By Daman Prakash
It is now increasingly recognized that the co-operative system in India has the capacity and potentiality to neutralize the adverse effects emerging from the process of globalization. After economic liberalization under the new economic environment, co-operatives at all levels are making efforts to reorient their functions according to the market demands.
The failure of the public sector in several cases is a worrisome trend. Privatization has also failed to make an impact in the rural areas. Therefore there is great hope on the co-operative sector.
The paper examines the causes of slow progress and highlights the emerging role and challenges of the co-operative sector. In comparison to the step-motherly treatment of the past, co-operatives are now considered an important plank of development. The government is committed to co-operative development.
The co-operatives have inherent advantages in tackling the problems of poverty alleviation, food security and employment generation. Co- operatives are also considered to have immense potential to deliver goods and services in areas where both the state and the private sector have failed.
Co-operation in a vast country like India is of great significance because:
• It is an organization for the poor who wish to solve their problems collectively;
• It is an institution of mutual help and sharing;
• It softens the class conflicts and reduces the social cleavages;
• It reduces the bureaucratic evils and follies of political factions;
• It overcomes the constraints of agricultural development;
• It creates conducive environment for small and cottage industries.
Slow Pace of Growth in Co-operatives
Despite its rapid growth, the overall progress of Co-operative Movement during the last 100 years is not very impressive. Some of the principal road-blocks have been the following:
Government Interference: The Co-operative Movement in India was initiated in 1904 under the auspices of British government. Right from the beginning the govt has adopted an attitude of patronizing the Movement. Co-operative institutions were treated as being a part and parcel of the government administrative set up. The govt interference thus became an essential element in the working of these institutions.
As a result people’s enthusiasm for the Movement did not grow. After attainment of Independence in 1947 some healthy changes in the attitude of the govt did take place. It was not given proper importance that it deserved in any Plan. Even today quite often co-operative societies are imposed upon the people. Though this increases in the membership of co-operatives, the spirit of co-operation cannot flower fully. Neither it grew according to any plan nor did it become a people’s Movement. It just grew very slowly and that too haphazardly. It turned out to be a State-driven institution.
Mismanagement and Manipulation: The essence of the Co-operative Movement is that it gives the farmers the status of shareholders and assures them agricultural, educational and other facilities. Co-operative institutions are small institutions owned by a small number of members. A hugely large memberships turns out to be mismanaged unless some secure methods are employed to manage such co-operatives. Over the years, this truly democratic idea got corrupted and farmers with larger holdings grew more powerful thereby altering the power structure of the co-operatives. In the elections to the governing bodies money became such a powerful tool that the top posts of chairman and vice-chairman usually went to the richest farmers even though the majority of members were farmers with small or medium-sized holdings.
Co-operatives do not enjoy level-playing field vis-à-vis private retail chains in the country. It is well-known that business houses cannot be run on bureaucratic lines.
Board members need to learn to take quick, appropriate and member-cum-customer friendly decisions. Traditional type of business of co-operatives must be conducted by competent and professionally-qualified personnel.
Lack of Awareness: People are not well informed about the objectives of the Movement, rules and regulations of co-operative institutions. Unfortunately, no special efforts have been made in this direction. People look upon these institutions as means for obtaining facilities and concessions from the govt. Lack of education,dirty local politics, caste-ridden elections to the offices of co-operative societies, bureaucratic attitudes of the govt officers at the lower rank are some of the hurdles in spreading the correct information about the Co-operative Movement and in educating the members abut its true character and vital role in the society. It has been observed that a large number of members are not aware of the existence of byelaws, their rights and duties and the roles of office-bearers and management staff of the co-operative. Studies have shown that almost 90-92% of members of PACS in Uttar Pradesh have never seen copies of the byelaws of their own co-operatives.
Inadequate Role of Promotional Institutions: To create awareness among co-operative members and general public, the promotional institutions like the National Co-operative Union of India and the state Co-operative Unions/Federations must take a stronger lead to implement member education programmes. Field studies have shown that the educational instructors and field projects are getting ineffective due to:
[i] lack of programming for them;
[ii] lack of funds; [iii] inadequate supply of support material; and,
[iv] lack of trainers training programmes.
At present 40 field projects do not have any funds to carry out field activities, nor do they have any support material and work programmes. Also, much of the responsibility rests with the co-operatives themselves. They need to allocate some funds for the education and orientation of their members. The scope of central-level co-operative education fund needs to be revisited so that interested co-operative institutions and specialized agencies are able to generate training and educational materials.
Restricted Coverage: The Co-operative Movement has also suffered on account of two important limitations on its working. One is that the size of these societies has been very small. Most of these societies are confined to a few members and their operations extended to only one or two villages. As a result their resources remain limited, which make it impossible for them to expand their means and extend their areas of operations. Two, most of the societies have been single purpose societies. Such societies are unable to assess a total view of the persons seeking help, nor can they analyze and solve problems by themselves. The help these societies render thus can not be adequate. By assessing the persons and the problems only from one angle, these societies neither help properly the person nor make an optimal use of their resources. Under these circumstances it has not been possible for these societies to make much progress.
Functional Weakness: The Co-operative Movement has suffered from inadequacy of trained personnel. Lack of trained personnel has been caused by two major factors: [i] there has been a lack of appropriate institutions for training of personnel; [ii] unsatisfactory working of co-operative institutions qualified and experienced personnel did not feel attracted or motivated. The functioning of the co- operative societies, too suffer from several weakness. Some of these are, not being careful of the need of credit-seekers or their repaying capacity at the time of granting loans, making no adequate provision for repayment of loans, unsatisfactory accounts keeping, factional politics in the management, lack of co-ordination among various divisions of the co-operative structure, too much dependence on outside sources of finance, lack of and untimely auditing and inspection.
Thus there are several pitfalls. Poor infrastructure, lack of quality management, over-dependence on government, dormant membership, non-conduct of elections, lack of strong human resources policy, neglect of professionalism, etc. are the limiting factors. Indian co-operatives are also unable to evolve strong communication and public relations strategies which can promote the concept of co-operation among the masses.
Misconceived Concentration of Power: Although cooperatives are democratic business institutions, yet the distribution and exercise of power at the Board level is a matter of concern. In general, the principal task of the Chairman of the Board is to conduct the meeting and assist in formulating logical business proposals and take appropriate decisions. The chief executive of the cooperative is given the task of implementation of such decisions. In many cases it has been found that the Chairman, due to self-interest, assumes both roles as leader of the organisation as well as that of the executor of the decisions taken. They become executives reducing the chief executive/managing director to execute the orders from the Chairman. Such a situation generates manipulation and serves self-interest.
In a large number of small cooperatives, Chairmen are the bosses and the managers are mere clerks. To insulate the cooperative from such a situation, a careful study of byelaws is of great relevance where the rights and duties of chairmen and managers are clearly defined. It becomes necessary for cooperative enterprises to develop a proper chart of duties.