Cooperative Societies, types and benefits

A cooperative society is not a novel concept. It is almost a global notion prevailing in all nations and gets represented in all industries such as agriculture, food, finance, healthcare, etc.

The aim of the cooperative society in India is to defend the interests of the weaker parts. It is a group of people who get together voluntarily for the sake of the members’ well-being.

Meaning and definition of Cooperative Society

A cooperative society in India is a non-profit organisation that began to serve its members. It is a sort of company where people from the same social class group together to achieve their common aims.

The poor individuals or members of society’s weaker parts often work to make such a society. It represents the yearning of the impoverished to stand on their own two feet or merit. An economically disadvantaged individual to improve and elevate their economic situation via mutual aid forms a cooperative society.

Many commercial organisations’ primary goal is to make a profit while also exploiting their clients. However, the foundation of this organisation is to support one another with available resources and supply commodities to society members without profit or at a reduced price.

Simply said, cooperation implies working together to improve their economic situation. This organisation entails the principle of “all for one and one for all.” As a result, all members work together to run this organisation.

Many corporate businesses get formed to make a profit, whereas cooperative societies get established to serve the members of the society for the common good, not to make a profit.

History of Cooperative Society in India

A cooperative society in India has existed since the pre-independence period. Many farmers in Western Maharashtra protested against the persecution of money lenders in the late 1890s. In 1904, the British government in India enacted the Cooperative Society Act 1904 to help impoverished farmers reliant on moneylenders for agricultural loans.

This Act’s provisions were eventually broadened to include cooperative finance agencies and banks in rural and urban regions. However, during World War II, cooperative groups in India encountered difficulties due to agricultural commodity price increases.

After independence, India’s “cooperative movement” gained traction. The government recognised the importance of the cooperative sector in promoting the rural economy. It included proposals for this area in its Five Year Action Strategies series of development plans. At least one cooperative organisation got promoted in each hamlet. It also aided in the establishment of cooperative farms.

In India, cooperative societies grew from the agricultural market to the credit sector and then to large-scale industries such as housing, fishing, banking, etc. It resulted in the establishment of many forms of cooperative organisations in India.

Types of Cooperative Societies in India

The cooperative society in India gets categorised into six kinds based on the number of members and the nature of the operation.

Cooperative Farming Society

  • The agriculture industry in India is the largest; farmers in the country must earn a profit for their goods. Unfortunately, this sector is economically weaker due to various factors, including farmer debts, expensive equipment, agents or intermediaries, and so on.
  • Farmers set money aside to consolidate farming equipment, seeds, fertilisers, and so forth. They earn more through cooperative farming than individual farming since the profit is split based on their landholdings.
  • The benefits of cooperative farming groups in India include increased agricultural productivity and profit.

Cooperative Credit Society

  • Cooperatives that offer financial services to their members such as deposits, short-term loans, and so on
  • Members of these societies are all individuals who make deposits in them. These societies raise funds through deposits from their members and offer them short-term loans at a low-interest rate.
  • These schemes assist members by shielding them from the high-interest rates of commercial banks, which often do not match the demands of farmers or economically disadvantaged groups.

Producers’ Cooperative Association

  • These societies are critical to developing India’s middle and small businesses.
  • These cooperatives are for producers such as fishery owners, farmers, craftsmen, local artisans, and many other companies. AMUL dairy, India’s largest cooperative, is the most remarkable example.
  • Without intermediaries, the output is pooled and distributed by the cooperative, creating a direct consumer-producer interaction.
  • Buyers of the goods might be members, non-members, or the general public.

Cooperative Consumer Society

  • Consumers are the ones who create these cooperatives.
  • Consumers for such cooperatives acquire items in bulk to decrease costs and sell them to its members (and non-members as well) at cheaper rates to receive household goods at an affordable price.
  • Bulk purchases and sales result in price reductions for customers, which is an extra benefit. These cooperatives establish storefronts where all items are sold under one roof. Apna Bazaar, for example, is an Indian consumer cooperative.

Cooperative Marketing Society

  • Marketing cooperatives help farmers market or sell their goods the same way as farming cooperatives help farmers with pre-farming necessities.
  • These cooperatives assist farmers in economically selling their products. They also provide farmers with services such as a sales platform, cold storage, produce grading, and so on.
  • Fruit and vegetable cooperatives, cotton cooperatives, and sugarcane cooperatives are the largest and most sought-after marketing cooperatives.

Cooperative Housing Society

  • With land costs soaring, housing is a major challenge for the average person in cities and towns. In such cases, individuals organise cooperatives to acquire property, build buildings, and sell them to the members.
  • To become a cooperative housing society member, a person must buy a house or acquire shares in the cooperative.

Characteristics of Cooperative Societies

The cooperative society in India adheres to democratic, egalitarian values. In the first place, it gets intended for mutual assistance. People who are not financially secure might join these cooperatives and work toward a shared objective.

The following are some characteristics of cooperative societies in India.

  • Voluntary Formation and Participation: Joining a cooperative is simple and free. The procedure of joining and leaving a cooperative group is entirely voluntary.
  • Each member has one vote: Cooperatives, as previously said, operate on democratic ideals. Every cooperative has a chief managing committee, and by the general membership, the members get elected.
  • Independent body: The government of India recognises a registered cooperative society as an independent organisation. It has the authority to make its own decisions for the interest of its members.
  • Mutual benefit: People in the middle and lower-income levels always gain from cooperatives. They assist one other in achieving larger earnings beyond their typical incomes and build mutual trust.
  • No Financial Risks: There are no financial hazards because cooperatives primarily function based on cash and direct transactions. Others do not give credit, except financial cooperatives, which shield them from damages caused by poor loans. As a result, we may claim that cooperatives are an excellent way to prevent economic hazards.
  • Objective to assist: The primary goal of a cooperative society in India is to assist people in navigating difficult financial situations and gain support and aid from neighbouring communities. It improves communal relations.
  • Fair profit distribution: Surplus produce or profits are divided fairly among members according to their shares in the cooperative sector.
  • Professional Management: All cooperatives need to get run terribly and professionally. It’s essential to have regular audits. A centralised Registrar oversees the regulation.

Significance of Cooperative Society in India

Since cooperatives play a significant role since it is an organisation for the impoverished, ignorant, and unskilled people, the following is a list of the cooperative sector’s relevance to India:

  • It offers agricultural credits and finances when the public and private sectors fail to do so.
  • It gives strategic inputs to the agriculture sector while consumer societies satisfy their consumption needs at reduced rates.
  • It aids in overcoming agricultural development restrictions.

Benefits of Cooperative Societies in India

Let’s see the various advantages of cooperative society in India can be

Combating poverty and ensuring food security

Cooperatives provide smallholders in partner nations a larger voice in the global supply chain by allowing them to market their goods jointly. The ILO estimates that cooperatives market roughly half of the world’s rural agricultural production.

Offering low-cost financing

Credit unions and other financial cooperatives provide long-term financing to persons who cannot access regular banks. Credit unions provide a secure approach to savings and loads since they are operated by and for people in the community and lend prudently.

Increasing local expertise and profit

Cooperatives create and disseminate business knowledge because they are governed by and for local people. Profits are reinvested in the cooperative, the local community, or dispersed to local owners. Cooperatives are an excellent self-help strategy.

International collaboration is essential.

Cooperatives cooperate extensively as a worldwide movement centred on the notion of self-help. Strong cooperative networks allow practitioners worldwide to learn from one another and exchange best practices.

Creating better jobs

Cooperatives employ about 100 million people worldwide, and 3 billion rely on them for a living. Whether for farmers, labourers, or office employees, they strive to give exemplary work with job security and good working conditions.

Women’s Empowerment

A cooperative society in India promotes gender equality because they are open and democratic organisations. Many women hold prominent positions in cooperatives, and women have created a considerable number of cooperatives to provide them with an income.

Challenges to the Cooperative Society in India

  • Local politicians have influenced cooperatives in India for decades, and this has a tremendous influence on that region’s domestic politics. Politicians profit by preventing the poor from receiving their initial advantages.
  • Another issue is the poor infrastructure and organisation of cooperatives, which is primarily due to a lack of funding. There is a need for cooperatives to be assisted or subsidised for these goals.
  • There is also an issue with cooperative employees; normally, if the cooperative work is small, its members are underpaid.

So, it’s essential that in India, cooperative organisations must address these issues while also looking out for the interests of their members.


The Cooperative Society in India is to meet the requirements of its members according to cooperative ideals. They are democratic organisations owned and governed by unitary, independent, and self-help members. The entire system is democratically governed, and the members elect representatives to govern their cooperatives’ business. The cooperatives appoint and dismiss management and employees.

Every issue is determined democratically by a simple majority of votes. Members share profit and loss depending on their engagement as customers of the cooperatives’ services, and there is little interest in share capital.

The cooperative society in India also gives education and training to their members, elected representatives, managers, and staff to actively contribute to the growth of their cooperatives. They work together via local, national, regional, and worldwide organisations and serve their members most efficiently and strengthen the movement. They also aim to ensure the long-term growth of the communities they operate.

FAQs Regarding Cooperative Society in India

How does a cooperative society work?

Mutual aid and welfare are the guiding principles of a cooperative society. As a result, the principle of service dominates its operation. If a surplus gets created, it is dispersed to the members as a dividend by the society's bye-laws.

What is a Multi-State Credit Cooperative Society (MSCS)?

A multi-state credit cooperative has members from more than one state. The Multi-State Cooperative Society Act, 2002 was established in 2002 to regulate such multi-state cooperatives, and it gets governed by the office of the Central Registrar of Cooperative Societies.

Who manages a cooperative society in India?

The cooperative society members collectively get referred to as the general body, while the members who govern the cooperative society are referred to as the management committee. They run a cooperative society democratically. The rule is "one member, one vote," so members may have a say in management.

What are the disadvantages of a cooperative society?

  • Limited Funding
  • Management Inefficiency
  • Lack of Motivation;
  • Disagreements and factionalism among Members;
  • A lack of competition;
  • Personal Gains Are Weighted
  • Corruption
  • Undue Government Intervention
  • Lack of Expertise
  • Lack of Understanding of Cooperative Society Principles

About Author

An aspiring lawyer and a first-year student at the Kalinga Institute of Industrial Technology.

I'm fascinated by the role of the law and high-quality education in improving access and opportunity for underprivileged people.

I am a very determined individual who is always seeking an opportunity to put my knowledge into practice.

Education Qualifations
- Delhi public school ruby park Kolkata
- Undergraduate law degree at KIITuniversity