New Ministry of Cooperation should enable people to leverage community networks


From UPSC perspective, the following things are important :

Prelims level : Farmer Producer Companies

Mains level : Paper 3- Cooperatives in India and challenges


India now has a Ministry of Cooperation that aims to strengthen the country’s cooperative movement. This is an opportune moment to look at the movement’s history, examine the potential of cooperatives and analyse the challenges they face.

Development of Farmer Producer Companies in India

  • India’s significant tryst with dairy cooperatives began in the 1950s with the success of what we know today as Amul.
  • The nation took note of this initiative and the National Dairy Development Board was set up in 1965.
  • However, the expansion wasn’t working the way it had been envisaged.
  • The need for a new model was felt soon as cooperatives outside Anand were not holding regular and proper elections.
  • Their accounts were not audited.
  • As a result, a committee was set up in the Company Affairs Ministry to allow farmers to set up companies.
  • The Farmer Producer Companies (FPCs) would run on the principle of “one share one vote” and the essence of cooperatives would not be diluted.
  • The Parliamentary Committee looked into the Bill to give legal backing to FPCs, with this, the Companies Act (Second Amendment), 2002 became law.

Funding the FPCs

  • The existing funding vehicles were designed to cater to cooperatives, not FPCs
  •  Around 2010, the Boston Consulting Group (BCG) had been commissioned to develop a plan for restructuring NABARD.
  • As a result, the restructured NABARD had a special window for FPCs.

Community-based cooperatives

  •  The Cheliya community set up a chain of Hearty Mart “cooperative” supermarkets in villages in Gujrat using the franchise model.
  •  Just as the network of Charotar Patels that Kurien relied on in the case of Amul —Cheliya community have played a key role in the spread of the model.
  • The idea of leveraging the community network was tried in some parts of the country in the context of re-imagining economic infrastructure.
  • To deal with the electricity board failures, a distribution company was run on a community basis.
  • This model has, in fact, worked in places like Kanpur, even Kerala.

Social cooperatives

  • The concept of social cooperatives builds on the idea of communities creating infrastructure by using local material and family labour.
  • These can be the village tank, paving the village road — with or without MGNREGA — finishing the last-mile construction of a canal network or even keeping watch on the contractor.
  • The pandemic seems to have increased the significance of community effort.
  • Reducing vaccine hesitancy, providing food to those waiting outside hospitals and, most importantly, looking after orphaned children are imperatives crying out for the cooperative model.

Way forward for new Ministry of Cooperatives

  •  Keeping in mind social needs while using resources is a large part of the solution to our current predicament.
  • The pandemic will not follow the laws of corporate finance, cooperation has a lot to speak for itself, the new ministry should take this message.
  • The new work-from-home model will create several problems as well as offer opportunities.
  • The new ministry is a recognition of the needs of our times.
  • But it should not be just about pumping in money. 


This is the time to design models that help those who help themselves. We will wait expectantly to see how the new ministry works.

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