?

A village co-operative that gives loans along with farm inputs, daily goods and guidance to its farmer members.

Q2. From which year did service co-operatives get a push in India?

From 1958, when the National Development Council encouraged them.

Q3. State any four features of a service co-operative society.

Open membership; limited liability; low share value; democratic management.

Q4. Explain the functions of a service co-operative society.

Credit in cash and kind; farm inputs and machinery on hire; daily goods; government schemes; savings; loan recovery; agent of marketing society; support to small industry.

Q5. Distinguish between a credit society and a service society.

Credit society only gives loans; service society gives loans plus inputs, goods and advice, so it serves more needs of the farmer.

Exam tip

Mention that loans are given in kind (seeds, fertiliser) to make sure they are used for farming.

Quick summary

Raw farm produce fetches a low price. When it is processed into finished goods, the farmer earns more. So farmers join to form processing co-operative societies, such as sugar factories (sugarcane → sugar), spinning mills (cotton → yarn) and dairies (milk → milk products).

Key points

• Under the MCS Act, 1960, a processing society is one whose main object is processing goods.
• Features: voluntary; capital from producer-members; democratic management; set up near the area of production; develops allied business; rural industrialisation; employment; removes middlemen.
• Functions: collecting produce; processing it; selling the product (standardisation, grading, packing); guidance on crop protection; supplying seeds and fertilisers; developing by-products; credit for production; training.
• History: 1917 – first cotton ginning society in Mysore; 1951 – first co-operative spinning mill in India.
• Sugar factories: India's first co-operative sugar factory was set up in 1933 at Etikoppaka, Andhra Pradesh. Maharashtra's first was at Pravaranagar (Ahmednagar) in 1951, through Dr. Vitthalrao Vikhe Patil. By-products: molasses, alcohol, co-generation of power, ethanol, particle board.
• Spinning mills: second most important processing co-operatives; gin cotton, make bales and yarn; cotton seed gives edible oil and cake. Mainly in Maharashtra, Gujarat and Tamil Nadu.
• Dairy co-operatives: began in Kheda district, Gujarat (Amul). With Dr. Verghese Kurien, the NDDB was set up in 1965. Operation Flood brought the White Revolution. In Maharashtra, Mahanand Dairy in Mumbai is the state federation.

Important terms

• Processing (प्रक्रिया) – turning raw material into finished goods.
• By-product – a secondary product made along with the main one, e.g. molasses.
• Crushing capacity – cane a sugar factory can crush per day.
• White Revolution – rapid rise in milk production through dairy co-operatives.

Important dates and people

• 1933 – Etikoppaka, first co-operative sugar factory in India.
• 1951 – Pravara, first in Maharashtra.
• 1965 – NDDB, with Dr. Verghese Kurien.

5 important questions

Q1. What is a processing co-operative society?

A society of producers formed to process their raw produce into finished goods and sell them.

Q2. Where was the first co-operative sugar factory in Maharashtra set up?

At Pravaranagar, Ahmednagar district, in 1951.

Q3. State any four by-products of a co-operative sugar factory.

Molasses, alcohol, co-generated electricity, ethanol.

Q4. Explain the functions of a processing co-operative society.

Collection of produce, processing, grading and packing, sale, supply of seeds and fertiliser, credit, by-product development, guidance and training.

Q5. Write a note on dairy co-operatives.

Started with Amul in Kheda, Gujarat. NDDB (1965) under Dr. Verghese Kurien ran Operation Flood, leading to the White Revolution. Mahanand Dairy is Maharashtra's state federation.

Exam tip

Keep the three examples (sugar, spinning, dairy) ready with one key date each.

Quick summary

Farmers often had to sell their produce cheaply to traders and middlemen. Marketing co-operative societies were formed so that farmers get a fair price and exports grow. India's first co-operative marketing society was set up in 1915 at Hubli in the Bombay province.

Key points

• Definitions are given by the Reserve Bank of India, Margaret Digby (FAO expert) and Dr. B. S. Mathur: a society of farmers formed to carry out marketing on co-operative lines, more cheaply than private traders.
• Features: voluntary association of farmers; marketing of farm produce; wide area of work; capital from shares; democratic management; link between credit and marketing; helps government in procurement; federal structure; removes middlemen; gives market information.
• Functions:

1. Collecting and grading produce.
2. Storage in godowns.
3. Packing.
4. Transport.
5. Selling – the main function.
6. Advances against produce.
7. Buying at Minimum Support Price for the government (e.g. monopoly cotton procurement, onion procurement through NAFED).
8. Market information to members.
9. Price control.
10. Export of farm produce.

• Four-tier structure: primary marketing society (village/taluka) → district central marketing federation → state marketing federation → NAFED (national level, set up 2 October 1958, head office New Delhi).

Important terms

• Marketing (विपणन) – all activities that take goods from producer to consumer.
• Grading – sorting goods into classes by quality.
• Minimum Support Price – lowest price the government fixes to buy a crop.
• NAFED – National Agricultural Co-operative Marketing Federation of India.

Formats and formulas

5 important questions

Q1. Where and when was India's first co-operative marketing society set up?

At Hubli, Bombay province, in 1915.

Q2. What is NAFED?

The national-level apex body of marketing co-operatives, set up on 2 October 1958 with its head office in New Delhi.

Q3. State any four features of a marketing co-operative society.

Voluntary association of farmers; democratic management; link between credit and marketing; federal structure.

Q4. Explain the functions of a marketing co-operative society.

Collection and grading, storage, packing, transport, sale, advances against produce, procurement at MSP, market information, price control and export.

Q5. Explain the organisational structure of marketing co-operatives.

Primary society at village/taluka, district federation, state federation and NAFED at the national level, each serving the level below it.

Exam tip

For structure questions, draw the four tiers as a pyramid with NAFED at the top.

Quick summary

Food, clothing and shelter are basic needs. In cities, land is scarce and costly, so low and middle-income people find it hard to own a house. People with the same need for shelter join to form a housing co-operative society and get homes at a reasonable cost.

Key points

• India's first housing co-operative: Bangalore Co-operative Society Ltd, 1909, in Mysore province.
• National Co-operative Housing Federation of India (NCHF) – national apex body, set up in September 1969.
• HUDCO (Housing and Urban Development Corporation) – set up in April 1970; gives loans for urban housing projects.
• The MCS Act, 1960 defines it as a society formed to provide houses or flats to its members.
• Features: voluntary; houses at reasonable cost; capital from shares, entry fees and loans from banks; democratic management; removes brokers; saves on building and maintenance; habit of saving; community living; urban development.
• Functions:

1. Getting land.
2. Completing registration formalities.
3. Getting building permission.
4. Contract with builders.
5. Buying materials (cement, sand, bricks, steel).
6. Getting civic amenities.
7. Repairs and maintenance.
8. Keeping accounts.
9. Giving ready houses to needy members.
10. Educating members.

Important terms

• Housing co-operative (गृहनिर्माण संस्था) – society formed by members to build or own homes.
• Flat (सदनिका) – a separate home in a building.
• HUDCO – national body that finances housing.
• Maintenance charges – amount members pay for upkeep and common services.

Important dates and people

• 1909 – Bangalore Co-operative Society, first housing co-operative.
• September 1969 – NCHF.
• April 1970 – HUDCO.

5 important questions

Q1. Which was the first housing co-operative in India?

Bangalore Co-operative Society Ltd, set up in 1909 in Mysore province.

Q2. What is HUDCO?

Housing and Urban Development Corporation, set up in April 1970 to finance housing projects.

Q3. State any four features of a housing co-operative society.

Voluntary association; houses at reasonable cost; democratic management; removal of brokers.

Q4. Explain the functions of a housing co-operative society.

Getting land and permissions, contracting builders, buying materials, getting amenities, maintenance, accounts, allotting houses, member education.

Q5. How does a housing co-operative help low-income people?

Pooling money and getting bank loans lowers cost, brokers are removed, and members share maintenance, so a house becomes affordable.

Exam tip

Remember the three dates: 1909, 1969, 1970. They often appear in "match the pairs".

Quick summary

Private traders sometimes exploit consumers through hoarding, adulteration and black marketing. To get pure, good-quality goods at fair prices, consumers voluntarily form a consumers' co-operative society (store). The world co-operative movement itself began with the Rochdale consumer store of 1844.

Key points

• India's first consumer co-operative: Triplicane Urban Co-operative Society Ltd, Chennai, 20 September 1905.
• In World War II, these societies distributed food grains at controlled rates.
• Consumer protection law: Consumer Protection Act, 1986 (as in the textbook), now replaced by the Consumer Protection Act, 2019. 24 December – National Consumer Day; 15 March – World Consumer Rights Day.
• Features: formed under co-operative law; voluntary; cash sales only; pure, quality goods; democratic; checks profiteering; fair prices; four-tier structure; direct buying from producers.
• Four-tier structure: National Co-operative Consumers' Federation → state federation → wholesale/central stores (district) → primary consumer stores.
• Functions: protect consumer interest; remove unfair trade practices; supply pure goods; remove middlemen; check monopoly; keep prices stable; teach thrift; act for the government (e.g. ration distribution).
• Types: primary consumer stores; central stores / super bazaars / Janata bazaars; student consumer stores in schools and colleges.

Important terms

• Consumer store (ग्राहक भांडार) – a shop run by consumers on co-operative lines.
• Adulteration (भेसळ) – mixing low-quality material in goods.
• Hoarding – storing goods to create artificial shortage.
• Super bazaar – a large store selling many goods under one roof.

Important dates and people

• 1844 – Rochdale, world's first consumer co-operative store.
• 20 September 1905 – Triplicane society, Chennai.
• 15 March – World Consumer Rights Day; 24 December – National Consumer Day.

5 important questions

Q1. Which was the first consumer co-operative in India?

Triplicane Urban Co-operative Society Ltd, Chennai, set up on 20 September 1905.

Q2. Why do consumer stores sell only for cash?

To avoid bad debts and keep enough working capital, so prices stay low.

Q3. State any four features of a consumers' co-operative society.

Voluntary association; cash trading; quality goods at fair prices; democratic management.

Q4. Explain the functions of a consumers' co-operative society.

Supplying pure goods, removing unfair practices and middlemen, controlling monopoly and prices, educating members, distributing goods for the government.

Q5. Explain the types of consumer co-operatives.

Primary stores at local level; central stores, super bazaars and Janata bazaars in cities; student stores in schools and colleges.

Exam tip

Write "cash trading" and "elimination of middlemen" in every answer on consumer stores; they are key words.