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 activities of private traders, the govenunent identified the consumers'

cooperatives as efficient and reliable means for the distribution of scarce

essential commodities.

After the outbreak of World War 11, the consumer cooperative movement

made sign~ficant progress. During 1943 rationing was introduced in many

provinces of lndia. The provincial govemments issued instructions to Collectors

of districts to encourage the consumers' cooperative stores by grant of necessary

licenses and quotas. The progress made by the consumers' cooperative stores in

lndia during the World War 11 and post- war period is presented in Table 2.2

Table 2.2

Number of Primary Consumers' Cooperative Stores and Membership in Primary Consumers' Stores in lndia During World War 11 (1940 to 1945)

i 2 a w a g i s : 2 .- States t; , g I .

o i w ~1 C % : - ! %

L o 1 I P ~ Z

Bihar

icentra' Province 1 30 1812i 1 29 1 I 9 3 3 30 122291 63 N A / 1131 N A 1281 ( N A

The progress of primary consumers' cooperative stores in the post World

War I1 period can be assessed by the statistics given in Table 2.3. It is seen that

71600

N A

N A

between 1946-47 and 1949-50, the number of societies increased by 74.58 per

of Cooperative Registrars, Quoted from Goyal S K (1972) Consumer Cooperative Movement in India, Meenaksh~ Prakashan, Meerut, p.62

21300C

N A

9475

938

33

132

1191

33

155

343000

3849

12283

1286

N A

I59

408000

N A

13537

cent. Accordingly. membership increased by 99.05 per cent and sales by 100

per cent. T h ~ s trend continued till the first half of 1950-5 I.

Table 2.3

Progress of Pr~mary Consumer Stores in India during the period

1946-47 to 1949-50

Items -

No. of Soc~eties --

Member shlp (in thousands)

Paid up share capital (Rs. lakh) -

Reserve and other funds (Rs. lakh)

Value of annual purchases (Rs. lakh) 1 3318.90 1 3001.60 1 5003.60 1 6744.80 / Value of Annual sales (Rs. lakh) -3505401 3499.60 i 5064.50 j 7045.40 1 Source: Kulkarni ~ . R ( 1 9 6 2 ) 'Theory knd PractiLe of Cooperation in india and I

Abroad Vol.lV; Cooperator's Book Depot, Dadar, Bombay, p.72.

Thereafter the states began to lift the controls gradually and by the end of

195 1-52, the removal of controls had put an end to the privileged position which

consumer's cooperatives enjoyed

2.4 Progress of Consumer Cooperative Movement in lndia under the Five Year Plans

In the earlier paragraphs we have seen the growth and progress of

consumer cooperative movement in lndia during the World War period and on

the eve of independence. Since independence the govenunent of lndia

formulated strategies for speedy economic progress. The methodology for this

speedy development was the launching of Five Year Plans. Five Year Plans

strategies touched up on all sectors where cooperatives is also not an exemption.

The First Five Year Plan document pointed out that in urban areas special

significance must be attached to consumer cooperatives. But no targets were

laid down and no specific financial outlay was envisaged in the First and

Second Five Year Plans for this purpose. The reversion to decontrol and the

consequent functioning of free economy has also adversely affected the

consumer cooperative movement in India. As a result, the number of primary

consumer cooperative stores fell from 9757 in 1950-51 to 7050 in 1960-61, and

the membership from 18.45 lakh to 13.41 lakh, both recording a fall of 27 per

cent. The total sales made by these stores also declined from Rs.81.87 crore in

1950-5 1 to Rs.44.23 crore in 1960-61, the rate of fall being 45 per cent6.

In November 1960, the National Cooperative Development and

Warehousing Board appointed a Committee under the chairmanship of Natesan

to review the exlstlng status of the consumer cooperatives and to suggest

measures for the speedy development of the consumers' movement during the

Third Plan period. The Committee suggested for organization of 50 wholesale

stores and 2200 primary stores and made a number of recommendations

regarding organization, structure, pattern of consumer cooperatives, size and

viability, the need for strong wholesale stores, improvement of managerial

efficiency, business techniques and govenunent assistance.

The Chinese aggression (1962) led to the declaration of emergency

which resulted in an economic cris~s. The increase in agricultural and industrial

production alone could not solve the problem of scarcity of several essential

commodities The problem was not only one of production but distribution also.

Hence the problem was how to streamline the distribution of scarce resources.

The government took initiative in the organisation of consumer's cooperatives

all over the country, with a view to hold the price line of essential commodities

by offering to participate in share capital and provide managerial assistance and

other various subsidies. (Himachalam, 1991)'.

Besides the consumer cooperatives organised by the public in the urban

areas, a number of specialised consumer cooperatives have also been organised.

In 1962, the Minishy of Labour and Employment formulated a scheme for

organisatlon of consumer cooperative stores among industrial workers in the

private and public sector undertakings, employing more than 300 persons.

According to this scheme, employers were expected to make available financial

assistance to the store and also to provide accommodation to the stores either

free or at nominal rent. Up to the end of 1965-66, 1675 primary stores were set

up under the scheme in India. Another category of specialised consumer

cooperative stores consists of consumer cooperative stores organised for the

employees of the lndian Railways. There were 345 stores for railway

employees at the end of 1965-66 (Government of india, Administrative Reforms

Commission. 1968)'.

The devaluation of the lndian rupee by 36.5 per cent in June 1966 created

adverse psychological impact on the trade and the prices of all the goods started

rising indiscriminately. The government of lndia introduced an accelerated

7 Himachalam, D. (I99 I) < ) / ~ c i t . , p. 18. "ovemment of India (1968), Admmisrrotiv~. Kc:f&-rns Commission Report of' the Working

Grorrp on ('oopc.rotron. New Delhl. p. 127.

programme for strengthening consumers' cooperative movement in the country

by organising central stores in all the districts not covered during the Third Five

Year Plan penod. T h ~ s programme envisaged setting up of 101 new wholesale

stores and 2000 prlmary stores 01. branches, 50 departmental stores to cover all

important cities and towns with a population of about 2 lakhs, setting up of

consumer cooperative stores in universities and colleges, strengthening of

National and State Level Federations, building up of a system of

institutionallsed purchases, streamlining of supply arrangements and training of

supervisory staff and other personnel with the assistance of the govenunent.

(Himachalam, 199 1 )"

During the Fourth Five Year Plan period, a countrywide network of

consumer cooperatives has been built up. By the end of June 1974, there were

400 central wholesale consumer cooperatives, 14 State Federations of consumer

cooperatives and the National Cooperative Consumers' Federation at the apex

level." During the Fifth Plan, a Centrally Sponsored Scheme was formulated to

organize new department stores arid to strengthen the wholesale stores and the

state consumer federations. The Plan document emphasized that "if the

consumer cooperatives are well organized and run as efficient and economically

uable units, they can sell goods at fair and reasonable prices or even below the

market rates. and enlist mass support and participation of consumers"". The

Sixth Five Year Plan envisaged measures to strengthen the state federations and

measures to expand the activities of the National Cooperative Consumers'

9 Himachalam, D. (1 99 1 ) op. crl, p. 19. LO Mathur B.S (1991) o l ) . c i ~ . p.323. I1 Government of India ( 1973) Reporr ( I / /he Working Group on Coopernlion (F'ryh Five Yenr

Plnn), Nen. Delhi. p 10 1

Federation to procure supplies directly from manufacturers. The Central outlay

for the consumers' cooperatives during the Sixth Five Year Plan was Rs.56

crore. In order to support the consumers' cooperative movement, the

government of lndia entered into agreements with selected manufacturing

companies to make available 20 per cent of their manufactured articles through

the cooperative network.

The Seventh Five Year Plan proposed to increase the number of

departmental stores from 330 to 430 by the end of the period. It was also

proposed to increase the number of consumer cooperative outlets from 3 1,960 to

32,660 by the end of the Seventh Plan period. The National Cooperative

Development Corporation has extended Rs.98 crore till the end of the Seventh

Plan period as assistance to the consumer cooperatives. The main emphasis in

the Seventh Plan was to expand the coverage and intensity of consumer

cooperatives to backward and hi114 areas.

Eventhough there is coverage on cooperation in the Eighth and Ninth

Five Year Plan documents, the discussion is thin and scattered compared to the

earlier seven Five Year Plans. Hence in the immediate paragraph an attempt is

made to summarise the progress of consumer cooperative movement in lndia till

the end of the Seventh Plan with the help of available statistics.

The progress of primary consumer cooperative stores in lndia during the

period 1960-6 1 to 1988-89 is presented in Table 2.4. As evident from the table

2.4 the number of primary consumer cooperative stores in the counhy recorded

an average annual growth of 6.3 per cent during the period 1960-89. The

membership of primary consumers' cooperative stores in the country increased

from 13.40 lakh in 1960-61 to 70.40 lakh in 1988-89; signifying an increase in

the membership per store from 190 to 3 1 I . The total share capital of primary

consumers' cooperative stores in the country increased from Rs.2.49 crore in

1960-61 to Rs.34.99 crore in 1988-89, the rate of annual growth being 13.40 per

cent. Total sales made by prima~y consumer cooperative stores in the country

during the period 1960-6 1 was Rs.44.20 crore which rose to Rs. 1 177.40 crore

during the year 1988-89. The average annual sales per primary consumer

cooperative store in the country increased from Rs.62,670 in 1960-61 to

Rs.3,84,880 in 1988-89 recording an increase of 5.14 times.

Table 2.4

Progress of Primary Consumer Cooperative Stores (1960-89) in lndia

Membership in '000 (Rs. in '000)

-- -. I

At the end of ea Descriptions

Number

Membership

Share capital (Rs.) Total sales (Rs.)

Stores in profit (No) Stores in loss (No) Fair price shops in cooperative sector(no.)

Source: National cooperatives in lndia 1960-61 to 1988-89 (2"* Plan -71h Plan). Data Series, New Delhi, p.58-65.

The profitability of priina~y consumer cooperative stores in the country

increased during the period from 38.60 per cent in 1960-61 to 43.60 per cent in

1988-89. During the year 1988-89, total number of fair price shops in the

country stood at 3.53.798. As there were 83,544 fair price shops in the

cooperative sector, cooperative f a ~ r price shops constituted 23.60 per cent of the

total fair price shops in the country. The serious attempts to strengthen the

network of consumer cooperatives under the Five Year Plans through the

Centrally Sponsored Schemes as a consequence of Chinese aggression have

contributed for these achievements.

In the above paragraphs we examined the progress of primary consumer

cooperative stores at the national level. The various support measures also

helped the growth of consumer cooperative movement at the state level.

Available data suggest that the movement improved both in the number of

stores and membership over the years (See tables 2.6 and 2.7). The available

data also helped to classify the states into three levels, high performing, low

performing and average performing based on the number of consumer

cooperative stores (See table 2.51. From table 2.5 it is seen that eight states

came in the category of high performing led by Tamil Nadu and followed by

Bihar and Maharashtra. In the average performing category also there were

eight states including Kerala state

Table 2.5

Primary Consumer Cooperative Stores State wise number of cooperative Stores. (1988-89)

Average

Tamil Nadu .Ow

( Bihar 2847 Laksha Dweep 16 Himachal 239 Pradesh

/ Maharashtra 2650 / Pondicheny 2: 1 1 Kerala 380 1 I

West Bengal 2605

Uttar Pradesh 1785

Kamataka 1625

Andhra Pradesh 1 157 1 lamriiu B 50 Orissa 808 1 / Kashm~r I I I

I I

Gujarat 1425

I Goa 78 1 I

Andarnan 39

Sikk~m 36

Meghalaya 41

Arunaclial 96 Pradesh

Assam 422

Delhi 570

Rajastan 624

Havana 44

1 Tr~pura 1 1 1 1 I -- 1

Source: Nat~onal Cooperative Un~on of India, Analytical study of consumer cooperatives rn lndia 1960-6 1 to 1988-89 (2" Plan - 7th Plan), Data senes. p 3

Madhya Pradesh 763

Table 2.6

State-w~se Details of Pnmary Consumers Cooperative Stores in lndia dunng the per~od 1960-6 1 to 3 988-89

(Number of Stores)

Figures in Actual - - 7 - 1 7

85-86 86-87 87-88 88-89

961 1001 932 1113 1157

70 130 92 96

Assam 365 298 303 422 1-

Bihar 1915 2741 2600 2847

Mizoram --

Orissa

Rajasthan i 402 1 655 544 / 681 1 6'77 1 664 1 532 1 624 1 624 (

Tamil Nadu

Tripura ---4-~i.M3 5

93 9) 97 1 loo 9) 1 I

Andamans t 1 9 1 31 1 38 1 37 1 36 1 36 1 36 1 36 1 39 1 --- -

Delhi 168 370 313 455 711 711 570 570 - -

I 4 4 3 5 7 7 7 7 6 7 7 6 1 1 7 8 1 Goa, Daman & 1 Diu I

- .+- Lakshadeep

Pondicher~

Chand~garh I

Dadar 1 1 1 1 1 1 5 1 5 1 6 1 8 1 ; 1 4- I

Goa I -4- Daman& DIU i

i - I L I

.ource: National Cooperative Unlon of India, Analytical study of consumer cooperatives in India 1960-6 1 to 1988-89 (2nd Plan - 7'h Plan), Data senes, p 58

Total i70W 39081 I5797 16701 17727 18542 21913 22647

Table 2.7

Membership in Primary Consumers Cooperative Stores in India during the period 1960-6 1 to 198 1-89

State1U.T

Andhra Pradesh

Bihar

Gujarat

l~aryana

Himachal Pradesh

Madhya Pradesh

Mizoram --

Contd

~p

Source: National Cooperative Union of India, Analytical study of consumer cooperatives in India 1960-61 to 1988-89 (2"* Plan - 7'h Plan), Data series, p.59.

. 0 1 5 7 77-78 W-85

Sikkim 1 14500

X5-X

2213

686689

10354

394813

533377

10403

/ 229000

703073

8822

467395

536811

10422

158852

25126

1846

66342

7120

686

---A- Tamil Nadu 1 321091 / 555835 715764 802897

86-87

0

715764

8849

221398

399470

9337

96705

I

+ -

Total ~1340707i2929987 6806027

7552

365389

I

476000

11339

3- ~ r i ~ u r a 1240 71391 884"

7038616

87-88

13000

1441000

11000

394000

541000

11000

182000

, f- Uttar ! 149 126i 11459 13

I Pradesh , 1 - I

299451 15123

5943357

88-W

14000

1272934

11812

209378

543711

10572

182000

22000

48000

19340

1000

2000

-

221398

22134

18400

6935

700

3592725

25150

26343

19340

1000

850

- 7901

I

1025

13569

195

292

Goa, Daman I 1 Ill95 & Diu

--- .. +- Lakshadccp i I

.-A-

Pandicheri i 4 5 11474

W.Benga1

Andarnans -

Delhi

l5121i 16813 ;

--

1025 12241 ,

i35(,uj 40109

Chadigarh

Dadar

Goa

I -+-

195 -

292 a

-+- ! -

i I-

I ---+-

-.

6809

338

Daman 11: 1 i Diu I

- i

2.5 The Progress of Consumer Cooperative Movement in India in the 1990's

The Eighth Five Year Plan proposed to promote and strengthen consumer

cooperatives to supply public distribution items and to build up a strong

consumer protection movement both in the urban and rural areas. While the

earlier Five Year Plans aimed at consolidating the consumer cooperative

movement, the Eighth Plan emphasised the need to involve consumer

cooperatives in mamtaming the price line and providing quality products to the

consumers at reasonable rates. During this Plan period it was proposed to cover

10,000 Primary Agricultural Cooperative Societies (PACS), Large-sized Multi

Purpose Societies (LAMPS) and Farmers' Service Societies (FSS) to undertake

distribution of consumer articles in the rural areas and to achieve an estimated

retail rural sales of Rs.4,400 crore by the terminal year of the Eighth Plan

(1997).

Table 2.8 shows that there are fluctuations in the growth of primary

consumer cooperative societies during the period 89-90 to 98-99. In 91-92

substantial growth was achieved in the number of stores, recording an increase

of 17.27 per cent. But, the sales turnover during this period increased only by

11.89 per cent. This may be due to the shift in consumer preferences towards

private Waders and supermarkets as a consequence of globalisation,

liberalisation and privatisation. In the later years, the sales volume increased,

but it cannot be attributed to the rise in unit sales, unless we know the price

factor and the rate of' inflation.

Table 2.8

Details of primary consumer cooperative stores in lndia during n~neteen nineties

Year I Ilo. of Stores I Total sales I I ln thousand) / (Rs. ~n Million /

Source: 1) National Cooperative Union of lndia (2000), Vision 2005, lndian Cooperative Movement. A profile, seventh edition, p.7.

2) Ram lqbal Singh (2000). Development of consumers cooperative movement- its future needs in the light of global changes in the economy, lndian consumer cooperator, Vo1.27, No. 2&3, April- September. P.5.

Figure 2.1

The growth of primary consumer cooperative stores in lndia during nineteen nineties

-- ~~~~ ~ .~ No. of Stores (fin hwsand) OTotal sales (Rs. in 4

~ p~~~

~ ~ ~~~-~ ~. ~

~~ ~~ -~~. ~ .- -2

So far we have reviewed the progress of consumer cooperative

movement in lndia with the support of available statistics on primary consumer

cooperative societies. In the succeeding paragraphs an attempt is made to

examine the growth of consumer cooperatives at the district, state and national

levels. As mentioned earlier, this discussion is presented after the discussion on

primary societies, because time series data for a lengthy span is available only

for primary consumer cooperative societies

2.6 District Wholesale Consumers' Cooperative Stores in lndia

The objective of wholesale consumers' cooperative stores is to secure the

economies of large-scale operations. As the primary stores were not in a

position to obtain the economies of wholesale buying, the wholesale stores were

organised in lndia. During World War I1 it was realised that a wholesale agency

with larger financ~al resources, more efficient management and greater business

ability would be more suitable to undertake the work of wholesale purchasing

from the producers and supply it to the primaly stores. Hence, attempts were

made to organlse District Cooperative Wholesale Stores with the object of

coordinating the purchases of primary stores in a district by making bulk

purchases from the producers or suppliers at proper time and then functioning as

central distributing agencies for their affiliated primary stores. (Goyal, 1972)'~.

During the perlod of controls, the wholesale stores acted as procurement

agencies for the government and d~stributed food grains to the primaries

Table 2.9

Progress of Consumer's Cooperative Wholesale Stores in India - ( 1949-50 to 1959-60

N o of Membership Sales I wholesale stores (Thousands) (Rs. lakh)

Source: Reports of the Reserve Bank of India, (various issues).

'' Goyal. S K (1972). ('on.strmer ('oq,eroirve Movemen1 In Ind~ci. Mcnakshi Prakashan. Merut . p 66

An All lndia Seminar on <:onsurners' Cooperation, convened by the All

lndia Cooperative Union (now National Cooperative Union of India) held at

Bombay m September 1960 recommended that wholesale societies may be

established in all the districts where there are about fifty retail primaries in order

to undertake the work of bulk purchases, manufacturing, processing, distribution

etc. The seminar also suggested that the district societies should also open

branches in those areas where there are no primary stores which may be

converted into primary stores later on.

The progress in the number of wholesale/central consumers' cooperative

stores in India is presented in Table 2.10.

Table 2.10

Progress of CentralIWholesale consumer cooperative stores in lndia during the period 1960-6 1 to 1988-89

Total number of stores

Pradesh Jamrnu & Kashmir

9 9 9 9

Karnataka

Kerala I I 12 I I I I Contd .

I Madhya I

: Pradesh I

1 Maharashtra ! I / 33 / 40 ) 68 83 1 I00 1 93 1 103 1 1 1 1 I -4-

Meghalaya ! I

I Man~pur -- M~zoram I 2

Puniab I6 15 16 16 16 16 16

a a s a n

- PI 1 1 8 - 1 I9 1 2 ; 12: 12: 12: 1 2 ; I Slkkim

i ~ r i ~ u r a I 1 ~ 1 1 ' ~ 1 I + -~

Utter Pradesh

9 4 1 52 54 57 60 60 60 60

W.Benga1 8 23 29 29 28 28 28 29 29

Source: National Cooperative Union of India, Analytical study of consumer cooperatives in India 1960-6 1 to 1988-89 (2nd Plan - 7Ih Plan) -Data series. New Delhi p. 127

As evident from Table 2.10, the number of wholesale/central consumer

cooperatwe stores in lndia increased from 75 in 1960-61 to 631 in 1988-89. In

the year 1988-89. Maharashha state had the maximum number of wholesale

stores - ( I I I stores) followed by Bihar (92 stores) and Uttar Pradesh (60 stores).

The progress made by wl~olesale stores since 1989-90 is presented in

Table 2.1 l

Table 2.1 I

Within the period of eight years (1989-90 to 1996-97), the total sales of

Progress of Wholesale Consumers' Cooperatives in India (1989-90 to 1996-97)

whole stores in India has recorded an increase of 80.14 per cent. But the

93-94

No.of Whole sale stores 635 , 756

++ Total sales 1 158 1 1228 / 1232 1247 1552

C . - - - - b + Per cent of profit making 1 37 45 stores

percentage of profit making stores has declined from 47 per cent in 1989-90 to

37 per cent in 1992-93, later improved to 48.50 per cent in 1995-96 and by the

Source: National cooperative Union of India (2000), Vision 2005, Indian Cooperative Movement: A Profile. seventh edition, New Delhi, p.21.

94-95

666

1632

46

end of 1996-97, the number of profit rnaking wholesale stores declined to 44.30

per cent. The frequent fluctuations in the profitability of wholesale consumers

95-96

676

cooperative stores is due to frequent changes in the policy towards consumer

96-97

, 696

cooperatives and the resultant consequences.

1952 / 2086

48.5 44.3

2.7 State cooperative Consumer's Federation

All lndia Semmar on Consumer's Cooperation (1960) recommended

that, at the state level, there shouid be an apex marketing and supply society to

coordinate the activities of district supply and marketing societies and to assist

them in the procurement of supplies and development of consumers'

cooperatives. They should also engage themselves in the inter-state and import

trade. In order to brmg about an integration and close link between the

consumers, marketing, processing and industrial cooperatives, all of them

should be the members of the district society also.

The main functions of State Consumer's Cooperative Federation are:

Promote consumer cooperatives in the respective state.

a Procure bulk quantity of consumer goods and supply to member institutions.

Assist and guide member institutions for facilitating their working.

a Act as agent of govenunent for distribution of essential consumer items.

a Liaison with government and other financing institutions

The progress of state cooperative consumer federations in India is

presented in Table 2.12.

From table 2.12 it is seen that at present there are 29 state level

federations in the country. This includes federations exclusively for the states

and a few federations for the ur~ion territories. Their membership position

which stood at 1578 in 1973-74 ~ncreased by 10.73 times in 1999 and reached

17942. Similarly total sales also recorded an increase of 17.87 times over the

years.

Table 2.12

Progress of State Cooperative Consumers' Federations in India (1973-74 to 1998-99)

(Amount Rs. lakh) .-

Number 29 29 29 +-

Membership 1578

8 1.07

i-

Source: ( I ) National Cooperative Union of lndia, Analytical study of consumer cooperatives in India, 2"* Plan - 7Ih Plan, Data Series, New Delhi, p. 135.

(2) National Cooperative Union of lndia (2000), Vision 2005, lndia Cooperative Movement: A Profile, p.28.

These trends exhibit the public support and popularity enjoyed by the

State Cooperative Consumer Federations. The government participation which

stood at 71.93 per cent in 197:3-74 reached the maximum in 1988-89 (87.36)

and came down to 74.70 in 1994-95 and later improved to 81.07 in 1998-99.

2.8 The National Cooperative Consumers' Federation of lndia Limited (NCCF)

The NCCF. which was organised by the state level federations in 1965,

started functioning from January 1966. The National Cooperative Consumers'

Federation of lndia Limited (NCCF) the apex body of consumer cooperatives in

the country 1s govenied by the Multi-State Cooperative Societies Act, 1984. The

main objectives of the NCCF are to provide support to the member's in

particular and other consumer cooperatives in general for distribution of

consumer goods of daily use besides rendering technical guidance and

assistance for improving and increasing their operational and managerial

efficiency. The commercial operations of the NCCF are undertaken through its

headquarters at New Delhi and 32 brancheslsub branches/processing units

(1 999) located in different parts of' the country

The business turnover of National Cooperative Consumers Federation is

presented in Table 2.13

Table 2.13

Sales turnover of National Cooperative C:onsumers Federation (1974-75 to 1991-92

(Rs. crore)

1 Year / Sales Turnover 1

1988-89 1 W::: 1 199 1-92 -

Source: (1) Natioanl Cooperative Union of lndia, Analytical study of consumers cooperatives in lndia 2"d plan-7"' Plan, Data Series, p. 183.

(2) Government of lndia (1993), Cooperative movement in lndia - A statlst~cal profile, p.87

Table 2.13 shows that the business turnover of the National Cooperative

Consumers Federat~on declined since 1984-85. Since 1983-84, it started

incumng losses. The main reasons attributed were uneconomic business deals,

higher admrnlstratrve and establ~shment expenses and witl~drawal of the scheme

of distr~but~on of controlled cloth (Ram Iqbal Singh, 2000)': In later years, as a

result of the rnrtratron of varlous measures such as divers~ficat~on of commerc~al

activities, reduct~on in administrative cost by relieving the surplus staff through

voluntary retirement scheme, closing down of loss making branches and

adoption of various austerity measures etc. the NCCF started showing

improvement from 1993-94 onwards

The NCCF has achieved a record sales of Rs.403.79 crore and earned a

net profit of Rs.4.44 crore during the year 2000-2001 as compared to the sales

turnover of Rs.3 12.19 crore and net profit of Rs.2.78 crore achieved during the

year 1999-2000.'" The increased sales turnover during 2000-2001 resulted in a

gross margin of Rs. 16.17 crore as against Rs. 13.20 crore during the previous

year. The total expenditure of the Federation during 2000-2001 was of the order

of Rs.12.53 crore as compared to Rs. 12.59 crore in the previous year. The

reduction in expenditure was on account of the savings in interest cost due to

settlement of loans and consequential reduction in the loan liability,

In the year 2000, the government of India has introduced "sarvapriya" a

National Scheme for distribution of a few consurner goods of daily use such as

pulses of different varreties, salt, tea, toilet soap and detergent cake, edible oil

l 3 Ram Iqbal Singh (2000) '.Welcon~e Address on the Inaugural function of the 34' Annual Meeting of the gcneral body of NCCF"'. lndinn Consitmer Cooperoror, October- December 2000. P.22.

I 4 NCCF (200 1 ) Annirrrl /{epor/ (!fNrirrr~nol ('oo/)erorive ('onsirmers ' I~tderorion oj'Indin,fi~r /he Annirrrl General Hod), Meeting hcld on 30-1 0-200 1

and exercise note books through the network of 4,50,000 ration shops, retail

outlets of cooperatives and Civil Supplies Corporations all over the counhy for

the benefit of people living below the poverty line. The NCCF has been

nominated as a nodal agency to execute the schemeI5.

Consultancy and Promotional Cell (CPC)

The NCCF, as a National Federation has also been providing consultancy

services to the consumer cooperatives since 1972 for improving their

operational and managerial efficiency through its Conslutancy & Promotional

Cell (CPC) set up with the financial support of the Central Government. The

technical guidance is being provided in the field of management accounting

system, wholesale and retail management, setting up of self-service department

stores, education and training including preparation of project reports for

modemising retail operations and rehabilitation of sick and weaker consumer

cooperatives through its Regional Offices at New Delhi, Kolkatta, Chennai, and

Mumbai.

The remaining section of this chapter is earmarked for discussing the

origin, growth and the current status of the consumer cooperative movement in

Kerala. As mentioned earlier, the consumer cooperative movement in the state

is of a three-tier structure consistiog of primary stores, district wholesale stores

and the state level federation.

2.9 Consumer Cooperative Movement in Kerala

The present Kerala State was formed on I" November 1956 by

amalgamat~ng two pr~ncely states, Travancore and Cochin and the Malabar

" The H~ndir (2000) ..Reforms in PDS". i0Ih July. Kochi. p.5

district under Madras presidency The first consumers' cooperative society in

Travancore was the Thiruvananthapuram Cooperative Distribution Society Ltd.

which was registered in 1914. Soon consumers' cooperatives were registered in

several taluks in the Travancore state. The movement did not show vitality and

strength in normal times but when the World War I1 broke out and the system of

control was introduced, the people both in urban and rural areas recognised the

benefits of the consumers' stores (Goyal, 1972)".

The first consu~ners' cooperative store in Cochin was registered in 1917.

The growth of consumer cooperative societies in Cochin state also got a real

fillip with the outbreak of World War 11. Whereas in the pre-World War 1 years

the number of stores in Cochin state stood at 18, in 1932 it was 51 and in 1947 it

rose to 124(Goyal. 1972)".

2.10 Primary Consumer Cooperatives in Kerala

As we did in the case of national scenario, at the state level also the

discussion on progress of consuirier cooperative movement should start with

primary level societies. But availability of basic information relating to primary

societies was a very difficult task and hence the discussion is arranged at two

levels based on data availability. In the first phase, we have data from 1956 to

1977 but not at regular intervals. The second phase consists of data from 1982-

83 to 1994-95 at regular intervals. Secondary data on consumer cooperatives in

Kerala since 1994-95 are not yet available (2001) due to various reasons. Little

scattered information was available for 1998 from the joint statement issued by

the Department of' Cooperativt:~, Government of Kerala and the State

Cooperative Un~on, Kerala.

Table 2.14 gives the progress of consumer cooperative movement in

Kerala between 1956 and 1977.

Table 2.14

Progress of P r ~ m a ~ y Consumer Cooperative societies in Kerala (1956-1977) (Rs. lakh)

p.94. (2) Government of India (1968), Report of the Working Group -

Cooperation, Administrative Reforms Commission, p. 124.

I Particulars 1956 1957 1960

Number of 181 stores

38852

Paid-up share 1 5.71 7.05 capital (Rs. in; lakhs) ! -+-

(Rs. lakh)

(Rs. lakh) i

(3) Government of Kerala, Handbook on Cooperative Movement in Kerala, Registrar of Cooperative Societies, (various issues).

Table 2.14 shows that there was a decline in the number of primary

Source:(]) Annual Reports, quoted from Goyal S.K. (1972), Consumer Cooperative Movement in India, Meenakshi Prakashan Meerut,

1966

294

78068

19.65

N.A

673.04

consumer cooperative stores in 1960 mainly due to liquidation. However, the

sales turnover of the primary consumer cooperative stores in the state recorded

1970

336

1 1 1189

33.01

94.55

1066.55

steady increase throughout the period. Regarding the membership in primary

1977

325

134140

54.37

N. A

1655.41

consumer cooperative stores, the average number of members per store was 134

1n 1956, which ~ncreased to 229 in 1957 and later fall to 215 in 1960. From

1966 to 1977 there was growth in the average number of members in primary

consumer cooperative stores in Kerala. In 1976-77, the average membership in

a primary consumer cooperative store in Kerala was 413

The progress made by the primary consunler cooperative stores from the

years 1982-83 to 1987-88 is presented in Table 2.15.

Table 2.15

Progress of primary cooperative stores in Kerala (1982-83 to 1987-88)

No. of Branches

No of profit earning stores

No of societies

Source: Government of Kerala, Handbook on Cooperative Movement in Kerala. Registrar of Cooperative Societies, (various issues).

Table 2.15 shows that except in the year 1985-86 there was consistent

increase in the number of primary consumer cooperative stores. In 1983-84

there was an increase in the number of members over the previous year, but the

succeeding two years has recorded a decline in membership. The average

membersh~p in a prnnary store which stood at 484 members in 1982-83 declined

to 458 members in 1987-88. The. average paid up capital of the primary stores

increased from Rs.0.28 lakh in 1982-83 to Rs.0.38 lakh in the year 1987-88.

The sales turnover dur~ng the period 1982-83 to 1987-88 increased by 55.89 per

cent. The cost of management has also recorded an increase of 74.88 per cent

over the period of six years. Regarding profitability, 37.32 per cent of the

primary stores in Kerala had generated profit in 1982-83, but in 1987-88 the

number of profit makmg societie!~ declined to 32 per cent. On the other hand

the number of dormant societies has increased from 19.37 per cent to 32.25 per

cent.

The progress of primary c:onsumer cooperative stores from 1988-89 to

1994-95 is presented in Table 2.16. The progress in the number of primary

consumers' cooperative stores in Kerala as shown in Table 2.16 reveals that

there was 113.73 per cent growth in the primary consumers' cooperative

societies over the period of seven years from 1989 to 1995. In 1989,

Thiruvananthapuram district, (16.34 per cent) had the maximum number of

primary consumers' stores, followed by Kannur district (15.90 per cent).

During the year 1992-93, there was a significant expansion in the primary stores

in Kerala. As conipared to 1991-92 there was more than 100 per cent increase

in the number of primary stores in ldukki, Thrissur, Kozhikode, K a ~ u r and

Kasargode districts during the year 1992-93. One of the probable reasons for

this trend may be the political tactics to capture the governance of cooperative

socie~teis as a consequence of polltical changes at the state level administration.

Table 2.16

Progress in number of Primary Consumers' Cooperative Stores in Kerala ( 1988-89 to 1994-95)

Name of D~strict

1990-9 1 199 1-92 1992-93 1993-94 1994-95 --- I Th~ruvananthap 75

uram I 76 I 78 127 I

130 1 140

Source: Govenunent of ~e ra l aTHand Book on Cooperative Movement in Kerala, Registrar of Cooperative Societies, Kerala (Various issues).

Since 1993, Kannur district tops in the list of primary consumers stores

having 171 stores accounting for 17.43 per cent of the total primala, stores

during 1994-95, followed by Thiruvananthapuram district with 140 stores which

accounts for 14.27 per cent of the total primary stores in 1995. Wayanad district

with 1.83 per cent and Pathanan~thitta district with 2.34 per cent of the total

primary stores had the lowest pos~tion in 1995

Table 2.17 Primary Consumer Cooperative Stores in Kerala - Progress in Membership

( 1988-89 to 1994-95) -- I-- / n I

(Membership in '000)

Name of I

D~shict

-+--

Kottayam 1 9 . 4 6 9.19 -- C--

-

Ernakulam 29.03 29.94 -- Kozhikode 1 15.40 16.94 I 16.63 16.49 18.20 19.38 19.48

-1--

Wayanad ! 3.00 3 . 303 3.66 3.71 4.13 4.23 -c--

Kannur 1 42.60 44.58 45.96 46.89 52.15 52.17 54.01 t-- -

Kasargode i 8.91 9.06 1 9.04 9.34 9.44 10.54 10.23 A- -

Total 1 213.43 205.54 21 1.39 209.21 242.82 255.66 268.63

Source: ~ o v e r n r n e n t o f ~ e r a l c Hand Book on Cooperative Movement in Kerala, Registrar of Cooperative Societies, Kerala. (Various issues)

As evident from table 2.17, the membership in primary consumers'

cooperative societies increased from 2.13 lakh in 1988-89 to 2.68 lakh in 1994-

95. However, the average number of membership in primary stores in Kerala

declined from 464 in 1988-89 to 273 in 1994-95. From 1988-89 to 1994-95

Kannur district had the maximu~n number of members, followed by Ernakulam

and Thiruvananthapuram districts. The average number of members in primary

stores in these districts also declined since 1992-93; the year in which there was

great Increase in the number of primary stores in Kerala. In 1991-92, the

average number of members in a primary consumers' store in Kannur district

was 609 which exceeded the state average of 406 members. In 1994-95, while

the state average declined to 273, the average membership in primary

consumers' stores i n Kannur d~shict also declined to 3 16. The decline in the

number of members in primary consumers' cooperative societies is likely to

affect the smooth functioning of people's organisations like consumers'

cooperatives.

Table 2.18 explains that the average paid up capital of a primary

consumers' society in 1988-89 .was Rs.32,961. In 1994-95, it declined to

Rs.25.368. The narrowing capital base of the primary consumers' cooperative

societies indicate the weakening of the consumers cooperative movement in

Kerala. The district wise analysis of total paid up capital reveals that Ernakulam

district had the maximum paid up capital in primary consumer cooperative

stores in Kerala. The average paid up capital in Ernakulam district was Rs. 1.21

lakh in 1995 as against the state average of Rs.0.25 lakh. The ldukki district

with 83 prlmary stores in 1995 had the lowest average paid up share capital of

Rs.0.06 lakh, which was Rs.0.09 lakh in 1989.

Table 2.18 Total pa~d up cap~tal of prtmary consumer cooperative stores in Kerala

( 1988-89 to 1994-95)

I Thiruvananthag I I warn

' 17.54 / 17.61 1 8 . 8 8 1 19.07 ! 23.57 / 25.10 / 29.36 / I

--- (Rs. lakh) Name of i 8 9 9 0 9 - 1992- 1993- 1994- District 1 89 91

ldukki 2.90 2 . 9 2 i 3.11 1 2 . 9 3 1 5 . 2 1 1 5 . 2 8 1 4 . 6 0 1

-+-- 92

Wayanad I 369 1 4.01 1 4.93 i 4.98 1 6.25 1 8.65 1 7.52 1

13.02

4.10

4.84

13.84

' 10.28

3.41

3.1 1

13.94

Kollam 1 10.03 10.16 / 11.41

P a t h a n a m t h i t t < i e 3.78

93

Alappuzha 1 2.25

_____t__ Ernakulam 1 ::r] 4072 4;:

The total sales turnover made by the prinnaly consumers' cooperative

15.18

4.16

5.78

14.44

2.17

53.50

10.04

9.69

15.22 -

18.08

Kannur 28.00 -t--

Kasargode

Total

stores had also recorded steady growth except i n tile year 1992-93. As shown in

94

20.23 '

4.19

6.83

14.33 1- -

Kottayam 1 I I 90 1 10.79 1 11.57 I-

10.30

1 1 . 1 1

13.62

Thrissur 10.23 1 8.97 ----- 1 ::ti 7.72 1 7.76 Palakkad

Table 2.19, the sales tunlover of Ks.953 1 . 1 1 lakh in 1994-95 was 143.26 per

95

58.95

10.04

10.99

15.24

19.97

Malappuram 9.60 --

Kozhikode 12.01 13.46

Source: on cooperative Movement in Kerala, Registrar of Cooperative Societies, Kerala. (Various issues)

29.68

5.49

cent higher than the turnover of Rs.3918.02 lakh achieved in 1988-89.

58.01

14.44

10.98

15.08

21.12 3

11.65

15.22 --- -

35.62

6.55

30.71

6.42

248.86

33.06

7.06

181.98 1 214.49 234.50

Table 2.19

Total sales turnover in the primary consumers' cooperative stores in Kerala ( 1988-89 to 1994-95)

(Amount Rs. lakh)

Name of District

1 199 1-92 1992-93 1993-94 1994-95

Thiruvanantha- puram

878.36 249.98 216.09 353.13

C-- Kollam 289.47 279.87 356.67 458.26

Pathanamthitta 28.15 22.55 75.89 61.20 66.28

Alappuzha 38.03 56.83 75.19 76.02 86.48

Kottayam

ldukki 10.91 2 6 . 1 7 35.57 37.00 36.71

Emakulam 769.03 789.03 785.55 1061.86 1523.09

Thrissur 1694.68 1627.17 2145.23 2332.43 --

Palakkad 188.30 181.55 233.36 262.99

Kozhikode

Wayanad +- Kannur

Total I

Source: Government of Kerala, Handbook on Cooperative Movement in Kerala, Registrar of Cooperative Societies, Thiruvananthapuram, (various issues).

The profitab~lity of the primary consumers' cooperative societies in each

district is available from Table 2.20.

Table 2.20

The percentage share of profit niaking primary consumer cooperative stores (1988-89 to 1994-95)

Alappuzha

District 1988-89 1989-90

ri:~:anth{~~+~ puram - -

Kollam / 12 50 20 00

Palakkad 354s 1 29.03 j 25.81 1 15.15 1 17.50 1 9.09 1 18.87 1 I --I-

199 1-92

23.08

14.55

1990-9 1

28.95

12.73

1--

Kottayaln 1 1 0 q ~ ! 22.58 4--- --

Kozhikode I

Wayanad 27 27 1 33 33 40.00 25.00 35.29 16.67

Kannur 52 63 33 77 15.98 16.96 14.62

1992-93

12.60

9.62

ldukki 12.12 8.82 7.23 3.61 9.64

Emakulam 47.37 46.15 45.83 42.86 35.42

Thrissur 26.09 25.00 15.52 5.26 15.52

12.90

Total 28.54 27.79 1 31.35 1 22.91 1 15.23 1 19.58 / 25.79 1 - L -- 1-1

1993-94

17.69

5.56

3.03

Kasargode 1176 JF- 4-

Source: Government of Kerala, Handbook on Cooperative Movement in Kerala, Regist~ar of Cooperative Societies, (Various issues).

1994-95

32.86

30.63

11.43

11.76

8.82

7.41 10.94 10.77 10.45

The percentage of profit laakmg primary stores had shown variations

during the period 1988-89 to 1994-95. 31.35 per cent of the prilnary stores in

the state earned profit during 1990-91. But in the year 1992-93 the share of

profit making societies declined to just 15.23 per cent. Among the districts,

Kozhikode distr~ct had the maximum number of profit making stores, viz. 57.89

per cent in 1988-89. Ernakulam and Kannur districts had the second and third

position respectlveiy. In 1994-9:5 also, Kozhikode district continued its lead

over other districts in the number of profit making primary consumers'

cooperative societies. with 67.33 per cent of the total stores running on profit.

With 35.42 per cent stores runni~ug on profit, Ernakulam district stood second,

while Thiruvananthapuram district with 32.86 per cent of the total primary

stores earnmg profits, recorded tht: thlrd position.

As mentioned earlier, till March 2001, the Handbook on Cooperative

Movement in Keraia, published by the Registrar of Cooperative Societies, was

released only up to 1994-95 and hence later statistics are not available. But

certain details relating to 1998 published by the Department. of Cooperation,

Government of Kerala and the State Cooperative Union, Kerala are available.

According to these documents, the status of primary consumer's cooperative

societies were as given in table 2.2: 1

As compared to 1995, there was a fall in the number of primary

consumers' cooperative societies from 981 to 915. The number of members

also reduced from 2.68 lakh in 1995 to 2.53 lakh in 1998. However, there was

some marginal improvement in the average number of members. The average

number of members increased from 273 in 1995 to 277 in 1998.

Table 2.2 1

Status of Pr~mary Consumers Cooperative Societies in Kerala as on 3 1-3-1998

I-- -

1 No.of Pr~lnary Consumer's Societies

253496

Share capital : Total (Rs. lakh) C -.

Government (Rs. lakh) I 152 1 Value of sale of consumer goods (Rs. lakh) 1 28509 ( Profit maklng societies (number)

Profit made by societies (Ks. lakh)

Loss maklng societies (number) I 508 / Loss made by societies (Rs. lakh) 1 500 1

/ Number of societies without profit or loss 1 312 1 Source: Government of Kerala, Department of Cooperation and the State

Cooperative Union, KeraYa (Pamphlet).

Total paid up capital of the primary consumers' cooperative societies has

remarkably increased from Rs.249 lakh in 1995 to Rs.871 lakh in 1998. The

percentage of government's contribution to the share capital of primary societies

has fallen from 35.16 in 1995 to 17.45 in 1998, in the wake of liberalisation

process. The sales turnover achieved by the primary stores rose to Rs.285.09

crore in 1998. recording an increase of 199.12 per cent as compared to 1995.

The number of profit making stores as a percentage of total number of primary

consumer's cooperative stores reduced from 25.79 per cent in 1995 to 10.38 per

cent in 1998. The fall in the nu~nber of profit making societies even after a

notable increase in the sales tunlover may be due to the increase in

establishment expenses and fall in unit profit margin. The percentage of

dormant soc~eties has declined fro111 36.29 in 1995 to 34.09 in 1998. Out of 915

primary consumers societies, 558 societies, constituting 55.52 per cent of the

total number of socletles were running on loss in 1998.

Evaluating the performance of primary consumers' cooperative societies

in Kerala, it is felt that while the number of societies are on an increase, the

number of profit making societies and the rate of profit are declining over the

years. Naturally, this requires more detailed thinking and analysis which is

attempted in the later chapters.

2.11 District Wholesale Consumers' Cooperative Stores in Kerala

Along with primary societies, district wholesale stores were also started

in Kerala. In the earlier years. they had effective linkages with the primary

societies but later they became exclusive stores even doing retail business

through their various branches.

The progress of district wholesale consumer cooperative stores in Kerala

between 1956 and 1985 is available from table 2.22. Developments since 1985

are explained later. From this table it is seen that the number of stores stood at

two in 1956. increased to 10 within a span of ten years and later became 1 1 in

1985. The membership position which stood at 288 in 1956 reached 49000 in

1974 and later declined to 32000 i n 1985. A point to be noted here is the erratic

variations in the membership position. For instance, the number of members

which was 288 in 1956 increased to 1147 in 1957 and later declined to 263 in

1960. The erratlc variations in riiembership may be due to the changing

preferences and attitudes of the members towards the store.

Table 2.22

District Wholesale Consumers Cooperative Stores in Kerala (1956-1985)

(Rs. lakh) - 1960 1966 1974 1978 1985

umber of I 10 10 1 1 I I

embership 288 1147 263 31000 49000 44000 32000

Rs. lakh)

Rs. lakh)

Cooperative Moverner~t in lndia, Meenakshi Prakashan Meerut, p.94.

(2) National Cooperative Union of lndia, Analytical Study of Consumers' Cooperatives in lndia 1960-6 1 to 1988-89, Data series, New Delhi, p. 129-132.

(3) Government of Kerala, Handbook on Cooperative Movement in Kerala. Registrar of Coloperative Societies, (various issues).

An important indicator in order to assess the performance of consumer

cooperative store is its sales tunlover. Data relating to the sales turnover

suggest that there is notable increa:se in the sales turnover over the years. But a

judgement on sales performance cannot be arrived immediately because sales

turnover is a function of multiple factors

Table 2.23

Performance of wholesale Consumer's Cooperative Stores in Kerala ( 1985-86 to 1994-95

Share capital by

Working 1 79 I 06 W,7.10 974,

Amount of

i No, of loss 1 , ,(, making stores I

I I I I

-- Amount 7 188.92 (Rs. lakh)

.. ---i

No.of socict~cs 1 i or loss I

I I

Source: Govenunent of Kerala, Handbook on cooperative movement in Kerala, Registrar of Cooperative Societies (various issues).

485.48

0

13

354.62

0

I I

784.31

2

10

330.10

I

10 10

234.77

I

132.21

1

The number of wholesale consumer's cooperative stores in Kerala has

increased from 12 in 1985-86 to 14 in 1990-9 1, as a result of re-organisation of

the state Into 14 revenue districts. The trends regarding the number of branches

managed by the distr~ct wholesale stores reveal that since 1989-90 there was

gradual decline in the number of branches. The growth in the membership of the

wholesale stores was maximum during the year 1987-88 as the average number

of members in a store increased from 2897 in 1986-87 to 3557 in 1987-88. With

the format~on of two new wholesale stores, the average number of members in a

store decreased to 3 128 in 1990-9 I

Total paid-up share capitel and the contribution by the government

towards the share capital of the stores have recorded continued growth. The

average paid up share capital of a wholesale store increased from Rs. 14.82 lakh

in 1985-86 to Rs.20.31 lakh in 1989-90 and to Rs.27.84 lakh in 1994-95. The

percentage of the share capital cor~tribution by the govenunent towards the total

paid up capital of the wholesale stores increased from 88.74 per cent in 1985-86

to 90.54 per cent in 1990-91, but later declined to 83.89 per cent in 1994-95.

The participation by the government in the total paid up share capital of the

wholesale stores is still strong in Kerala compared to the national average of

14.30 per cent (Herath 1999)".

Total sales turnover continued to decline since 1985-86 to 1988-89. In

1985-86, the total sales turnover was Rs.2571.79 lakh, which declined to

Rs. 1878.42 lakh in 1988-89. The sales turnover was maximum during the year

1993-94,in which it reached Rs.2'732.06 lakh. It is surprising to observe that

I n Herath W.U. (1999) Hccent 7'rend.s c!f uon.s,rmer C'oopernrion in Asin and the I1noijic_ ICAROAP. Nc\v Dclhi P 63.

not a s~ngle store could make profit in 1985-86 and 1987-88. This may be due

to the mismatch between sales turnover and establishment cost. Since 1992-93,

three stores were able to maintair~ profits, but the maximum average profit per

store was only a nominal amount of Rs. 1.35 lakh. The number of loss making

stores and the ~nc~dence of loss per store is high as compared to the profit

making wholesale stores in Kerala The number of loss making stores varied in

between 10 and 13 during the period of study. The average amount of loss in a

wholesale store was maximum during the year 1991-92.

2.12 The Kerala State Cooperative Consumers' Federation Limited (KSCCF, also known as Consumerfed)

The apex federation, Consumerfed was registered and started its

functioning in 1965. The objectiv~es of KSCCF as per bylaw are primarily to

coordinate and facilitate the working of affiliated societies and to assist in the

production, organisation and development of consumer cooperatives in Kerala.

Table 2.24

Progress of Kerala State Cooperative Consumers' Federation Limited 1'374- 1989)

Part~culars

Paid-uo share caoital 124.80 125.96 172.40

State government's contribution1 6.50 1 60.36 1 61.52 1 107.85 1 Itowards the share ca~ltal

Working capital

Sales turnover

Net profitfloss Source: (1) National Cooperative Union of India, Analytical Study of

Consumers' Cooperative in India 1960-61 to 1988-89, Data Series, New Delhi, p. 177.182.

(2) Government of Kerala, Handbook on Cooperative Movement in Kerala, Registrar of Cooperative Societies, (various issues).

The paid-up share capital of Kerala State Cooperative Consumers'

Federation ~ncreased by 19.13 t~lnes during the period 1974-1989. The state

government's contribution to the share capital was 72.14 per cent in 1974,

which later declined to 48.37 per cent in 1981 but further improved to 62.56 per

cent in 1989. Though there was a decline in the share of the state government in

the paid-up capital of Consumerfed, the contribution by the govenunent to the

Kerala Cooperative Consumer's Federation has recorded an increase of 9.29

times in 198 1 and 16.59 times in 1989, over the period from 1974. The sales

turnover made by the Consumerfed in 198 1 recorded a growth of 153.61 per

cent over the seven year period from 1974. In 1985 and 1989 the sales turnover

recorded a fall compared to the sales turnover made in 198 1. Later developments are ava~~lable from Table 2.25.

Table 2.25 Average monthly sales of Consumerfed during the period 1990-91 to 1997-98

(Rs. Lakh)

1 1 i I Growth rate in I

1 1997-98 1 724878 604.06 149.35

Source: Annual Reports of Keral,a State Cooperative Consumers' Federation (Various years).

The sales turnover of KSCCF has increased from Rs. 13.46 crore in 1990-

91 to Rs.72.48 crore in 1997-98, registering an increase of 538.51 per cent.

There was a steady progress of average monthly sales of Consumerfed, except

in the year 1994-95 In 1997-98 the average monthly sales recorded the

maximum growth rate of 149.35 per cent. The gross profit of Consumerfed has

improved from Rs.0.91 crore in 1990-9 1 to Rs.4.47 crore in 1997-98, recording

a growth of 489.73 per cent. (See Table 2.26)

Table 2.26

Gross profit margin of Consumerfed ( 1990-91 to 1997-98)

Rs. lakh

r e a r Gross Profit Net sales margin in percentage

In table 2 26 it is seen that the gross profit ratio of Consumerfed has

1997-98

varied between 6.11 in 1992 -93 and 8.83 in 1994-95. While the net sales of

Consumerfed has increased by 149.36 per cent over the previous year in 1997-

Source: Annual Reports of Kerala State Cooperative Consumers' Federation (Various years).

446.93

98, the gross profit has increased only by 92.10 per cent suggesting that the

higher sales volume has been attai~led mainly by lowering the margin on sales.

7248.78

The trends in net profit margin is given in the next table

6.17 1

Table 2.27

Net profit margin of Consumerfed ( 1990-9 1 to 1997-98)

(Rs. lakh)

1 Year Net profit margin

1 996-97 4 5 5 1 2907.00 1 0.16

1997-98 14.43 7248.78 0.20

Source: Annual Reports of Kerala State Cooperative Consumers' Federation (Various years).

The trends reveal that the incidence of net loss as a percentage of sales

was maximum during the year 1990-91, being 1.06 per cent of net sales. The

Consumerfed continued to incur net loss during the two subsequent years and

also in 1995-96. These facts reassure our earlier claim that the rate of profit of

the Consumerfed is gradually declining as in the case of primary stores due to a

fall in the rate of sales turnover followed by an escalating rate of establishment

cost.

In this chapter we have examined the growth of consumer cooperative

movement in India at the macro level. Initially the growth in the movement for

the entire country was examined. later followed by the state level discussion.

The macro analys~s reveals that the consumer cooperative movement in the

country is making a steady progress over the years. Eventhough these are the

facts at the nat~onal level or even at the state level, the store-wise performance

may be different. Individual sto,res may be struggling due to various reasons

including the threat from globalisation, liberalisation and privatisation. It is also

felt that there are regional differences in the performance of primary consumers'

cooperative stores also. For instance, over the years, the number of primary

consumer cooperative stores in the northern region steadily increased, while the

growth in the southern region IS very low. Hence it is appropriate to examine

the financial perfomance of selected stores at the regional level in order to get a

more detailed picture.