A cooperative is a voluntary association of individuals having common needs, who join hands for the achievement of common economic interest. It aims to provide support to its members, with focus on the interest of the poorer sections of society, through the principle of mutual help. There are different types of cooperatives working in India viz. Consumers’ Cooperatives Societies, Producers’ cooperative societies, Cooperative Credit Societies, Cooperative Farming Societies and Housing Cooperative Society.

Significance of Cooperatives in India:

• Enhancing Social Cohesion: Unlike other processes of social cohesion that are public and involve a third party, the cooperative way is natural, intimate, private and does not involve a third party. It makes cooperation, in the cooperative, an alternative approach to social cohesion.
• Social empowerment: It promotes equal rights, enhances bargaining power of the poor, promotes leadership as all members are equal and free for their rights as well as Cooperative institutions elect their leaders democratically.
• Promoting Financial inclusions: Cooperatives have been revolutionary institutions in providing credit to farmers at cheaper rates and substituting the role of moneylenders and other non-institutional suppliers of credit from the rural scene.
• Reduce inequality of wealth: It helps in facilitating equal distribution of wealth by enhancing accessibility to loans at affordable rates and providing financial and other assistance to marginalized and economically weak sections.
• Role of Cooperatives in Indian Agriculture: It helps in provision of credit, input delivery and its effective usage, processing and marketing of agricultural produce, storage facilities and information sharing.

Recently, the Union Government has created a separate Ministry of Cooperation to be led by the Union Home Minister to give impetus to cooperatives as:

• It will provide a separate administrative, legal and policy framework for strengthening the cooperative movement in the country.
• It will help deepen cooperatives as true people based movements reaching up to the grassroots.
• It will work to streamline processes for Ease of Doing Business for cooperatives and enable development of Multi-State Cooperatives.
• Under the new Ministry, the cooperative movement would get the required financial and legal power to penetrate all over India.

However, the Supreme Court has declared some portions of Part IXB, introduced in the Constitution by the 97th Amendment Act of 2012, which provided the terms for running cooperative societies in a single state as unconstitutional. This has created doubts regarding the role of the newly created Ministry of Cooperation as it will now have powers to frame rules only for multi-state cooperatives or for those cooperatives, which are working in Union Territories. Notwithstanding the legal challenges, there is a need for a strong cooperative movement for developing the rural and agriculture sector of India. For this, various other measures like structural reforms in terms of winding up weaker and inefficient societies and merging stronger and efficient societies, promoting multipurpose societies, ensuring efficiency in functioning, capacity building and promoting transparency for making the cooperative more effective and realizing its objectives are needed to be taken at both levels- union and state- in the spirit of cooperative federalism.