consumer cooperative movement in the first consumer cooperative society was established by rochdale

CHAPTER I1

CONSUMER COOPERATIVE MOVEMENT IN INDIA

2.1 Introduction

The basic aim of the cooperative movement is to achieve the

advancement of the members concerned and to protect them from exploitation.

With this purpose different types of cooperatives have been formed. Consumer

cooperatives are organised to serve as the best custodians of the unorganised

consumers by supplying quality products and services at reasonable prices and

in correct weights. The first consumer cooperative society was established by

Rochdale P~oneers in the year 1844 in Manchester in England. A batch of

twenty eight weavers in Rochadle formed the 'Rochdale Society of Equitable

Pioneers on 2 4 ~ October 1844 and started business on 21 December 1844 to set

an example to the world by making collective purchases and distribution of

consumer goods for cash at reasonable prices and bonus was declared at the end

of the year against the purchases made. The period that England passed through

(during the Industrial Revolution) when the Rochdale Society had been founded

was popularly known as the "hungry forties" (Cole, 1944)'.

Over the years, England and Sweden which are the forerunners of the

consumer cooperative movement in the world has proved that consumers

cooperatives can serve as effective guardian and spokesman of the consumers. . Some of the contributory factors for the successful working of consumer

I Cole, G.D.H. (1944) A Century ~f~('ooprrotion, George Allen and Unwin Limited for the Cooperative Union Limited. Oxford. p I

cooperatives were identified as the involvement of responsive members with a

spirit of cooperation, uniformity of needs and preferences of consumers due to

better standard of Iivmg and the positive attitude of the governments with a

well-desrgned and supportive legal framework for the development of people's

organisations like consumer cooperatives.

2.2 Consumer Cooperative Movements in Asia

Pradit Machima (1994)' suggests that consumer cooperative movements

in Asian countries can be classified into three groups - strong, medium, and

weak. Strong movements compr~sing Japan and Singapore have high standard

of living among the consumers. The countries which have consumer

cooperatives with medium performance are South Korea, Malaysia, Thailand,

Sri Lanka and parts of India. The weak movements include Bangladesh, parts

of India, Indonesia, Pakistan, Philippines and Vietnam, where socio-economic

conditions are not conducive to consumer cooperative development. Further,

organisationally, the consumer cooperatives in Asia can be divided into five

main categories, as follows:

1. Purely consumer cooperatives They are organised or owned by members

comprising general public and widely exist in Japan, Singapore and

Thailand

2. Multi-purpose cooperatives: Their activities are mixed such as credit, farm

supply, marketing, processing. consumer activities, insurance etc. This type

of cooperatives exist in Sri Lanka, Vietnam, Indonesia and South Korea

2 Pradit Machima (1994) "Consumer Cooperative Movements in Asia", I C A N C T Sub- regional Seminar on ('onslrmer Cooperative. Bombay 24' April to 3rd May 1994, p.25-26.

where consumer cooperatives are not in existence but are organized or

operated as a unit or section of agricultural cooperatives.

3. Institutional cooperatives: Institutional cooperatives are those cooperatives

which are organized among workers, employees or civil servants or m e d

forces, who work in the same organization or institution. They exist in many

countries like Bangladesh, India, Indonesia, Japan, Malaysia, Philippines, Sri

Lanka and Thailand.

4. Student/ University Cooperatives: The student/university cooperatives were

organlsed by the students and teachers as members and these societies

prowde student related artlcles for students and teachers. These societies

also help to cultivate cooperativisam among students. These societies are

very popular in almost all Asian countries except Sri Lanka and Vietnam.

5. Village and rural cooperatives: The ultimate objective of village and rural

cooperative is to supply essential articles to the rural people and thus serve

the rural areas. Among the Asian countries, it is widely spread and popular

only in lndia.

2.3 Consumer Cooperative Movement in lndia

In lndia the erstwhile Madras state was the pioneer in the field of

cooperative movement. The first consumer cooperative society was set up in

Madras, namely 'The Triplicane Urban Cooperative Society Limited' in 1904

with the prime aim of supplying necessities of life to its members and it has

grown up as one of the largest consumer cooperative societies in lndia'. With

the passing of Cooperative Credit Societies Act, 1904, the Madras state gave

registration to the Triplicane Urban Cooperative Society followed by the

registration to the Coimbatore Cooperative Society in 1906. However the

consumer cooperatives got legal recognition only after the enactment of the

Cooperative Societies Act of 19 12, which repealed the Cooperative Credit

Societies Act of 1904. Further, the Cooperative Societies Act, 1912 abolished

the dishnct~on between the rural and urban societies and in its place a new basis

for classificahon, namely limited and unlimited liability societies were

introduced.

As a consequence of the above mentioned measures the number of

cooperative stores which was 23 in 1912 rose to 78 at the close of the World

War 1'. The post World War I period witnessed high prices and scarcity for

essent~al goods and commodities. The inevitable result was a fillip to

cooperative consumers stores which continued their upward march till 192 1.

In 1919, on the basis of Montogue-Chelmsford reforms, cooperation

became a provincial subject and accordingly state laws were passed

subsequently to enable the state governments to effectively administer the

cooperatives organised for various economic activities.

The consumer cooperative movement received great stimulus after the

transfer of administrative powers and control of cooperative societies to popular

ministries in the provinces of lndia. In a country like lndia inhabited by 315

millions of people there were only 596 consumer cooperative stores (1920) as

against 37.000 agricultural and non-agricultural credit cooperatives in the

4 Sapre A.R. (1993 ) op.cit.. p.27.

country.' With the sole exception of Madras province where primary stores

were established in rural areas, the cooperative store movement in lndia was

concentrated in both urban and semi-urban areas. In the initial years, the

consumer cooperative movement received sufficient support and patronage from

the consumers

In the succeeding paragraphs, an attempt is made to evaluate the progress

of consumer cooperatives in lndia spread over a four tier structure consisting of

primary socletles. district wholesale societies, state level federations and

national level federat~on. While discussing the progress it is appropriate to

explain from top to bottom, but the available data on consumer cooperatives is

very comprehensive only for priniary societies. Further, the district, state and

national level societies were started little late also. Hence, considering the

convenience for explanation, we have followed bottom to top sequence.

Progress of Primary Consumer Cooperative Societies in lndia

Table 2.1 Progress of Primary Consumer Cooperative Societies during the post World

War I Period (I92 1 to 1929)

Number of Societies with Membership

1927 1929

Memb ership ership ershlp ership

Assam 2283 20 2475

-----.

Contd ...

5 Kulkami K.R (1962). Theory and Procrice qf Couperotion in India and Abroad. Vol. IV, Cooperators' Book Depot. Dadar. Bombay. P.38

! j Number of Societies with Membership

1 1921 -.L-?---

Bihar & Orisssa / 23 1 3066 23 / 4399 / I7 1 3032 / 18 / 2831 / c'p(centra', 30 13357 1 9 11431 1 10 11814 1 l l 1 1 8 4 8 1 Province)

-

Punjab 106 1 7698 3 153 3672

U.P +-T- I 21 I1440 13 1220 1131 1216 --

ource: Annual A d r n ~ n ~ s t r a t i v ~ ~ e ~ o r t s , Quoted from Goyal S.K. (1972), Consumer Cooperative Movement in India, Meenakshi Prakashan, Meerut, p.55

As seen from Table 2.1 this era of growth in the store-movement was,

only a temporary phase of expans~on as it slackened subsequently. The people's

patronage to consumers cooperative stores were ceased as soon as the control of

commod~ties of every day use like rice, kerosene and sugar were lifted.

With the outbreak of World War 11, there was shortage of essential goods

in the country. As the private traders indulged in profiteering and black

marketing along with manipulations in prices, the government had to control the

prices as well as the distribution of essential commodities. In order to check the

nefarious activiti