The Cooperative Conundrum: Can a Renewed Policy Push Revitalise India's Grassroots Economy?
Years into a new policy push, a look at the ambitious plan to transform India's vast but ailing cooperative sector, the challenges of centralisation, and the potential impact on the rural economy.
Nearly three years into its existence, the Ministry of Cooperation is driving a multi-faceted overhaul of a sector that forms the bedrock of India's rural economy. The government's ambition is to transform cooperatives from fragmented, credit-dispensing bodies into vibrant economic enterprises. This push, however, is accompanied by complex challenges related to governance, federalism, and economic viability.
What is the core objective of the government's new cooperative policy?
The central government's stated objective is to create a unified and modernised cooperative sector that can serve as a worker-centric alternative to purely corporate business models. The Ministry of Cooperation, established on July 6, 2021, aims to bring policy coherence to a sector spanning agriculture, dairy, fisheries, and banking. The official vision, as articulated by Union Minister Amit Shah, is to expand the role of cooperatives beyond credit facilitation into production, processing, and marketing, thereby creating robust value chains from farm to global markets (Source: The Hindu).
A key element of this strategy is the empowerment of Primary Agricultural Credit Societies (PACS). A massive computerisation project, with a budget outlay of ₹2,516 crore, was initiated in 2022 to digitise approximately 63,000 functional PACS. Following this, the government has enabled PACS to undertake over 25 different business activities, including operating as Common Service Centres (CSCs), setting up Farmer Producer Organisations (FPOs), and running retail outlets for petroleum products. The goal is to make them one-stop shops for rural economic needs.
What are the specific initiatives being implemented?
The government has launched a multi-pronged strategy to achieve its objectives. First is the creation of new national-level multi-state cooperative societies. Three such societies have been established since 2023: one for organic products, one for seeds, and one for exports. These apex bodies are designed to provide small cooperatives with direct market access and branding support, helping them compete with larger private players.
Keep reading this explainer
This is the opening of a 1285-word explainer. An account brings you the rest, a PDF to keep and the whole Explained archive.
Takes about a minute. Your email and a password is all it needs.