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International Year of Cooperatives. Image source: http://www.usa2012coop.com

This year, people around the world are celebrating a business model that puts people first and has sustained itself for many decades. This is the International Year of Cooperatives. Cooperatives and their members play a vital role in social and economic development—and meet the daily needs of millions of people. The United Nations International Year of Cooperatives provides an opportunity to increase awareness and understanding of a cooperative enterprise.

The co-operative movement in India is amongst the largest in the world, with strong links across the country’s vast geographical expanses and varied cultural traditions.

A ‘co-operative’ is a member-controlled association of individual farmers, households, etc., who share the risks and profits of a jointly owned economic enterprise. A co-operative is usually established in response to unfavourable market conditions, shared by all participating members, in order to gain leverage due to the combined size, capacity and capability of the whole group.

During the early years of the 20th century, in the wake of famines, which had resulted in economic hardship and an alarming increase in the indebtedness of the farmers, co-operatives appeared to be the best means of getting the farmers out of the vicious circle of debts and poverty. Farmers found the co-operative movement an attractive mechanism for pooling their meagre resources for solving common problems relating to credit, supplies of inputs and marketing of agricultural produce. However, it was the medium and large farmers who could pool their resources and organize a cooperative, since  poor farmers could not afford it initially, but could join and reap the benefits from this affiliation at a later stage.

The advantage of functioning under a co-operative is that it is neither a public nor a profit seeking organization. Its principal objective is to eliminate economic exploitation as it is controlled by members only.

In some areas of activity like dairying, sugar, handlooms, urban banking and housing, co-operatives have achieved great success, but there are larger areas where they have not been so productive. The failure of co-operatives in India is mainly attributed to dormant membership and lack of active participation of members.

Mounting overdue in co-operative credit institutions, lack of mobilization of internal resources and over-dependence on Government assistance, lack of professional management, bureaucratic control & interference in the management along with political interference have proved harmful to their growth.

For more information, read this. Click on the  cooperatives in India link to learn about some of the cooperatives in India