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    Co-operative Movement in India, Karnataka and

    Mysore District

    4.1 Introduction

    A vast majority of women in Karnataka State and Indian Republic constitute the

    marginalized sections of society. The women need multi-faceted developmental support

    from banks, cooperatives, SHGs and other sources in order to achieve progress on par

    with men in all spheres of human life. Women are constitutionally protected and

    politically represented in India but they are socially oppressed and economically exploited

    section of the society. Karnataka State is in the forefront of cooperative movement in

    India. The State has also promptly implemented the rules, regulations and guidelines of

    Government of India with respect to the management of cooperatives in general and

    empowerment of women and weaker sections in particular. There are a sizeable number of

    women cooperatives and women constitute more than 50% of the membership of the

    cooperatives in the state of Karnataka. There is a need to make the women economically

    self-reliant and professionally competent in modern society through cooperatives and

    other agencies as a matter of social responsibility. This chapter contains the development

    of cooperatives in India, Karnataka State and Mysore District. Along with this, in this part

    of the chapter, it is tried to provide status of cooperative societies in terms of growth of no.

    of societies, membership, share capital, and working capital for general cooperatives and

    women cooperatives. It is examined at all India level, state level (Karnataka) and the

    district level (Mysore District).

    4.2 Cooperatives in India

    The cooperative movement in India has passed through several stages. Scholars

    have noted that cooperatives in India have begun with the passing of the Cooperative

    Societies Act of 1904. In India the cooperative movement has completed 108 years since

    its inception Frederick Nicholson has documented that the idea starting cooperative

    societies in India was motivated by the factor of combating rural poverty and

    indebtedness. The Madras Government gave a serious thought to the possibilities of

    starting a system of land banks in that state. The Famine Commission (1898) strongly

    advocated the idea of cooperation for Indian agriculturist. Lord Curzon examined this

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    report and constituted a committee in 1901 under the chairmanship of Edward Law. The

    committee explored the possibilities of launching an organized cooperative movement in

    India and submitted meaningful recommendations. Hence, the first Cooperative Credit

    Societies Act, 1904 was enacted in India for the first time. The salient features of the Act

    are as follows:

    Any association of ten persons who were competent to enter into a contract could

    apply for registration and themselves into a cooperative society for the purpose of

    providing credit.

    Credit societies were distinguished as rural and urban according as at least 4/5ths

    of the members were agriculturists or non-agriculturists.

    In case of rural societies unlimited liability was the rural, while option was given

    in case of urban societies.

    In a rural society all profits were to be carried to a reserve fund and in case of

    urban only 1/4th

    of the profits were to be carried to it.

    No member could hold more than 1/5th of the shares and to a maximum limit of Rs.

    100 only.

    Registrars were to be appointed in all the Provinces to exercise supervision over

    the organization and also to exercise overall control over the movement.

    Every society was to be compulsory audited.

    The government offered certain reasonable concessions such as exemption from

    income tax, stamp duty and registration fee in order to promote the cooperatives. Besides

    this, the government also granted loans to cooperative societies free of interest for a

    certain period. During this phase, cooperatives were established all over the country as a

    means of economic support to agriculture and rural development.

    The second phase of cooperative movement (1912-1929) witnessed rapid growth

    in the number of cooperatives in the country. The Act was not broad based enough to

    cover all dimensions of cooperative management in the country. It did not facilitate legal

    sanction and capital mobilization in a systematic way. The second Cooperative Societies

    Act was passed in 1912 in order to provide legal recognition to producers and distributive

    societies such as cooperative unions, central banks and provincial banks. The government

    also abolished the distinction between rural and urban cooperative societies and in its

    place added unlimited and limited liability classification. The societies having majority of

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    members as cultivators were to be of unlimited liability while the central societies were

    required to adopt limited liability.

    The new act provided an impetus to the cooperative movement in the country and

    new types of societies came into existence in different sectors of economic mainstream.

    The government also appointed Maclagan Committee in 1914 in order to promote the

    cooperative movement in the right direction. The committee made for reaching proposals

    for the development of the cooperative movement including systematic audit, setting up of

    provincial banks, emphasis on teaching and steady progress of the cooperative movement.

    Under the Reform Act of 1919, cooperation became a provincial subject and various states

    passed independent cooperative acts in order to suit their environment and convenience.

    The Cooperative Societies Act of Bombay (1925), Madras (1932) and Orissa (1935) were

    passed with suitable changes and modification. These new initiatives paved the way for

    healthy and competitive cooperatives all over the country.

    The third phase of the cooperative movement in India occurred during 1929-1933.

    The Great Depression caused a setback to cooperative movement in the country. There

    was unexpected slump in agricultural prices and farmers experienced decline in the

    agricultural income. Consequently, the number of credit societies considerably decreased

    from 89 thousands in 1930 to 84 thousands in 1935, writes Madan (2007).

    The fourth phase of the cooperative movement occurred during 1934-1946 in the

    country after the Great Depression. Several provincial governments appointed committess

    before independence in order to look into the re-construction of cooperative movement in

    the country. During this period, the policy makers and officials concentrated on

    consolidation, rectification and rejuvenation of the cooperative movement in the country.

    There was rise in the prices of agricultural commodities and farmers were enabled to repay

    their loans regularly. The deposits also increased and there was considerable demand for

    financial assistance. The introduction of economic controls and rationing of food grains

    and other necessities gave impetus to the growth of non-credit forms of societies

    particularly consumer stores, marketing and industrial societies. The government also

    constituted Cooperative Reconstruction Committee in 1945 in order to strengthen the roots

    of cooperative movement in the country. The committee made the following


    The State should end laissez-faire policy and should enlarge its functions in

    spheres like education, agriculture, industries etc.

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    The distribution of improved agricultural implements, seeds, rationed goods etc.,

    should be made through the cooperative societies.

    The credit cover only one aspect of the agriculturists life and all village credit

    societies should be converted into multipurpose ones to cover all aspects and they

    should be properly coordinated with marketing societies.

    50% of the villages and 30% of the rural population should be brought into the

    cooperative fold within a period of ten years and there should be at least 50

    members in a society to have adequate business.

    All important types non-credit societies, such as fruit growing, consolidation of

    holdings, cooperative farming, industrial labour etc., with proper central

    organizations where ever necessary should be encouraged and 50% of the cost of

    management should be borne by Government during first five years.

    The partition of the country caused serious setback to the cooperative movement

    especially in three provinces such as West Bengal, East Punjab and Assam where many

    members left the societies without paying their dues. The total number of cooperative

    societies also fell since some of the territories became part of Pakistan.

    The 5th

    phase of cooperative movement took place during 1947-1954. Mahatma

    Gandhi was a champion of cooperative movement. He called upon the national leaders to

    facilitate the development of cooperatives in the country as effective instrument of

    decentralized and localized economic development. His works inspired the policy makers

    to strengthen the foundation of cooperative movement in the country on the basis of sound

    principles and practices. The independent Indian government gave a serious thought to the

    advancement of cooperative movement in the country several types of cooperative


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