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Cooperatives are model for inclusive growth. Explain. Identify the major roadblocks before Cooperatives in India.
- Cooperatives operate on the principle of democratic control and are owned and managed by their members, who share the benefits and risks of their activities.
- The Government of India took a major decision in July 2021 to establish new ministry of cooperation. Till then, area of co-operation at Union level was under the ministry of agriculture and farmers’ welfare. This decision seems to be the result of realisation that cooperation is a critical institution for a very large section of the Indian society covering small farmers, small scale businesses, small and micro enterprises, and informal sector. These segments dominate India and are not quite amenable to public or corporate governance model. The move also augurs well with the goal of Sabka Saath, Sabka Vikaas.
- The Budget 2023-24 strengthens the cooperatives to take forward the agenda for inclusive growth.
The potential of cooperatives in promoting inclusive growth
- Employment Generation: Cooperatives can create employment opportunities in areas where traditional employment opportunities are limited. Cooperatives provide jobs for their members and their families, and often employ people from disadvantaged communities, women, and youth.
- Poverty Reduction: Cooperatives can contribute to poverty reduction by providing members with access to credit, training, and other resources that enable them to start or expand their own businesses. Cooperatives can also provide affordable goods and services to their members, such as healthcare, housing, and education.
- Social Welfare: Cooperatives promote social welfare by providing members with a sense of community and belonging. Members work together to achieve common goals and share the benefits of their collective efforts. Cooperatives also promote social responsibility by supporting community development projects and by practicing ethical and sustainable business practices.
- Financial Inclusion: Cooperatives can provide financial services to people who are excluded from the formal banking system. Cooperatives offer a range of financial services, including savings, loans, and insurance, that enable members to meet their financial needs and build assets over time.
- Empowerment: Cooperatives empower members by giving them a voice in decision-making and by promoting democratic control. Members have equal voting rights and participate in the management of the cooperative, which enhances their leadership skills and promotes civic engagement.
Challenges facing cooperative system in India
- Weak regulatory framework: The regulatory framework for cooperatives in India is weak and outdated. This makes it difficult to monitor and enforce compliance with regulations, and leaves room for fraud and mismanagement.
- Lack of transparency: Many cooperatives in India suffer from a lack of transparency in their operations and management. This makes it difficult for members to hold their leaders accountable and can lead to corruption and abuse of power.
- Limited access to capital: Cooperatives often struggle to raise capital due to limited access to financial institutions and a lack of collateral. This makes it difficult for them to invest in new projects and expand their operations.
- Political interference: Many cooperatives in India are influenced by political parties, which can undermine their autonomy and lead to corruption.
- Inadequate training and education: Many members and leaders of cooperatives lack the necessary training and education to manage their organizations effectively. This can lead to mismanagement and a lack of accountability.
Addressing these challenges will require significant reforms in the legal and regulatory framework for cooperatives, as well as efforts to improve transparency and accountability. Additionally, providing better access to capital and training and education for cooperative members and leaders can help to promote their success and sustainability.