Cooperative societies have been very useful to foster economic development of the communities following the principle of self-help, democratic decision making, and the benefits to create transformative potentials of people in rural as well as urban areas. This has enabled not only rural development; it has also bridged disparities of socio economic level. The co-operative model is a model of inclusive growth and supports the principle of Vasudeva Kurambhakkam which means the world is considered as one large family. Co-operative laws have been drafted by the government to foster governance and provide guidance to cooperative societies from evolution, management point of view as outlined in relevant laws and regulations. This all has been done by developing and enacting cooperative societies laws. Model bylaws for multi-purpose societies formation and regulations has been communicated through major state co-operative laws and acts.This paper will attempt to discuss Indian cooperatives as they are governed by Central act and State cooperative acts through their respective Cooperative societies Act. The second part of the research paper will focus on the relationship of cooperative laws and their friendliness to facilitate strategic entrepreneurship which will be useful towards inclusive growth of the country taking it to a better level of economic growth and marching towards Viksit Bharat by 2047. India follows a legal system where through a single law, all types of cooperatives are governed by such as agriculture, housing, consumer, banking etc. The government builds its relationship through cooperatives with the marginalised section of the society to encourage agriculturists, and people with limited means to improve their earnings by collaborating and working together. This will provide them with opportunity for all round development and progress. In the International Year of Cooperatives, in 2025, the Government of India, Ministry of Cooperation, announced its policy to define, explore, govern, and support cooperative activities through various programs, policies, acts, and legislations. However, the achievements are not as good as they ought to be or as expected. Yet, we are hopeful that the cooperative movement will flourish in our country and will become an important tool in taking the country to achieve the goal of Viksit Bharat. This research paper, which is conceptual in nature, has tried to explore the concept and objectives of the cooperative movement, governing laws, Acts and the challenges faced by society in this regard. The Government has also contributed a lot by initiating and strengthening cooperative governance on the principles of transparency and social responsibility. In a cooperative setup, people work in a democratic way with responsibility, adopting a culture of cooperation and caring for others. The Government has formulated the policies and programmes of Sahkarita and "Sahkar se Samriddhi" to reach the people and enable them to gain the benefits of a cooperative setup. We hope that cooperative movement accelerates economic growth of the country and support Indians in making Viksit Bharat 2047
The society in which we are living faces challenges of income inequality, scarce resources, and socio- economic imbalances in communities who are not only marginalized but also vulnerable; cooperatives provide a chance for social inclusion and sustainability by creating justice, equity and equality. Through the various institutions of the government, the cooperatives can be used as a vehicle for achieving long-term social development, higher GDP as well as overall economic growth. Cooperative-based initiatives become a necessity for the society, to use this tool for its transformation by addressing socio-economic challenges faced by it. In various countries, cooperatives have successfully achieved objectives of social inclusion and long term development. They have the capacity to facilitate collective action and empower the communities which are marginalized. Cooperatives are an effective form of organizations for sustainable development of the society to achieve multifaceted objectives.(Mojo.et.all.)
As per the ICA (International Cooperative Alliance), when people join voluntarily and form autonomous organization , it is known as cooperative .They achieve their social, cultural, and economic objectives which are common, jointly owned, and controlled democratically (Kayode Ogundeji & Olajide Talabi, 2012). They work on the basis of a non-profit motive or cost-to-cost motive and are controlled by members, where one of them works as a patron. There is a common factor of ownership, control, and service motive as a feature which differentiates it from other forms of business.
Cooperative organizations are symbolic of democratic control with opening membership to all. People are offered limited interest on capital and surpluses are distributed among members .Trading is done on a cash basis. Promotes education of members and the concept is supported by the political system on a neutral basis(MacPherson, 2012) .Research has been conducted by (Hitt et al., 2001) on cooperatives extensively. There are five principles which govern and are the basis of any strategic entrepreneurship in the form of a cooperative. The first principle is intention, meaning good intention. The second principle is involvement of the people who will contribute and work together to achieve their common goals. The third is partnership; there is a partnership of resources as well as minds in the organization. The fourth principle is that everybody has to contribute to the work, and the final principle is solidarity, which is expected from each member of the group.
The leadership emerges from within the cooperative, and the person who has the entrepreneurial capability to manage resources with creativity and skill comes forward and openly offers his services; when accepted by the members, he becomes their leader to achieve the organizational goals of the cooperative. There is no standard style of leadership in this form of cooperative; the one who has initiative and is interested in offering his or her services can come forward as a chairperson of the group. The members, on the basis of their trust in his or her capacity and capability, accept him or her as a leader. The leader so selected strategically orchestrates resources and does all such activities to create organizational and societal benefits. This cooperative and entrepreneurship affects wealth and benefits the members as well as groups (Hitt, 2011). It has been seen that individual benefits are eliminated in this form of organization and replaced by a new model where social and organizational benefits become relevant and important.
The objective of developing an open set of corporations and cooperatives is to empower the marginalised communities and to promote growth of the economy which is more inclusive in nature. The objective of this study is to learn about the impact of cooperatives on socio-economic development and well-being of the people by examining the functioning of the cooperatives as well as their contribution to the society. There is a need to have and develop a society which believes in transformation to build good quality of social capital and create opportunities to form strategic entrepreneurship, especially by youth to build a Viksit Bharat in the times to come.
Objectives
The objectives of the study are:
A descriptive method of research has been adopted to know about cooperative laws and Acts as applicable in India, considering that the subject matter is of utmost importance from economic growth and socio-demographic point of view. Secondary data has been used and a literature review has been conducted to understand the history and evolution of cooperative movement in India. Government laws/acts/schemes and announcements from time to time have been studied in detail and have been reflected in the discussions developed. The theoretical horizon has been generated in such a way that it gives an idea about the gaps in the research as well as directions for future research.
Cooperative Laws In India: Evolution and growth of Cooperatives :
The history of introduction of cooperatives begins from the year 1892 when Sir Frederick Nicholson was requested by the Madras government to explore a system to facilitate banking for the agriculturists. Around 1900, Mr H. Dupernex conducted the study on rural credit situation and published a book titled as “people's bank for northern India”. The Government of India took note of it and considered introducing cooperative credit societies and it gave direction to another committee to draft a bill and model rules as was prevalent in European countries. The result was the enactment of Cooperative Credit Society’s act, 1904 which was approved and passed on 25th March 1904. Further the ideas were developed and with the progress of cooperative movement, the cooperative societies act 1912 was passed. This is the basis of the Cooperative legal framework in our country which has the features of simplicity and elasticity. The Bombay act of 1925 introduced classification of societies.
In 1905, the Registrar of the cooperative societies made a visit to the state of Punjab and heard that people do not have any knowledge about the cooperation. They took the initiative of setting up societies in five districts namely Karnal, Hoshiarpur, Montgomery, Mianwali and Rawalpindi. (Brij Narain 1990)
There he took charge and popularised different types of societies that suited the conditions of Punjab and also drew model bylaws (Ata Ullah 1937 )
The Government of India in 1919 passed the reforms act and cooperatives as a subject was passed to the states. British officials H. Calvert, M.and l. darling were of the opinion that agriculture in Punjab can progress if there is a progress of cooperation (Patrick Fagan ,1923)
It was reiterated further that in case you want to escape from poverty the cooperation is best and the only way to achieve this target (M.L. Darling 1930)
All India Association of Cooperative Institutes was set up in 1929 to strengthen the cooperative institutes and provide them the facilities of education and training. The Mehta committee in 1937 recommended the formation of multi-purpose cooperatives so that a momentum to the growth of cooperatives be provided. From 1939 to 1945, urban cooperative societies began their banking functions and indulged in various diversified activities to take the benefit of credit and banking services. The Multi unit cooperative societies act was passed in 1942 delegating powers from Central Registrar Cooperatives to State Registrar. In 1946, in pre-independence development the milk producers registered as a society and on 14 December 1946 the famous cooperative, Amul was registered. In the post-independence era various five year plans have led emphasis on development of cooperatives as a preferred organization for economic and political development. Industrial cooperatives, consumer and housing cooperatives, urban cooperative banks have developed and the government has emphasized to focus on training and education and recommended that the government department should follow the policy of building and developing the cooperatives. Building of cooperatives became part of the scheme of planned development.
The All India rural credit survey committee in 1954 observed that though cooperatives have not been successful in our country, it must succeed and the state should not interfere and control beyond a point. Thereafter, it was decided that different states should have autonomy and various activities were categorised into central list, state list and concurrent list and cooperation became subject under state list. The cooperative legislation was given to the state government though the functioning was controlled through the ministry of cooperation. Each state government went for separate legislation facilitating the incorporation of cooperative societies in their states as per the national government rules and regulations. The following governments have their own state Cooperative Societies Acts : Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Chhattisgarh, Goa, Gujarat, Haryana, Himachal Pradesh, Jammu and Kashmir, Jharkhand state, Karnataka, Kerala, Madhya Pradesh , Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Punjab, Rajasthan, Sikkim, Tamil Nadu, Telangana, Tripura, Uttar Pradesh, Uttarakhand, and West Bengal.
In 1956, the industrial policy resolved to build up a large and growing cooperative sector. The third and fifth five year plans between 1961 to 1969 stressed that the cooperative should be developed in all areas of commercial activities and medium and large industries should take up the activities on cooperative lines. After the Indo-China war in 1962 consumer cooperatives and public distribution systems were strengthened and in 1963 National Cooperative Development Corporation Act was passed and through this act of parliament NCDC was set up. Further in 1964, the National Dairy Development Board (NDDB) was also established. Various five year plans have emphasised on reorganization of cooperatives and have recommended various strategies for cooperative development by emphasising the importance of cooperative efforts.
It has been systematically directed to work on betterment of economic conditions of rural poor and marginalised sections of the society. The National Bank for Agriculture and Ruler Development Act was passed in 1981. NABARD was set up. Multi state cooperative act enacted in 1984 to repeal the cooperative societies act of 1942. Model cooperative act, 1990 appointed Chaudhary Brahm Prakash as its chairman to finalise a Model Cooperative Act which will cover cooperative movement, laws and policies. The Multi State Corporative Societies Act was modified in 2002 and it replaced the earlier act of 1984. National cooperative policy 2002 was announced to facilitate all round development of cooperatives in the country. The government formed a ministerial task force which recommended single laws instead of parallel laws.
Not much research has been done in the field of entrepreneurship through cooperatives as a form of organisation. Basically, there are two business models, one is individual based organization and the second is cooperative entrepreneurship with collective membership. The limited research work available so far helps us not only in describing the concept but also forms a base for future studies to develop the concept and formal theory for entrepreneurial practices in the times to come.
The heroic model of Nicholls is followed in the case of social entrepreneurship, meaning thereby; Social entrepreneurship is different from conventional business and it does not have the same features and motivations as a normal business model has. A heroic individual dominates, comes forward, and takes up a few philanthropic foundations, and then supports and promotes the individualistic thinking to perform those activities (Nicholls, 2010).
There are more collective and organised models of social entrepreneurship which are quite prevalent and more widespread and the dominance of heroic entrepreneurship is challenged. In that case, Collective entrepreneurship has wider social economic and collective aspects of social enterprises (Spear, 2006). All over the world the Cooperatives are being established and they are making their presence felt by providing economic and social benefits. (Matei &Matei, 2012 )
Cook and Burress expresses collectiveness through recognising the engagement of multiple parties for entrepreneurship for generation of economic activities through an entrepreneurial process to own the assets, use the network, and do entrepreneurial activities through collective entrepreneurship (Cook and Burress, 2009).
Spear and Hulgår have explained that in the organizational form of cooperative entrepreneurship, collective forms of organizations take form by creating a new enterprise for activities like trade unions, voluntary organizations, and some municipal bodies. They are sponsored and support entrepreneurship which work on the basis of joint ownership, and the entrepreneurship is collectively managed by citizens in an organizational manner (Spear and Hulgård, 2006).
Haugh Studied several community enterprises and emphasised that formal and informal networks of support have proactively relied on trade theories and the entrepreneurship has developed due to recognition of the opportunity and its exploitation. He further stated that the stakeholders mobilize the network of support (Haugh, 2007).
Diaz-Foncea and Marcuello, while discussing transformational and collective dimensions of entrepreneurship which is cooperative in nature, noted that team entrepreneurship is prevalent; however, the team includes husband, wife and other family members. This transformation of structure is further supported by different forms of social enterprises which are either employee-owned or cooperative structures that support and assist, for recognition and running the body (Diaz-Foncea and Marcuello, 2011)
It has been seen that cooperatives have emerged to provide a solution for socio-economic challenges and through this process, prosperity is also shared (Joshi, 2024).
Cooperatives are not only marking their presence but also resulting in considerable economic and social benefits to the whole world (Byrne et al., 2015).
Poverty , food insecurity , unemployment and social injustices are some of the issues , need to be taken care of and they exist worldwide , cooperatives have ability to solve them and respective governments are addressing these issues where they occur (Mbokazi & Maharaj, 2024).
Towards Strategic Cooperative Entrepreneurship
Small firm policy has been advocated as a form of organization where people are close to each other and know about each other's strengths and weaknesses. In the respective circle of known people, entrepreneurship develops in such a form which supports the importance of accessing resources and knowledge on the basis of common ownership.
There is individual cooperative entrepreneurship as well as collective entrepreneurship for the development of sponsored projects in the form of organizational entrepreneurship. Consumer societies or autonomous bodies are created keeping in view network entrepreneurship to achieve social benefits by indulging in such activities which will facilitate social movements through socio-economic bodies, such as cooperatives.
A federal structure is quite common in the cooperative system of management in which the federal body of the cooperatives provide support on governing and legal aspects and issues by creating model constitutions which will be applicable to various cooperative societies working in that category to achieve specific types of objectives for declared supportive programs and initiatives. Finances may come from donations and contributions from members and loans from various financial institutions. In the federal system of societies, new societies are created and developed. They seek advice and support from the federal units.
Cooperative start-ups can also be promoted through strategic entrepreneurship.
There is a need for the setting up of cooperative training and educational institutes to support the development of cooperative entrepreneurship in different fields so that people can have access to the knowledge and skills of creating cooperatives and working through them. Such institutes should work as incubators, providing training, knowledge about various support systems to set up new cooperatives and run them successfully. The idea is to improve governance as well as operations so that there is no difficulty in achieving the objectives for which the cooperative has been set up. Business and advisory support should be provided at a minimum price to encourage various people, who want to set up a cooperative setup, to come forward and take advantage of these support systems.
It has been seen that not many people come forward to set up enterprises in the form of cooperatives as researched by Abell (1983). Abell states that we need to form cooperatives in a similar way as other institutions are being formed. As per him it is not happening the same way. We need to analyse the reasons for this inadequacy and take corrective steps to improve. Individualistic and collective models should be developed for the development of cooperatives and they should be popularized.
Government Initiatives for Development of Cooperatives:
To achieve the vision of Viksit Bharat, the role of cooperatives cannot be underestimated. The Government has recognised this, and for the evolution of cooperatives, the Ministry of Cooperation launched the landmark initiatives of "Sehkar se Samriddhi" in 2021. The strategy is aimed at recognising the role of rural areas in the development of the nation and the contribution of the cooperative sector to strengthen the mission and create resources to enable the ecosystem in this regard. Many initiatives were undertaken to empower the cooperatives and equip them with knowledge and financial support to become competitive with the present-day business firms. The cooperatives are expected to be transformed in such a manner that they are equipped with the latest skills. This is being done by organising effective training programs for them. Transformation has to be done in such a way that they are able to play a significant role by becoming an important part of the inclusive economy. The government is creating the requisite network, and resources to achieve the desired results. Primary cooperatives are being strengthened, and urban and rural cooperative banks are being given more powers so that they are able to open new branches for the growth of business. RBI approvals are fast, and cooperative banks are allowed to go for one-time settlements and work like regular commercial banks. Rural cooperative banks have been authorised to lend in the real estate sector, and various reliefs and exemptions in income tax have been given for the cooperative sector. Formulation of the new national cooperative policy has been taken up, and the National Cooperative Corporation Development has launched new schemes including "Swayam Shakti Sagar," "Yuva Sahakar Krishak Sahakar," "Dairy Sahakar," and "Neel Sahakar" to promote activities in the cooperative sector.
The key components of the "Sehkar se Samriddhi" scheme include offering low interest loans in the field of agriculture, housing, and marketing. Training facilities are to be provided to the cooperative team members to learn the skills needed in the field of business management, financial planning, and governance. Modern technologies and e-governance along with digital marketing are to be adopted as tools for doing business as required in the contemporary business environment. Storage facilities are being improved to overcome the challenges of infrastructure in the rural areas. The cooperatives are aiming to explore new markets in the international arena as well as in local markets by participating in fairs and exhibitions actively.
The "Sehkar se Samriddhi" scheme has been very impactful, and it is going to help cooperatives in terms of operations and access to the market and it will also encourage sustainable farming practices. This scheme will ensure that cooperatives of India will have a bright future and will become important partners in the sustainable and equitable growth of the country.
New Cooperative Policy 2025
The cooperative policy 2025 has been structured with six major pillars which can be described as under:
Key highlights of the new cooperative policy 2025 in terms of legislative and institutional reforms are to amend the cooperative laws so that transparency and ease of doing business may be improved. It has been decided that digitalisation of the records of the office of the registrar will be done and the cooperatives databases will be updated so that the sick cooperatives can be revived with the help of an institutional mechanism.
It has been decided that the foundation of the institutions will be strengthened, and legal reforms will be adopted to improve governance and financial access to the people. Digitalisation will be adopted and promoted. To promote vibrancy, new business ecosystems will be created. There will be an expansion of exports, and rural clusters will be created so that the cooperatives can be made future ready. There is a need for integration of technology and adoption of professional management as a form of governance. The reach of the government will be deepened to promote inclusivity as well as cooperative development and it will be promoted as a movement of the people. New sectors in the field of biogas, energy, healthcare, and warehousing will be created and promoted, and the young generation will be prepared to adopt cooperatives as a form of business. To facilitate this, courses will be designed; Schools, colleges, and universities will be motivated to create education and training facilities for the youth to learn about cooperatives so that they may seek employment as well as self-employment through this imparted education and training.
Primary agricultural credit societies will be revived and supported with finances through district and state level channels, and other umbrella organizations like the National Urban Cooperatives . The Finance Development Corporation should come forward to help these cooperative societies to achieve the objective of financial empowerment. The functioning of the cooperative banks will be broadened so that they can also handle government business. A business ecosystem will be developed, and model cooperative villages will be formed to encourage such activities by which the clusters can be formed at the village level and the village becomes a model corporate village which is self-reliant and is able to solve its business problems by itself. New networks will be created to promote digital commerce and e-market platforms. Cooperative incubators and centres of excellence will be encouraged and promoted to guide and train different stakeholders.
Appraisal, Suggestions and Road Map
We know that cooperatives play an important role in the growth of the country but they do face various obstacles because of lack of awareness, complex legal procedures, problems of management and incompetence, and the red-tapism of rigid government machinery. Rural cooperatives face problems pertaining to finances and adopting modern technologies, and issues arising out of the digital divide. Poor documentation and education facilities create a limitation on their capacity to understand the subject and make use of new information with regard to financial inclusion, marketing networks, job creation, and technology, and it limits their capacity to stand in competition at the national and global level. It is necessary that strategic planning be done for the implementation of new technology and adoption of new systems.
The concept of cooperatives needs to be popularized. To restore the confidence of the public and civil society in cooperatives, necessary measures should be taken. Promotional activities should be undertaken to promote and popularize the concept of cooperatives . Society needs to accept cooperatives as an alternate form of business. Cooperatives should be treated as an alternate form of strategic entrepreneurship to pull up resources with both commercial and welfare objectives .
There is a need to create awareness about the potential of cooperatives and their capacity to contribute in social as well as economic spheres. Institutions in the area of education need to spread the idea about cooperatives and educate people about their importance. Universities must come out with recognised courses in the cooperative sector and motivate students to learn about the concept of cooperatives and their functioning as a part of their syllabus. Textbooks and study material on cooperatives need to be designed and made available widely. Study material related to the history and development of cooperatives should be provided so that students can know about how cooperatives have grown over a period of time and contributed to the society. Projects should be initiated and developed in the field of comparative studies, and some key research projects, in the relevant areas to be undertaken to make a base for future research
Cooperatives as a form of strategic entrepreneurship to drive economic development in our country are a very important tool for social development and economic growth. The role of cooperatives and their impact on socio-economic development has been significant in the agriculture sector in the pre-independence era. In the post-independence era, they have expanded into many other sectors particularly in rural areas. The cooperative movement has evolved into a multifaceted system covering agriculture, housing, healthcare, banking, and various other sectors. It has demonstrated the power of collective efforts to meet the challenges of socio-economic development by pooling resources and functioning democratically, by following the principles of equality and community inclusivity with democratic form of decision-making.
The initiatives of the Ministry of Cooperation have emphasised and strengthened the performance of cooperative societies. Constant and continuous efforts are being made in the field of capacity building, and adoption of modern technologies to create a competitive edge for growth and sustainability. The government initiatives include formulating and implementing policies aimed at not only improving the internal governance of the cooperatives but in creating the opportunities of access to the markets , awareness about various opportunities and possibilities. The stakeholders are also embracing innovation and adopting new technologies to position themselves to play a decisive role in achieving socio-economic development , removal of poverty and achieving the objectives of inclusive growth with the help of new cooperative schemes as announced by the government in the International Year of Cooperatives 2025 .
No doubt, the future of the nation is very bright as the cooperatives have to play a very vital role in addressing contemporary socio-economic challenges, and it will make a historic contribution by empowering the marginalized communities of the nation and contributing towards achieving the sustainable goals and inclusive growth).
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