Grand ambitions: On India’s cooperative sector

Hypercompetitive business models that dominate the economic lives of people have undesirable social consequences. The cooperative model offers an alternative, albeit with its own imperfections. India’s Ministry of Cooperation, which completed five years on July 6, is a bold experiment in harnessing the potential of this approach. Traditionally confined largely to agriculture, cooperatives now have the opportunity and a requirement to expand into other sectors, particularly services. Cooperatives, by their very character, are relatively small-scale and fragmented; organising them, and connecting them to the broader economy that disproportionately rewards hyper-scalers is a balancing intervention — an economic, political and social imperative. The Ministry aims to transform the cooperative landscape by bringing policy coherence across agriculture, dairy, fisheries, banking, housing, consumer cooperatives, and exports. This requires collaboration with States and national federations, capacity building, wise use of digital technology, and market linkages. Primary Agricultural Credit Societies (PACS) are the foundation of rural cooperatives. Through a reformed legal framework, they have been empowered to undertake over 25 business activities, transforming them into multifaceted institutions delivering many economic services in rural India.

The Ministry has facilitated new national-level multi-State cooperative societies, expanding market access for members and strengthening cooperative value chains from production to global markets. Cooperative enterprises are being encouraged to grow and compete, and a National Cooperation Policy is in the making. But there are challenges amid the opportunities. Corruption and inefficiency eroded the potential of India’s cooperative sector, and the fear of local communities and States losing control of cooperatives to a national-level mechanism needs to be assuaged. The task is in finding the sweet spot of consolidation and decentralisation; localisation and nationalisation; technology and human labour, for boosting the sector. Union Home Minister Amit Shah, who holds the portfolio, is pushing the cooperative sector to expand into production and marketing, beyond agricultural credit and input facilitation, which could help mitigate the sector’s endemic crisis. A well-coordinated, yet federated, cooperative sector can offset the social, environmental and political costs of global capitalism, which is the default model of the economy. Government and business leaders worldwide are viewing cooperatives with renewed interest, as the pitfalls of hypercapitalism become pronounced. India can develop its cooperative sector as a global model.