The Union Cabinet in India has approved a plan to strengthen the cooperative movement in the country by establishing Primary Agricultural Credit Societies (PACS), viable dairy cooperatives, and viable fishery cooperatives in each uncovered Panchayat.

The plan aims to establish 2 lakh PACS/dairy/fishery cooperatives in the next five years with the help of an action plan prepared by the National Bank for Agriculture and Rural Development (NABARD), National Dairy Development Board (NDDB), and National Fishery Development Board (NFDB). The plan also aims to set up a national cooperative database for real-time monitoring of new cooperative societies.

Significance of the Plan

The establishment of new cooperative societies would provide farmers with forward and backward linkages to market their produce, enhance their income, obtain credit facilities, and other services at the village level. Moreover, it would generate employment opportunities in rural areas, which would have a multiplier effect on the rural economy. The plan would enable farmers to realize better prices for their products, expand the size of their markets, and integrate them into the supply chain.

Primary Agricultural Credit Societies (PACS)

PACS serve as the last link in a three-tier cooperative credit structure headed by the State Cooperative Banks (SCB) at the state level. They provide short and medium-term credit and other input services to member farmers. There are 98,995 PACS in the country with a member base of 13 crore. PACS account for 41% of the Kisan Credit Card (KCC) loans given by all entities in the country, and 95% of these KCC loans through PACS are to small and marginal farmers.

Issues with PACS:
  1. PACS cover only around half of rural households.
  2. Their funds are inadequate to process the short- and medium-term credit needs of the rural economy.
  3. Credit given by PACS is limited in both scale and function.
  4. Inefficient management structure.
Way forward:
  1. Digitisation of PACS for better management
  2. Streamlining of governance structures for better control of resources.
  3. Introduction of professional management with an aim to develop them as One Stop Shop for meeting all the needs of its members.
Cooperative Societies
  • Cooperative societies are voluntary associations of individuals with common economic interests and a focus on serving the poorer sections of society through self-help and mutual aid.
  • After independence, cooperatives were placed in the State list and became an important focus of the initial Five-Year Plans.
  • In 1958, the National Development Council recommended a national policy on cooperatives and the setting up of cooperative marketing societies.
  • The National Cooperative Development Corporation (NCDC) was established in 1962 under a statutory act to promote and develop cooperatives.
  • The Multi-State Cooperative Societies Act was enacted in 1984 to consolidate different laws at the central level, and was replaced by a new act in 2002.
  • The Indian government announced a National Policy on Co-operatives in 2002 to further strengthen the cooperative sector.
  • The 97th Constitutional Amendment Act 2011 added a new Part IX-B to the Constitution titled “The Co-operative Societies” and included the right to form cooperative societies as a fundamental right.

MCQs about Strengthening Cooperative Movement in India

  1. which of the following is the aim of cooperative societies in India?
    A. To serve the interests of the poorer sections of society
    B. To create economic monopolies
    C. To exploit the weaker sections of society
    D. To maximize profits for the rich
    Correct Answer: A. To serve the interests of the poorer sections of society
    Explanation: The aim of cooperative societies in India is to serve the interests of the poorer sections of society through the principle of self-help and mutual help.
  2. what was the recommendation of the National Development Council (NDC) regarding cooperatives in India in 1958?
    A. A national policy on cooperatives
    B. Banning cooperative societies
    C. Encouraging private monopolies
    D. Encouraging foreign investment only
    Correct Answer: A. A national policy on cooperatives
    Explanation: In 1958, the National Development Council (NDC) had recommended a national policy on cooperatives and setting up of Co-operative Marketing Societies.
  3. which of the following acts was enacted by Parliament to consolidate different laws at the central level regarding cooperatives in India?
    A. The Multi-State Co-operative Societies Act 2002
    B. The National Cooperative Development Corporation Act, 1962
    C. The 97th Constitutional Amendment Act 2011
    D. The State Cooperative Societies Act
    Correct Answer: A. The Multi-State Co-operative Societies Act 2002
    Explanation: In 1984, the Multi-State Co-operative Societies Act was enacted by Parliament to consolidate different laws at the central level regarding cooperatives in India.
  4. which amendment to the Constitution of India included the right to form cooperative societies as a Right to Freedom?
    A. The 97th Constitutional Amendment Act 2011
    B. The 86th Constitutional Amendment Act 2002
    C. The 73rd Constitutional Amendment Act 1992
    D. The 42nd Constitutional Amendment Act 1976
    Correct Answer: A. The 97th Constitutional Amendment Act 2011
    Explanation: The 97th Constitutional Amendment Act 2011 added a new Part IX-B to the Constitution titled “The Co-operative Societies” (Articles 243-ZH to 243-ZT), which included the right to form cooperative societies as a Right to Freedom.

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