Context: The Central Government has unveiled the National Cooperative Policy 2025. The government has urged States to announce their own cooperative policies by January 31, 2026, in alignment with the National Cooperative Policy.
Relevance of the Topic:Mains: National Cooperative Policy 2025; Cooperatives: Benefits and Challenges.
What are Cooperatives?
- A cooperative is a voluntary association of individuals with common economic, social, and cultural needs and aspirations, who come together to pool resources for mutual benefit. It functions on democratic principles and emphasises collective ownership, shared profits, and participatory decision-making.
- The 97th Constitutional Amendment (2011) gave constitutional recognition to cooperatives, adding Part IXB to the Constitution and inserting the term "Cooperatives" in Article 19(1)(c).
- Types of Cooperatives: Primary Agricultural Credit Societies (PACS); Dairy cooperatives, Fisheries cooperatives, Urban Cooperative Banks, etc.
- There are over 8.6 lakh registered cooperative societies in India covering 30 crore members, covering 99% of villages and 71% of rural households.
Benefits of Cooperatives:
- Economic Inclusion: Help small farmers, artisans, and rural entrepreneurs access markets and finance.
- Job Creation and Democratic Empowerment: Ensure grassroots participation in economic activities. With over 30 crore members, cooperatives remain a key socio-economic driver, especially in rural India.
- Rural Development: Cooperatives enable rural credit, dairy, storage, and agro-processing.
Challenges (As per Shivaji Rao Patil Committee):
- Lack of participatory character: Free rider problem where inactive members benefit without contribution. Dominated by elite members and politicians.
- Restricted Coverage and Role:
- Equity infusion by the government enables the government to appoint board of directors leading to poor autonomy.
- State Cooperative Acts allow postponing elections and superseding boards.
- Regional Skew: Cooperatives are successful only in a few states like Karnataka, Gujarat, Maharashtra. Limited to single-purpose societies like PACs, reducing viability.
- Governance related issues: Poor regulation by Registrar of Cooperative Societies. Prevalence of Financial fraud, corruption etc.
- Lack of adequate capital as cooperatives cannot raise money from capital markets. Poor use of technology and lack of professional management.
Government Initiatives for Cooperative Sector:
- Creation of Ministry of Cooperation (2021) to streamline cooperative growth, policymaking, and digitisation.
- Computerisation of PACs.
- Income tax relief: Reduction in MAT from 18% to 15% in Union Budget 2023-24.
- National Cooperative Database launched to create a real-time, unified registry of all cooperative societies.
- Banking Regulation (Amendment) Act, 2020 to strengthen regulation of urban cooperative banks.
- Cooperatives as buyers on GeM portal (Government e-Marketplace).
National Cooperative Policy 2025:
- Vision: To contribute to India’s collective ambition of becoming ‘Viksit' by 2047 through sustainable cooperative development.
- Mission:
- To create an enabling legal, economic, and institutional framework that will strengthen and deepen cooperative movement at grassroots level.
- To facilitate transformation of cooperative enterprises into professionally managed, transparent, technology-enabled, vibrant, and responsive economic entities.
- Need for a New Policy: The last cooperative policy was framed in 2002 which was outdated due to the radical shifts brought on by globalisation, digitisation, and socio-economic transformation.
Key Highlights of National Cooperative Policy 2025:
Legislative and Institutional Reforms
- Encourage States to amend cooperative laws (Cooperative Societies Acts and Rules) to enhance transparency, autonomy and ease of doing business.
- Promote digitalisation of registrar offices and real-time cooperative databases.
- Revive sick cooperatives with institutional mechanisms.
Financial Empowerment
- Preserve and promote the three-tier Primary Agriculture Credit Societies (PACS) - District Central Cooperative Bank - State Cooperative Bank credit structure.
- Promote cooperative banks and umbrella organisations (like National Urban Cooperative Finance & Development Corporation).
- Enable cooperative banks to handle government businesses.
Business Ecosystem Development:
- Model cooperative villages with multipurpose PACS as growth engines.
- Encouraging States/UTs to develop at least one model cooperative village.
- Develop rural economic clusters (E.g., honey, spices, tea).
Future-Readiness & Technology:
- Develop a national ‘Cooperative Stack’ integrating with Agri-stack and databases.
- Promote Open Network for Digital Commerce (ONDC) and Government e-marketplace (GeM) platform integration.
- Encourage research and innovation through cooperative incubators and Centres of Excellence.
Inclusivity Measures:
- Active participation of youth, women, SC/STs, and differently-abled in cooperatives.
- Model bye-laws for gender representation and transparent governance.
Sectoral Diversification:
Promote cooperatives in new and emerging sectors such as:
- Renewable energy,
- Waste management,
- Health and education,
- Mobile-based aggregator services (E.g., for plumbers, taxi drivers),
- Organic and natural farming,
- Biogas and ethanol production, etc.
Implementation and Monitoring
A robust multi-tier implementation structure is proposed:
- Implementation Cell within the Ministry of Cooperation with technical Project Management Unit support for effective and timely implementation of the policy.
- The National Steering Committee on Cooperation Policy chaired by the Union Cooperation Minister will be constituted for overall guidance, inter-ministerial coordination, periodic policy review, etc.
- Policy Implementation and Monitoring Committee headed by the Union Cooperation Secretary for coordination with States, troubleshooting implementation bottlenecks, periodic monitoring and evaluation, etc.