unit 1 - 1 history of cooperatives
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UNIT 1
CO-OPERATIVES
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CO-OPERATION
May you all have a common purpose,
May your hearts to be in unison,
May you all be the same hand,So that you can do work off, well.
** RIGVEDA.
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CO-OPERATION
Behold how good and how pleasant it is for brethren to dwell together in
unity.
- Bible
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CO-OPERATION
Derived from Latin word
µCo¶ ± µtogether¶
µOperari¶ ± µto work¶
Co-operation ± working together
Main principle
´EACH FOR ALL AND ALL FOR EACHµ
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DEFINITION OF CO-OPERATION
Mr. W. P. Watkins
³Co-operation is a system of social organisation based on the
principle of unity, economy, democracy, equity and liberty.´
Mr. V. L. Mehta
³Co-operation is a vast movement which promotes voluntary
association of individuals having common needs who combine
towards the achievement of common economic ends.
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HISTORICAL BACKGROUND
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ROBERT OWEN
By the end of 18th century Industrial revolution completely matured in
England
Capitalism came into existence
The cooperative movement began in Europe in the 19th century, primarily in
Britain and France
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ROBERT OWEN
Robert Owen (1771±1858) (England)Father of the cooperative movement
Industrialist by occupation
Belief - His workers in a good environment with access to
education for themselves and their children.
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ROBERT OWEN
Started labour exchanges, formed labour colonies and helped them in the
production of various things whereby their income increased
Demand before parliament of England ± Separate Act for labour class
improvement
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CHARLES FOURIER
François Marie Charles Fourier(7 April 1772 ± 10 October 1837)
A French utopian socialist and philosopher.
Tried to find out alternative to capitalism
The main evil of capitalism, according to Fourier, was the conflict of
individual interests.
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CHARLES FOURIER
Designed PHALANSTERE to eliminate
conflicts of interest by making each member a
cooperative owner as well as a wage earner.
Each member would draw his or her share of
income not only as a laborer but also as a
capitalist (shareholder) and manager
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CHARLES FOURIER
Each cooperative member had a voice in the
management of the phalanstere
His proposals for the establishment of
µphalanxes¶ gained considerable support by
practitioners
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DR WILLIAM KING
Owen & Fourier were followed by Dr William King (1786±1865)
A British physician and philanthropist from Brighton.
Took his ideas and made them more workable and practical.
Started shops using cooperative principles in England
but could not succeed in that
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ROCHDALE SOCIETY OF EQUITABLE PIONEERS
Put the co-operative efforts in reality by
Rochdale villagers in England.
1840 ± Period of hungry forties
Rochdale ± worst condition of Woolen and
cotton milling town
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ROCHDALE SOCIETY OF EQUITABLE PIONEERS
In 1844, a group of 28 weavers with an
initial capital £ 28 set up the Rochdale
Equitable Pioneer Society under Friendly
Societies Act
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ROCHDALE SOCIETY OF EQUITABLE PIONEERS
21 December 1844 ± opened store with a very meager
selection of butter, sugar, flour, oatmeal and a few candles.
Within three months, they expanded their selection to include
tea and tobacco
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ROCHDALE SOCIETY OF EQUITABLE PIONEERS
Known for providing high quality, unadulterated goods.
Ten years later, the British co-operative movement had grown to
nearly 1,000 co-operatives.
Considered the first successful co-operative enterprise
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DEVELOPMENT OF INDIAN
CO- OPERATIVE MOVEMENT
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1] First Stage (1904- 1912)
2] Second Stage (1912 to 1918)
3] Third Stage (1919-1929)
4] Fourth Stage (1929- 1939)
5] Fifth Stage (1939-1947)
6] The Sixth Stage (1947-1970)
7] The Seventh Stage (1970- 2000)
8] The Eighth Stage (2000 onwards)
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First Stage (1904- 1912)
Beginning P eriod of Co-operative Movement in India
Burden of debts on farmers - famines and droughts
Co-operative Credit Society Act passed in 1904 - Sir DanielHamilton
µThe way from poverty to plenty¶
Main object ± encourage thrift, self-help, co-operation among
agriculturists, artisans
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First Stage (1904- 1912)
Not successful due to No legal protection for the other co-operatives
No provision of financial aid to primary societies
Unsuitable classification as urban and rural
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Second Stage (1912 to 1918)
P eriod of
H arried
Ex pansion
Passed another Act in 1912 ± remedy for loopholes in 1904 Act
Focused not only on the credit aspect of co-operatives but also on all the other
functions that co-operatives could carry out
Broad layout for formation of all types of co-operatives from agricultural to
industrial, and from credit to consumer
Co-operative Movement was shooted for expansion.
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Second Stage (1912 to 1918)
Essential features of the ActRegistration of any society, credit or otherwise having promotion of economic
interest of its members in accordance with the co-operative principles
Registration of a federal society like central bank
Ltd liability of central societies and unlimited liability of rural credit societies
Provision of reserve fund from one-fourth of the net profits
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Third Stage (1919-1929)
P eriod of Unplanned Rapid Development
After world war I, by passing Reforms Act 1919 co-operation became a
provincial subject
Adequate to cope with the various problems.
The co-operative movement flourished thereafter in many provinces.
Provincial govt. appointed committees to study the co-operative
movement.
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Third Stage (1919-1929)
Depending upon the situation of the province various acts were passed by the
respective provincial govt. to develop the co-operative movements in their
provinces.
Bombay ± 1925
Madras ± 1932
Bihar and Orissa ± 1935
Coorg ± 1937
Bengal -1941
A tremendous development in the no. of societies providing credit.
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Third Stage (1919-1929)
Why defined as ³Unplanned Development.´ ?
Quantitative growth - No proper attention to qualitative growth.
Granted loans recklessly
Resulting steady increase in overdues causing liquidation
Rural families not benefited more
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Fourth Stage (1929- 1939)
P eriod of Consolidation and
Re-organization
Great depression in 1929 preceding world war II hit the world
Steep fall in the prices of agricultural produce
Weakened repayment capacity of agriculturist
Investment of capital of co-operative credit societies more in agricultural
activities
Development of co-operative movement in India hampered due to non-
repayment of loans
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Fourth Stage (1929- 1939)
The existence of co-operative societies was in danger.Affected the co-operative movement in Punjab, Haryana, Bihar and Bengal.
The ratio of loans to arrears was 20% in 1927-28 which increased to 40% in
1932-33.
The percentage of arrears went up to 93% in Bombay in 1938-39.
During this period about 50% of co-operative societies went into liquidation.
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Fourth Stage (1929- 1939)
The Indian Central Banking Enquiry Committee (1931) also stressed onstrengthening the co-operative movement
1935 ± Establishment of Reserve Bank of India. A separate section for
providing agricultural credit (Rural Credit Development)
1937 - this section studied various problems of Indian co-operative movement and
submitted its report stating that development of co-operative societies should be
given priority.
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Fifth Stage (1939-1947)
P eriod of
Recovery
The atmosphere of World War II proved to be beneficial for the co-operative
movement.
Started increasing in the price of the agricultural produce thereby increase in the
income of the agriculturists
Rise in level of their repayment capacity
Removed financial depression of Indian co-operative movement
Movement again on the path of its development.
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Fifth Stage (1939-1947)
Prosperity of consumer co-operative stores due to the restriction imposedduring war time.
Existence of industrial co-operative societies for the purpose of providing war
materials.
Developed non-profit supplying societies and multipurpose societies
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Fifth Stage (1939-1947)
The development of co-operative movement during 1929 to 1947
Year No. of societies
(in 000¶s)Membership (in lakhs)
Capital
(in crores)
1939 122.00 53.07 106.47
1943 146.00 69.01 121.14
1946 172.00 91.6 104.00
1947 139.00 90.00 156.00
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Sixth Stage (1947-1970)
After independence, the government felt that co-operatives should play animportant role in the development of rural areas.
The late prime ministers Jawaharlal Nehru and Lal Bahadur Shastri stressed on
the importance co-operatives.
Co-operatives were included in 5 year plans.
Co-operatives encouraged to enter into new sectors of rural economy ± dairy,
food processing, agro processing, etc.
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Seventh Stage (1970- 2000)
The government laid more importance on the development of rural bankingsectors.
Co-operatives were asked to develop rural banks.
The formation of NABARD (1982) as an apex bank for monitoring the co-operative banks.
The government also took the initiative in replicating the Anand pattern Model
for dairy co- operative across the country.
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Eighth Stage (2000 onwards)
The rise of the new millennium thrown many challenges to the co- operatives.
Growth of the WTO restrictions and the threat from global competition
Direct competition from multinationals for co-operatives
Adequate support and help from govt to the co-operatives by building brands,
distribution network and also in exporting their products to global market.
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OVERVIEW
STAGES HIGHLIGHTS
FIRST 1904 ² Passed Co-operative Credit Society Act
SECOND 1912 ² Another act passed to curtail the deficiencies
THIRD 1919 ² Passed Reform Act entrusting provincial govt.
FOURTH 1935 ² Establishment of RBI
FIFTH Period of Recovery
SIXTH Co-operatives in five year plan
SEVENTH Formation of NABARD
EIGHTH Cut throat competition
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