Yojana Magazine July 2023 - 3 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

 Page 1


31 July 2023
eing the largest democracy in the world, 
it is natural for India to be home to a 
movement that analogously represents 
democratisation at the grassroots level. 
Cooperatives have existed in the archives of the 
Indian economy for more than a century. As many as 
8.54 lakh cooperative societies with a membership 
of 29 crore people are estimated to be operating 
Non-credit Cooperatives are heterogeneous in nature, and due to 
their sheer diversity and vast spread across sectors and regions, a 
‘one-size-fits-all’ approach may not be successful for all sectors. To 
usher in development pathways of non-credit cooperatives, steps need 
to be taken to ensure convergence, awareness generation, training, 
mentoring, technological upgradation, and digitalisation.
in India. The evolution and growth of cooperatives 
in India vary across States. The difference across 
States arises due to the diverse focus areas and 
approaches adopted by the respective State 
administrative machinery to give an impetus to 
growth. This is reflected commensurately in the 
number of registered non-credit Cooperatives in 
States like Maharashtra, gujarat, Andhra Pradesh, 
nitisha mann Dr ishita g tripathy The author is Deputy Director in office of Development Commissioner (MSME). Indian Economic Service Batch-2016.  
email: nitisha.mann@gov.in
The author is Additional Development Commissioner in office of Development Commissioner (MSME), Indian Economic 
Service, Batch-1999. email: igtripathy@gmail.com
B
Ushering Development p athways 
for NoN-credit cooperatives
Page 2


31 July 2023
eing the largest democracy in the world, 
it is natural for India to be home to a 
movement that analogously represents 
democratisation at the grassroots level. 
Cooperatives have existed in the archives of the 
Indian economy for more than a century. As many as 
8.54 lakh cooperative societies with a membership 
of 29 crore people are estimated to be operating 
Non-credit Cooperatives are heterogeneous in nature, and due to 
their sheer diversity and vast spread across sectors and regions, a 
‘one-size-fits-all’ approach may not be successful for all sectors. To 
usher in development pathways of non-credit cooperatives, steps need 
to be taken to ensure convergence, awareness generation, training, 
mentoring, technological upgradation, and digitalisation.
in India. The evolution and growth of cooperatives 
in India vary across States. The difference across 
States arises due to the diverse focus areas and 
approaches adopted by the respective State 
administrative machinery to give an impetus to 
growth. This is reflected commensurately in the 
number of registered non-credit Cooperatives in 
States like Maharashtra, gujarat, Andhra Pradesh, 
nitisha mann Dr ishita g tripathy The author is Deputy Director in office of Development Commissioner (MSME). Indian Economic Service Batch-2016.  
email: nitisha.mann@gov.in
The author is Additional Development Commissioner in office of Development Commissioner (MSME), Indian Economic 
Service, Batch-1999. email: igtripathy@gmail.com
B
Ushering Development p athways 
for NoN-credit cooperatives
32 July 2023
and Telangana, which is relatively higher vis-à-vis 
other large States like West Bengal, uttar Pradesh, 
Bihar, o disha, Assam, etc.
1
The success of cooperatives lies in their 
formation and functioning, especially their 
characteristics such as voluntary participation, 
equal representation, professional management, 
and a greater profit share due to the absence of 
middlemen. In this context, this paper focuses on 
the pathways that non-credit cooperatives can 
follow for their sustenance, growth, development, 
and increasing competitiveness.
Cooperative Structure in india
The Cooperatives Society Act, 1912; the 
Mutually Aided Cooperative Thrift Society Act; and 
the Multi-State Cooperative Societies Act, 2002 
form the legal framework of cooperatives in India. 
There are two types of cooperative structures in 
the country, i.e., State Cooperative Societies and 
Multi-State Cooperative Societies. The Multi-State 
Cooperative Societies come under the Central 
government and the State Cooperative Societies 
under the State governments. Cooperatives in 
India primarily, inter alia, function in agriculture, 
dairy, credit and banking, housing, as producer 
cooperatives, etc. 
Self-Help groups (SHgs) play a more dominant 
role in Maharashtra, West Bengal, odisha, 
and Bihar
2
. Although informal, SHgs may also 
be considered as rudimentary cooperatives, 
functioning albeit, at a smaller-scale and generally 
more focused on relatively disadvantaged groups 
like women. Large-scale cooperatives, on the 
other hand, are commercially 
more concentrated in terms of 
products or functions.
Globalisation
It was largely believed that 
the advent of globalisation 
would impede the 
development of cooperatives. 
However, the success of 
certain cooperatives like 
Amul, Horticultural Producers’ 
Cooperative Marketing 
and Processing Society 
(HoPCoMS), Indian Farmers 
Fertiliser Cooperative Limited 
(IFFCo), orissa State Cooperative Milk Producers’ 
Federation, Karnataka Milk Federation (KMF), and 
Kerala Co-operative Milk Marketing Federation 
(KCMMF) have proved this supposition wrong.
The common thread running through these 
success stories is the existence of a multi-tier system 
that helps establish a strong supply chain. Be it for 
Amul, oMFED (refer to the Box on the next page), or  
IFFCo, the backbone of a successful cooperative 
is a well-functioning E2E (end-to-end) supply 
integration chain involved right from procurement 
of raw materials, product specification, 
manufacturing, scheduling, distribution, till delivery 
of products to consumers.
The success of these cooperatives could also 
be attributed to diversification of product mix, 
undertaking technical upgradation of methods 
and inputs, either at the granular level or in their 
production facilities, focusing on marketing and 
expanding their presence, even internationally, 
and professional management. These stories 
only reiterate that in order 
to thrive, any entity must 
serve its respective market 
efficiently and effectively, be 
well managed, work towards 
financial viability, and have a 
long-term vision. The iconic 
success of certain agricultural-
based and dairy cooperatives 
signals that cooperatives may 
have a lot to contribute in food-
processing, a sunrise sector in 
the Indian economy. 
t he Way Forward
Non-credit Cooperatives 
are heterogeneous in nature, 
The evolution and 
growth of cooperatives in 
India vary across States. 
The difference across 
States arises due to the 
diverse focus areas and 
approaches adopted 
by the respective 
State administrative 
machinery to give 
impetus to growth.
Page 3


31 July 2023
eing the largest democracy in the world, 
it is natural for India to be home to a 
movement that analogously represents 
democratisation at the grassroots level. 
Cooperatives have existed in the archives of the 
Indian economy for more than a century. As many as 
8.54 lakh cooperative societies with a membership 
of 29 crore people are estimated to be operating 
Non-credit Cooperatives are heterogeneous in nature, and due to 
their sheer diversity and vast spread across sectors and regions, a 
‘one-size-fits-all’ approach may not be successful for all sectors. To 
usher in development pathways of non-credit cooperatives, steps need 
to be taken to ensure convergence, awareness generation, training, 
mentoring, technological upgradation, and digitalisation.
in India. The evolution and growth of cooperatives 
in India vary across States. The difference across 
States arises due to the diverse focus areas and 
approaches adopted by the respective State 
administrative machinery to give an impetus to 
growth. This is reflected commensurately in the 
number of registered non-credit Cooperatives in 
States like Maharashtra, gujarat, Andhra Pradesh, 
nitisha mann Dr ishita g tripathy The author is Deputy Director in office of Development Commissioner (MSME). Indian Economic Service Batch-2016.  
email: nitisha.mann@gov.in
The author is Additional Development Commissioner in office of Development Commissioner (MSME), Indian Economic 
Service, Batch-1999. email: igtripathy@gmail.com
B
Ushering Development p athways 
for NoN-credit cooperatives
32 July 2023
and Telangana, which is relatively higher vis-à-vis 
other large States like West Bengal, uttar Pradesh, 
Bihar, o disha, Assam, etc.
1
The success of cooperatives lies in their 
formation and functioning, especially their 
characteristics such as voluntary participation, 
equal representation, professional management, 
and a greater profit share due to the absence of 
middlemen. In this context, this paper focuses on 
the pathways that non-credit cooperatives can 
follow for their sustenance, growth, development, 
and increasing competitiveness.
Cooperative Structure in india
The Cooperatives Society Act, 1912; the 
Mutually Aided Cooperative Thrift Society Act; and 
the Multi-State Cooperative Societies Act, 2002 
form the legal framework of cooperatives in India. 
There are two types of cooperative structures in 
the country, i.e., State Cooperative Societies and 
Multi-State Cooperative Societies. The Multi-State 
Cooperative Societies come under the Central 
government and the State Cooperative Societies 
under the State governments. Cooperatives in 
India primarily, inter alia, function in agriculture, 
dairy, credit and banking, housing, as producer 
cooperatives, etc. 
Self-Help groups (SHgs) play a more dominant 
role in Maharashtra, West Bengal, odisha, 
and Bihar
2
. Although informal, SHgs may also 
be considered as rudimentary cooperatives, 
functioning albeit, at a smaller-scale and generally 
more focused on relatively disadvantaged groups 
like women. Large-scale cooperatives, on the 
other hand, are commercially 
more concentrated in terms of 
products or functions.
Globalisation
It was largely believed that 
the advent of globalisation 
would impede the 
development of cooperatives. 
However, the success of 
certain cooperatives like 
Amul, Horticultural Producers’ 
Cooperative Marketing 
and Processing Society 
(HoPCoMS), Indian Farmers 
Fertiliser Cooperative Limited 
(IFFCo), orissa State Cooperative Milk Producers’ 
Federation, Karnataka Milk Federation (KMF), and 
Kerala Co-operative Milk Marketing Federation 
(KCMMF) have proved this supposition wrong.
The common thread running through these 
success stories is the existence of a multi-tier system 
that helps establish a strong supply chain. Be it for 
Amul, oMFED (refer to the Box on the next page), or  
IFFCo, the backbone of a successful cooperative 
is a well-functioning E2E (end-to-end) supply 
integration chain involved right from procurement 
of raw materials, product specification, 
manufacturing, scheduling, distribution, till delivery 
of products to consumers.
The success of these cooperatives could also 
be attributed to diversification of product mix, 
undertaking technical upgradation of methods 
and inputs, either at the granular level or in their 
production facilities, focusing on marketing and 
expanding their presence, even internationally, 
and professional management. These stories 
only reiterate that in order 
to thrive, any entity must 
serve its respective market 
efficiently and effectively, be 
well managed, work towards 
financial viability, and have a 
long-term vision. The iconic 
success of certain agricultural-
based and dairy cooperatives 
signals that cooperatives may 
have a lot to contribute in food-
processing, a sunrise sector in 
the Indian economy. 
t he Way Forward
Non-credit Cooperatives 
are heterogeneous in nature, 
The evolution and 
growth of cooperatives in 
India vary across States. 
The difference across 
States arises due to the 
diverse focus areas and 
approaches adopted 
by the respective 
State administrative 
machinery to give 
impetus to growth.
33 July 2023
and due to their sheer diversity and vast spread 
across sectors and regions, a ‘one-size-fits-all’ 
approach may not be successful for all sectors. For 
some sectors, a more focused approach may be 
necessary. In this context, a historic decision was 
taken by the Prime Minister in January 2023 when it 
was decided to set up and promote a national-level 
Cooperative society for organic products, which is 
gaining in importance with rising levels of health 
and environmental consciousness. To usher in 
development pathways of non-credit cooperatives, 
steps need to be taken to ensure convergence, 
awareness generation, training, mentoring, and 
technological upgradation, and digitalisation.
r egistered under the Cooperative Society Act, 
1962, oMFED’s main activities include promotion, 
production, procurement, processing, and 
marketing of milk and milk products. Its objective 
has been to ensure the economic development of 
rural farming community in the State.
The strength of oMFED lies in its efficiently 
managed supply chain, which enables it to 
meet its avowed objectives and the needs of 
customers. Following the three-tier system 
originally established by Amul, the village 
Cooperative Society represents the first tier. It is 
a voluntary association of milk producers in a village who are willing to sell milk on a collective basis 
to the nearest District Milk union, which is the second-tier. The committee then selects some more 
people to act as aides (milk tester, etc.).
The Milk union transports the collected milk to their processing centres. Milk unions also provide 
technical inputs (new methods), training, and sometimes even cattle feed and fodder, etc. to the village 
societies.
The third tier is the Milk Federation, which provides for the processing, packing, and marketing 
of milk and milk products in the federation dairy. After marketing the products, whatever monetary 
realisation is achieved is routed back through the supply chain to the producers once every 7-10 days. 
The Federation has representation from various Mu s and also from the State government of o disha. The 
products are marketed by authorised retailers of oMFED throughout the state and urban consumer is 
the last point in the milk flow supply chain of oMFED.
oMFED made its presence known in the 1980s when there was no large-scale formal dairy sector in 
o disha and the resounding success of Amul had demonstrated the capability of cooperatives. oMFED 
gave an opportunity to all the small dairy farmers who did not have the resources to set up small dairies 
but had surplus milk to sell. This led to a rise in their incomes, and the short cash-cycle incentivises them 
with regular payouts. 
Anil Mohapatra, a dairy farmer from Jagatsinghpur district has been supplying milk to oMFED for 
almost 30 years. He says that since higher quality yields a better price, he pays more attention to the 
feed and health of his dairy cattle. Farmers are also aided by regular veterinarian visits. He said that due 
to assured demand and payments, most of the families in the nearby villages have also started keeping 
dairy cattle to supplement their incomes.
Sources: 1. http://omfed.com/default.asp?lnk=home&
2. Authors’ interviews with the dairy farmers
ThE OrIssa sT a TE COOpEra TIvE MIlk 
prODuCErs’ FEDEra TIOn lIMITED (OMFED)
Page 4


31 July 2023
eing the largest democracy in the world, 
it is natural for India to be home to a 
movement that analogously represents 
democratisation at the grassroots level. 
Cooperatives have existed in the archives of the 
Indian economy for more than a century. As many as 
8.54 lakh cooperative societies with a membership 
of 29 crore people are estimated to be operating 
Non-credit Cooperatives are heterogeneous in nature, and due to 
their sheer diversity and vast spread across sectors and regions, a 
‘one-size-fits-all’ approach may not be successful for all sectors. To 
usher in development pathways of non-credit cooperatives, steps need 
to be taken to ensure convergence, awareness generation, training, 
mentoring, technological upgradation, and digitalisation.
in India. The evolution and growth of cooperatives 
in India vary across States. The difference across 
States arises due to the diverse focus areas and 
approaches adopted by the respective State 
administrative machinery to give an impetus to 
growth. This is reflected commensurately in the 
number of registered non-credit Cooperatives in 
States like Maharashtra, gujarat, Andhra Pradesh, 
nitisha mann Dr ishita g tripathy The author is Deputy Director in office of Development Commissioner (MSME). Indian Economic Service Batch-2016.  
email: nitisha.mann@gov.in
The author is Additional Development Commissioner in office of Development Commissioner (MSME), Indian Economic 
Service, Batch-1999. email: igtripathy@gmail.com
B
Ushering Development p athways 
for NoN-credit cooperatives
32 July 2023
and Telangana, which is relatively higher vis-à-vis 
other large States like West Bengal, uttar Pradesh, 
Bihar, o disha, Assam, etc.
1
The success of cooperatives lies in their 
formation and functioning, especially their 
characteristics such as voluntary participation, 
equal representation, professional management, 
and a greater profit share due to the absence of 
middlemen. In this context, this paper focuses on 
the pathways that non-credit cooperatives can 
follow for their sustenance, growth, development, 
and increasing competitiveness.
Cooperative Structure in india
The Cooperatives Society Act, 1912; the 
Mutually Aided Cooperative Thrift Society Act; and 
the Multi-State Cooperative Societies Act, 2002 
form the legal framework of cooperatives in India. 
There are two types of cooperative structures in 
the country, i.e., State Cooperative Societies and 
Multi-State Cooperative Societies. The Multi-State 
Cooperative Societies come under the Central 
government and the State Cooperative Societies 
under the State governments. Cooperatives in 
India primarily, inter alia, function in agriculture, 
dairy, credit and banking, housing, as producer 
cooperatives, etc. 
Self-Help groups (SHgs) play a more dominant 
role in Maharashtra, West Bengal, odisha, 
and Bihar
2
. Although informal, SHgs may also 
be considered as rudimentary cooperatives, 
functioning albeit, at a smaller-scale and generally 
more focused on relatively disadvantaged groups 
like women. Large-scale cooperatives, on the 
other hand, are commercially 
more concentrated in terms of 
products or functions.
Globalisation
It was largely believed that 
the advent of globalisation 
would impede the 
development of cooperatives. 
However, the success of 
certain cooperatives like 
Amul, Horticultural Producers’ 
Cooperative Marketing 
and Processing Society 
(HoPCoMS), Indian Farmers 
Fertiliser Cooperative Limited 
(IFFCo), orissa State Cooperative Milk Producers’ 
Federation, Karnataka Milk Federation (KMF), and 
Kerala Co-operative Milk Marketing Federation 
(KCMMF) have proved this supposition wrong.
The common thread running through these 
success stories is the existence of a multi-tier system 
that helps establish a strong supply chain. Be it for 
Amul, oMFED (refer to the Box on the next page), or  
IFFCo, the backbone of a successful cooperative 
is a well-functioning E2E (end-to-end) supply 
integration chain involved right from procurement 
of raw materials, product specification, 
manufacturing, scheduling, distribution, till delivery 
of products to consumers.
The success of these cooperatives could also 
be attributed to diversification of product mix, 
undertaking technical upgradation of methods 
and inputs, either at the granular level or in their 
production facilities, focusing on marketing and 
expanding their presence, even internationally, 
and professional management. These stories 
only reiterate that in order 
to thrive, any entity must 
serve its respective market 
efficiently and effectively, be 
well managed, work towards 
financial viability, and have a 
long-term vision. The iconic 
success of certain agricultural-
based and dairy cooperatives 
signals that cooperatives may 
have a lot to contribute in food-
processing, a sunrise sector in 
the Indian economy. 
t he Way Forward
Non-credit Cooperatives 
are heterogeneous in nature, 
The evolution and 
growth of cooperatives in 
India vary across States. 
The difference across 
States arises due to the 
diverse focus areas and 
approaches adopted 
by the respective 
State administrative 
machinery to give 
impetus to growth.
33 July 2023
and due to their sheer diversity and vast spread 
across sectors and regions, a ‘one-size-fits-all’ 
approach may not be successful for all sectors. For 
some sectors, a more focused approach may be 
necessary. In this context, a historic decision was 
taken by the Prime Minister in January 2023 when it 
was decided to set up and promote a national-level 
Cooperative society for organic products, which is 
gaining in importance with rising levels of health 
and environmental consciousness. To usher in 
development pathways of non-credit cooperatives, 
steps need to be taken to ensure convergence, 
awareness generation, training, mentoring, and 
technological upgradation, and digitalisation.
r egistered under the Cooperative Society Act, 
1962, oMFED’s main activities include promotion, 
production, procurement, processing, and 
marketing of milk and milk products. Its objective 
has been to ensure the economic development of 
rural farming community in the State.
The strength of oMFED lies in its efficiently 
managed supply chain, which enables it to 
meet its avowed objectives and the needs of 
customers. Following the three-tier system 
originally established by Amul, the village 
Cooperative Society represents the first tier. It is 
a voluntary association of milk producers in a village who are willing to sell milk on a collective basis 
to the nearest District Milk union, which is the second-tier. The committee then selects some more 
people to act as aides (milk tester, etc.).
The Milk union transports the collected milk to their processing centres. Milk unions also provide 
technical inputs (new methods), training, and sometimes even cattle feed and fodder, etc. to the village 
societies.
The third tier is the Milk Federation, which provides for the processing, packing, and marketing 
of milk and milk products in the federation dairy. After marketing the products, whatever monetary 
realisation is achieved is routed back through the supply chain to the producers once every 7-10 days. 
The Federation has representation from various Mu s and also from the State government of o disha. The 
products are marketed by authorised retailers of oMFED throughout the state and urban consumer is 
the last point in the milk flow supply chain of oMFED.
oMFED made its presence known in the 1980s when there was no large-scale formal dairy sector in 
o disha and the resounding success of Amul had demonstrated the capability of cooperatives. oMFED 
gave an opportunity to all the small dairy farmers who did not have the resources to set up small dairies 
but had surplus milk to sell. This led to a rise in their incomes, and the short cash-cycle incentivises them 
with regular payouts. 
Anil Mohapatra, a dairy farmer from Jagatsinghpur district has been supplying milk to oMFED for 
almost 30 years. He says that since higher quality yields a better price, he pays more attention to the 
feed and health of his dairy cattle. Farmers are also aided by regular veterinarian visits. He said that due 
to assured demand and payments, most of the families in the nearby villages have also started keeping 
dairy cattle to supplement their incomes.
Sources: 1. http://omfed.com/default.asp?lnk=home&
2. Authors’ interviews with the dairy farmers
ThE OrIssa sT a TE COOpEra TIvE MIlk 
prODuCErs’ FEDEra TIOn lIMITED (OMFED)
34 July 2023
i. Convergence 
The Ministry of Micro, Small and Medium 
Enterprises, government of India allows 
cooperatives to register as MSMEs through online 
registration on udyam portal. This opens up many 
avenues for cooperatives. As per udyam data, 
more than 16,000 cooperatives have registered 
as MSMEs on the portal. A further analysis of 
the data reveals that the highest number of 
cooperatives are registered under NIC code 10, 
which pertains to manufacture of food products. 
Cooperatives under this code are further engaged 
in procuring, distribution, processing, warehousing,  
packaging, etc. 
A number of schemes that have substantially 
benefited MSMEs en masse  are the Cluster-
based programmes. Such schemes provide 
funds for establishing Common Facility Centres, 
Display centres, Processing 
centres, recycling/resource 
recovery plants, Testing and 
Quality production centres, 
Infrastructure development, 
and soft interventions aiming 
at skill development. MSMEs 
also benefit in terms of 
creating  marketing linkages 
through the domestic 
Procurement & Marketing 
Scheme, and the International 
Cooperation Scheme. 
Cooperatives engaged in 
processing and manufacturing 
can really get a boost in terms 
of increased quantity and 
quality of produce through 
such interventions.  For 
MSMEs, udyam is almost like  ‘Know Your Customer’. In this context, authorities 
may consider udyam certification as the basic 
document for cooperatives to avail benefits of 
programmes instead of any other documentation. 
This would also be in tandem with the ‘Whole of the 
government Approach’ . one of the most important 
advantages of such a step of being accorded MSME 
status would be being covered under Priority Sector 
Lending.   
ii.  awareness, t raining & mentoring
The need of the hour is to make students aware 
that the cooperative sector can be a full-fledged 
career option. For this purpose, training needs to be 
imparted to them. Awareness programmes about 
cooperatives are required across India for capacity-
building. Cooperatives can also be linked through 
the Skill Development Programmes being run 
by various Ministries and rural Self-Employment 
Training Institutes for the skill 
upgradation of their staff/ 
workers. Soft-skill interventions, 
currently being done in cluster-
level schemes, can also yield 
benefits to cooperatives. 
organising exposure visits 
for smaller cooperatives to 
larger Multi-State Cooperatives 
functioning in similar domains 
can also be fruitful to help 
the former emulate similar 
organisational and operational 
systems. Smaller cooperatives 
can benefit from mentoring by 
larger cooperative. For example, 
a mentorship programme may 
be envisioned, wherein, larger 
cooperatives may provide 
The success of these 
cooperatives could 
also be attributed 
to diversification 
of product mix, 
undertaking technical 
upgradation of methods 
and inputs, either at the 
granular level or in their 
production facilities, 
focusing on marketing 
and expanding their 
presence.
Page 5


31 July 2023
eing the largest democracy in the world, 
it is natural for India to be home to a 
movement that analogously represents 
democratisation at the grassroots level. 
Cooperatives have existed in the archives of the 
Indian economy for more than a century. As many as 
8.54 lakh cooperative societies with a membership 
of 29 crore people are estimated to be operating 
Non-credit Cooperatives are heterogeneous in nature, and due to 
their sheer diversity and vast spread across sectors and regions, a 
‘one-size-fits-all’ approach may not be successful for all sectors. To 
usher in development pathways of non-credit cooperatives, steps need 
to be taken to ensure convergence, awareness generation, training, 
mentoring, technological upgradation, and digitalisation.
in India. The evolution and growth of cooperatives 
in India vary across States. The difference across 
States arises due to the diverse focus areas and 
approaches adopted by the respective State 
administrative machinery to give an impetus to 
growth. This is reflected commensurately in the 
number of registered non-credit Cooperatives in 
States like Maharashtra, gujarat, Andhra Pradesh, 
nitisha mann Dr ishita g tripathy The author is Deputy Director in office of Development Commissioner (MSME). Indian Economic Service Batch-2016.  
email: nitisha.mann@gov.in
The author is Additional Development Commissioner in office of Development Commissioner (MSME), Indian Economic 
Service, Batch-1999. email: igtripathy@gmail.com
B
Ushering Development p athways 
for NoN-credit cooperatives
32 July 2023
and Telangana, which is relatively higher vis-à-vis 
other large States like West Bengal, uttar Pradesh, 
Bihar, o disha, Assam, etc.
1
The success of cooperatives lies in their 
formation and functioning, especially their 
characteristics such as voluntary participation, 
equal representation, professional management, 
and a greater profit share due to the absence of 
middlemen. In this context, this paper focuses on 
the pathways that non-credit cooperatives can 
follow for their sustenance, growth, development, 
and increasing competitiveness.
Cooperative Structure in india
The Cooperatives Society Act, 1912; the 
Mutually Aided Cooperative Thrift Society Act; and 
the Multi-State Cooperative Societies Act, 2002 
form the legal framework of cooperatives in India. 
There are two types of cooperative structures in 
the country, i.e., State Cooperative Societies and 
Multi-State Cooperative Societies. The Multi-State 
Cooperative Societies come under the Central 
government and the State Cooperative Societies 
under the State governments. Cooperatives in 
India primarily, inter alia, function in agriculture, 
dairy, credit and banking, housing, as producer 
cooperatives, etc. 
Self-Help groups (SHgs) play a more dominant 
role in Maharashtra, West Bengal, odisha, 
and Bihar
2
. Although informal, SHgs may also 
be considered as rudimentary cooperatives, 
functioning albeit, at a smaller-scale and generally 
more focused on relatively disadvantaged groups 
like women. Large-scale cooperatives, on the 
other hand, are commercially 
more concentrated in terms of 
products or functions.
Globalisation
It was largely believed that 
the advent of globalisation 
would impede the 
development of cooperatives. 
However, the success of 
certain cooperatives like 
Amul, Horticultural Producers’ 
Cooperative Marketing 
and Processing Society 
(HoPCoMS), Indian Farmers 
Fertiliser Cooperative Limited 
(IFFCo), orissa State Cooperative Milk Producers’ 
Federation, Karnataka Milk Federation (KMF), and 
Kerala Co-operative Milk Marketing Federation 
(KCMMF) have proved this supposition wrong.
The common thread running through these 
success stories is the existence of a multi-tier system 
that helps establish a strong supply chain. Be it for 
Amul, oMFED (refer to the Box on the next page), or  
IFFCo, the backbone of a successful cooperative 
is a well-functioning E2E (end-to-end) supply 
integration chain involved right from procurement 
of raw materials, product specification, 
manufacturing, scheduling, distribution, till delivery 
of products to consumers.
The success of these cooperatives could also 
be attributed to diversification of product mix, 
undertaking technical upgradation of methods 
and inputs, either at the granular level or in their 
production facilities, focusing on marketing and 
expanding their presence, even internationally, 
and professional management. These stories 
only reiterate that in order 
to thrive, any entity must 
serve its respective market 
efficiently and effectively, be 
well managed, work towards 
financial viability, and have a 
long-term vision. The iconic 
success of certain agricultural-
based and dairy cooperatives 
signals that cooperatives may 
have a lot to contribute in food-
processing, a sunrise sector in 
the Indian economy. 
t he Way Forward
Non-credit Cooperatives 
are heterogeneous in nature, 
The evolution and 
growth of cooperatives in 
India vary across States. 
The difference across 
States arises due to the 
diverse focus areas and 
approaches adopted 
by the respective 
State administrative 
machinery to give 
impetus to growth.
33 July 2023
and due to their sheer diversity and vast spread 
across sectors and regions, a ‘one-size-fits-all’ 
approach may not be successful for all sectors. For 
some sectors, a more focused approach may be 
necessary. In this context, a historic decision was 
taken by the Prime Minister in January 2023 when it 
was decided to set up and promote a national-level 
Cooperative society for organic products, which is 
gaining in importance with rising levels of health 
and environmental consciousness. To usher in 
development pathways of non-credit cooperatives, 
steps need to be taken to ensure convergence, 
awareness generation, training, mentoring, and 
technological upgradation, and digitalisation.
r egistered under the Cooperative Society Act, 
1962, oMFED’s main activities include promotion, 
production, procurement, processing, and 
marketing of milk and milk products. Its objective 
has been to ensure the economic development of 
rural farming community in the State.
The strength of oMFED lies in its efficiently 
managed supply chain, which enables it to 
meet its avowed objectives and the needs of 
customers. Following the three-tier system 
originally established by Amul, the village 
Cooperative Society represents the first tier. It is 
a voluntary association of milk producers in a village who are willing to sell milk on a collective basis 
to the nearest District Milk union, which is the second-tier. The committee then selects some more 
people to act as aides (milk tester, etc.).
The Milk union transports the collected milk to their processing centres. Milk unions also provide 
technical inputs (new methods), training, and sometimes even cattle feed and fodder, etc. to the village 
societies.
The third tier is the Milk Federation, which provides for the processing, packing, and marketing 
of milk and milk products in the federation dairy. After marketing the products, whatever monetary 
realisation is achieved is routed back through the supply chain to the producers once every 7-10 days. 
The Federation has representation from various Mu s and also from the State government of o disha. The 
products are marketed by authorised retailers of oMFED throughout the state and urban consumer is 
the last point in the milk flow supply chain of oMFED.
oMFED made its presence known in the 1980s when there was no large-scale formal dairy sector in 
o disha and the resounding success of Amul had demonstrated the capability of cooperatives. oMFED 
gave an opportunity to all the small dairy farmers who did not have the resources to set up small dairies 
but had surplus milk to sell. This led to a rise in their incomes, and the short cash-cycle incentivises them 
with regular payouts. 
Anil Mohapatra, a dairy farmer from Jagatsinghpur district has been supplying milk to oMFED for 
almost 30 years. He says that since higher quality yields a better price, he pays more attention to the 
feed and health of his dairy cattle. Farmers are also aided by regular veterinarian visits. He said that due 
to assured demand and payments, most of the families in the nearby villages have also started keeping 
dairy cattle to supplement their incomes.
Sources: 1. http://omfed.com/default.asp?lnk=home&
2. Authors’ interviews with the dairy farmers
ThE OrIssa sT a TE COOpEra TIvE MIlk 
prODuCErs’ FEDEra TIOn lIMITED (OMFED)
34 July 2023
i. Convergence 
The Ministry of Micro, Small and Medium 
Enterprises, government of India allows 
cooperatives to register as MSMEs through online 
registration on udyam portal. This opens up many 
avenues for cooperatives. As per udyam data, 
more than 16,000 cooperatives have registered 
as MSMEs on the portal. A further analysis of 
the data reveals that the highest number of 
cooperatives are registered under NIC code 10, 
which pertains to manufacture of food products. 
Cooperatives under this code are further engaged 
in procuring, distribution, processing, warehousing,  
packaging, etc. 
A number of schemes that have substantially 
benefited MSMEs en masse  are the Cluster-
based programmes. Such schemes provide 
funds for establishing Common Facility Centres, 
Display centres, Processing 
centres, recycling/resource 
recovery plants, Testing and 
Quality production centres, 
Infrastructure development, 
and soft interventions aiming 
at skill development. MSMEs 
also benefit in terms of 
creating  marketing linkages 
through the domestic 
Procurement & Marketing 
Scheme, and the International 
Cooperation Scheme. 
Cooperatives engaged in 
processing and manufacturing 
can really get a boost in terms 
of increased quantity and 
quality of produce through 
such interventions.  For 
MSMEs, udyam is almost like  ‘Know Your Customer’. In this context, authorities 
may consider udyam certification as the basic 
document for cooperatives to avail benefits of 
programmes instead of any other documentation. 
This would also be in tandem with the ‘Whole of the 
government Approach’ . one of the most important 
advantages of such a step of being accorded MSME 
status would be being covered under Priority Sector 
Lending.   
ii.  awareness, t raining & mentoring
The need of the hour is to make students aware 
that the cooperative sector can be a full-fledged 
career option. For this purpose, training needs to be 
imparted to them. Awareness programmes about 
cooperatives are required across India for capacity-
building. Cooperatives can also be linked through 
the Skill Development Programmes being run 
by various Ministries and rural Self-Employment 
Training Institutes for the skill 
upgradation of their staff/ 
workers. Soft-skill interventions, 
currently being done in cluster-
level schemes, can also yield 
benefits to cooperatives. 
organising exposure visits 
for smaller cooperatives to 
larger Multi-State Cooperatives 
functioning in similar domains 
can also be fruitful to help 
the former emulate similar 
organisational and operational 
systems. Smaller cooperatives 
can benefit from mentoring by 
larger cooperative. For example, 
a mentorship programme may 
be envisioned, wherein, larger 
cooperatives may provide 
The success of these 
cooperatives could 
also be attributed 
to diversification 
of product mix, 
undertaking technical 
upgradation of methods 
and inputs, either at the 
granular level or in their 
production facilities, 
focusing on marketing 
and expanding their 
presence.
35 July 2023
intensive partnership, collaboration, and creative 
cooperation to strengthen State-level Cooperatives 
engaged in similar activities.
In this regard, the government of India has 
announced the formation of (i) National-Level 
Multi-State Cooperative Seed Society, which 
would act as an apex organisation for production, 
procurement, processing, branding, labelling, 
packaging, storage, marketing, and distribution of 
quality seeds; strategic research & development; 
and (ii) a Multi-State Cooperative organic Society 
to act as an umbrella organisation for aggregation, 
certification, testing, procurement, storage, 
processing, branding, labelling, packaging, logistic 
facilities, and marketing of organic products. Since 
cooperatives at all levels will be eligible to join as 
members, those engaged in similar functions can 
help contribute and also benefit from being a part 
of the complete value-chain. This comes across 
as a perfect emulation of the earlier mentioned 
success stories, wherein the chosen sectors (where 
cooperatives have prior presence and experience) 
are covered end-to-end. 
iii.  technology & Digitalisation
It is fairly obvious that unless technology, 
production, and business models are upgraded 
and digitalisation of the processes is not pursued 
in earnest, Cooperatives may not be able to 
stay relevant and competitive. The handholding 
from the government in this regard is available 
in many forms, ranging from direct subsidies to 
various credit facilities that may be used for this 
pursuit. The hard interventions, such as, creating 
physical infrastructure, may be made available by 
considering cooperatives as clusters and linking 
them with relevant cluster schemes.
Concluding remarks
Though cooperatives have been overshadowed 
in the growth trajectory of the Indian economy, 
their relevance in promoting inclusive and 
sustainable growth remains unquestionable. The 
tremendous inherent inclusivity within cooperative 
enterprise development prompted the Prime 
Minister of India to offer a clarion call – Sahakar 
se Samriddhi. The creation of a new dedicated 
Ministry focusing on cooperation and cooperative 
development indicates the emphasis of the union 
government on community-led socio-economic 
development in this digitised era. Suitable and 
timely interventions by the Ministry of Cooperation 
are expected to address the impediments to the 
growth of cooperative enterprises and to boost 
the performance of existing and well-structured 
cooperatives.
A well-thought-out strategy envisaging an 
Action Plan through which more and more State 
cooperatives can be linked or integrated to form 
multi-state cooperatives in areas where there is 
ample scope for a large, proactive membership 
base will ensure sustainable growth.                          ?
endnotes
1. Statistical Profile of National Cooperative union of 
India, 2018, https://pib.gov.in/Pressr eleseDetailm.
aspx?PrID=1776506.
2. National rural Livelihoods Mission
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