Cooperative Sector in India

Context

The Ministry of Cooperation, established on 6 July 2021, celebrated its 5th Foundation Day in July 2026, highlighting the progress of the "Sahkar Se Samriddhi" vision.

State of Cooperatives in India

Current Profile

• Global Footprint: India has over 8.58 lakh registered cooperative societies, accounting for over 25% of the world's cooperatives and serving nearly 32 crore members.
• Sectoral Mix: Around 2 lakh are credit cooperatives, while 6 lakh operate in dairy, fisheries, housing, consumer goods, and other sectors.
• Geographic Skew: Cooperatives are concentrated mainly in western and southern India, with Maharashtra accounting for nearly one-fourth of all societies.
• Financial Footprint: India has 1,469 Urban Cooperative Banks (UCBs) managing assets worth ₹7.38 trillion, around 3% of the banking sector.

Scale Ambition

• Under the National Cooperation Policy, India aims to triple the cooperative sector's GDP contribution by 2034 and increase active membership to 50 crore.

Significance of the Cooperative Sector

• Credit Support: Rural cooperatives provide about 9% of institutional agricultural credit, reducing farmers' dependence on informal lenders.
• Dairy Sector: Cooperatives procure nearly 50% of organized milk and return 70–80% of the consumer price to farmers.
• Forest Produce: TRIFED ensures fair prices for tribal communities through the MSP for Minor Forest Produce scheme.
• Fertiliser Supply: Cooperatives produce around 29% of fertilisers and distribute 35%, supporting food security.
• Urban Housing: Housing cooperatives manage nearly 20% of affordable urban housing.

Challenges Associated with the Cooperative Sector

Financial & Structural Distress

• High NPAs: PACS have NPAs of ₹72,550 crore, nearly 50% of their outstanding loans (₹1,43,044 crore).
• Declining Credit Share: Cooperative share in agricultural credit has fallen from 64% (1992) to about 9%.
• Inactive PACS: More than one-third of India's 1 lakh PACS are non-functional.

Governance & Capital Roadblocks

• Capital Constraints: Shares can be issued only at face value, limiting capital growth and outside investment.
• Weak Governance: Political interference affects loan decisions and delays recovery from defaulters.

Way Forward: Government Initiatives

Conclusion

The cooperative sector is vital for financial inclusion, rural development, and agricultural growth. Addressing high NPAs, governance issues, and capital constraints through digital reforms, professional management, and diversified activities will strengthen cooperatives and help achieve the vision of "Sahkar Se Samriddhi."