Organization and Management of Co-operatives
Co-operation- Defined
‘A form of organization, wherein the persons voluntarily
associate together as human beings, on a basis of equality,
for the promotion of economic interest of themselves’
- Calvert
Voluntary organization
Democratic Control
Equality
One end
No profit
Rochdale Model
As an alternative philosophy to Trade Unionism to fight
against capitalistic exploitation
First successful co-operative model, set up against the
undesirable developments of industrial revolution
As a new economic ideology to substitute trade
unionism
First store in 1843- to purchase the requirements
collectively to economize expenditure
Inspired by Robert O
Principles on co-operation- founded
Rochdale Principles on Co-operation
Open membership
Democratic Control
Limited Interest on capital
Patronage dividend
Cash trading
Political and religious neutrality
Promotion of education
1844-1934- changes in the E-S-P Front
ICA appointed a sub committee- 1934- submitted report
in 1937
Suggestion- categorization of principles into Essential
and Non essential
Essential and Non Essential Principles
Essential
Open membership
Democratic Control
Limited Interest on capital
Distribution of dividend in proportion to transactions
Non-Essential
Religious and political neutrality
Cash Trading
Promotion of Education
ICA Principles- 1966
ICA appointed a commission in 1964 to improve clarity of
erstwhile principles
To examine the extent to which these principles are followed/ to
examine the reasons for non-adherence/ To reformulate and
recast the principles
Submitted the report in 1966
PRINCIPLES
1. Voluntary and Open membership
2. Democratic organisation, management and control
3. Limited rate of interest on share capital
** ICA- 1895- Geneva
Independent, non governmental organisation
Unites/Represents/serves co-operatives world wide
ICA Principles 1966
4. Self help and mutual help
5. Disposal of surplus not on the basis of share
contribution
6. Political and religious neutrality
7. Cash Trading
8. Co-operative education
9. Publicity- without any concealment
10. Co-operation among co-operatives
ICA Principles of Co-operation- 1995
Open and voluntary Membership
Democratic Member Control
Member Economic Participation
Autonomy and Independence
Education, Training and Information
Co-operation among Co-operatives
Concern for the Community
Co-operation v/s Economic systems
Economic system: Systematic pattern of conducting
different economic activities with the help of different
institutions and organizations, towards the
satisfaction human wants.
Production/Distribution/ consumption/exchange and
growth
Effective employment of factors of production
Major systems
Capitalism
Socialism
Mixed economy
Capitalism
Gives power to capitalists
Economic decisions are taken by private individuals with least
governmental intervention
Free enterprise, competition and Private ownership, prevails
Consumer’s sovereignty- producers adjust prodn. Schedule
Market mechanism- DD and SS- determine prices which help the
producer to decide on What, where, how, how much and when to
produce
Profit Orientation
Competition
Laissez faire policy- less intervention
Unequal Distribution of income- ‘survival of the fittest’
Co-operation v/s Capitalism
Domination of money- ‘money is the master which rules
man’
Exploitation- taking advantage of weak bargaining
power of workers
Conflicts- lead to division of society into capitalist and
proletariat class
Philosophy- individual v/s mutual help and community
living
Co-operation- Defined
‘ An association for the purpose of joint trading,
originating among the weak and conducted always in an
unselfish spirit, on such terms that all who are prepared
to assume the duties of membership may share in its
rewards, in proportion to the degree in which they make
use of their association’
- C.R Fay
Association of the weak
Joint trading
Unselfish spirit
Reward in proportion to degree of association
Co-operation- Defined
‘A society which has its objective, the promotion of the
economic interest of its members in accordance with co-
operative principles’
- CS Act 1912
Characteristic Features
Association of persons- ‘Men that count-not money’
An enterprise with ethical standards- ‘collectively own costs-
share jointly the gains’
Voluntary association- need based
Service Objective
Democratic Management
Equality
Social Justice
Models on Co-operation
Co-operative Credit Movement- Germany
Friedrich Wilhelm Raiffeisan: 1849
Started ‘poor peoples’ committee’- procure and serve food grain
Organised ‘Union in aid of impoverished farmers’ – Farmers
were enrolled as members/ raised fund through well to do people.`
1864- Started Heldesdrof Beneficient Society – raised fund
through deposits from rich on interest/ loans to deserving farmers for
production.
First Co-operative Society was established on the principles of ‘Each
for All and all for Each’- ‘Heddesdrof Credit Union’- Honorary
Service/ Unlimited Liability/ Fund raising on collective security of
members.
1877- ‘The Grand Union of Rural Co-operative Societies’ – known
as Raiffeisan Union- a federation of Raiffeisan Societies.
Raiffeisan Societies
Features
Working Capital- Deposits/Loans from Central bank/Issue of shares
Administration- GB the supreme authority/ met once a year/major
policy decisions are taken by GB/ GB elects BoD and Council of
Supervision
BoD- Consisted of 6 members- Term of office is 4 years/Functions:
management of affairs/ consideration of application for
membership/ Scrutinizing loan application.
CoS- 3 members for 3 years- Quarterly reviews/verification of
stock/ Exercise general control
Grant of loans- Simple loans- ST/LT- Interest rate- 4-5%
Profit- Considered as collective property of members but not
distributed/ Transferred to Ord Reserve fund (to cushion occasional
losses) 1/3 and endowment fund 2/3(pay off debts/devt.)
Schultz-Delitzsch Banks
Herr Franz Schultz- Chairman of famine commission
1849- ‘Friendly society for relief sickness’- to distribute
bread among people hand in glove with Charitable
organisations.
1849- ‘Friendly Society of Shoe makers’- adv.of bulk
purchases for members.
1850- First credit association- fund from rich.
1852- Incorporated co-operative principles and found a
society in Delitzh
1859- General Union of German Industrial Societies.
1867- First Co-operative Societies Act
1889- Made applicable to all societies- Ltd. liability
Schutz- Delitzsch Banks
Objectives: cater to the credit requirements of
traders/artisans/ middle class in urban areas and to run
the bank as business organisation
Area of operation: not specified
WC: fund raised through SC/Deposits/Loans- member
to purchase at least one share/ deposits from members
and non- members
Administration: General Assembly- BoM (3 members
for 3 years)- council of supervision- Auditing by
inspectors of Schultze- Delitsch Union
Loans
History of Co-operative Movement in India
Represent a variegated mosaic
About 118 years old
Deccan Riot- Agricultural Loans Act 1883, land
Improvement Act 1884.
‘Co-operation’- Introduced by the state and developing
under its fostering care.
Madras provincial govt. took the lead role in 1892
Sir Frederic Nicholson’s report- ‘Find Raiffeisan’
Northern India- Sir Dupernix - suggested the scheme of
‘Peoples bank for Northern India’- 1901
Famine Commission- 1901- recommended establishment of
Co-operatives
History
First Co-operative Societies Act passed- 1904- ‘co-
operative Credit Societies Act 1904’
Appointed a registrar of Co-operative Societies
Demand for non-credit societies
Passed Co-operative societies Act 1912
1914- Sir McLegan is appointed to study the defects of co-
operative movement- ‘Classical report’
Passing of Reforms Act 1919- provincial autonomy is given
to co-operatives
World war II- vitally affected
1946- significant increase in number of societies- policy of
distribution of essential commodities through Co-ops
History
Partition of India- 1947- societies suffered considerably
Migration of members from one dominion to another
Post-independence period- thrust for economic development
plans based on co-operative enterprises.
Planned Development
Tenth FYP- Doubling percapita income in next 10 years
Expected growth rate of population- 1.6%/ GDP GR 8%
over 10th Plan and 9.8% during 11th Plan.
Reduction of poverty ratio by 15% points by 2012
Universal access to primary education
Reduction in decadal growth rate of population to 16.2%-
2001 to 2011
Planned Development-Tenth FYP
Increase in literacy to 75%
Reduction in Infant MR- 45/1000 in 2007 and 28/1000
in 2012
Reduction in Maternal Mortality Ratio- 2/1000 in 2007
and 1/1000 in 2012
Increase in Forest and Tree cover to 25% in 2007 and
33% in 2012
All Villages have access to potable drinking water in
2012
Cleaning of major polluted rivers by 2007 and notified
stretches by 2012.
Planned Development- Eleventh FYP
‘Towards faster and more inclusive growth’
Average GDP Growth rate- 9%
Agricultural GDP 4%
Generation of 58 million employment
