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CHAPTER - IV
Co-operative Movement in India, Karnataka and
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
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
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.
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
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.
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.
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