Q1. What do you mean by rural business?Enlist the varios types of Rural Business.

India is a country of villages. About three-fourth of India's population are living in rural areas out of

which 75% of the labour force is still earning its livelihood from agriculture and its allied activities.

Land being limited is unable to absorb the labour force in agriculture. Therefore, there is a need to

develop rural industries to solve rural unemployment and rural migration to cities. Growth and

development of rural economy is an essential pre-condition to development of the nation as a whole.

The gap between rural urban disparities should be lessened.

The standard of living of the rural people should be increased. Entrepreneurship in rural sector

provides an answer to the above problems. Indian rural sector is no longer primitive and isolated.

Therefore, entrepreneurship in the rural and tribal areas looms large to solve the problems of poverty,

unemployment and backwardness of Indian economy. Rural industrialisation is viewed as an effective

means of accelerating the process of rural development. Government of India has been continuously

assigning increasing importance and support for the promotion and growth of rural entrepreneurship.

Meaning:

Rural entrepreneurs are those who carry out entrepreneurial activities by establishing industrial and

business units in the rural sector of the economy. In other words, establishing industrial and business

units in the rural areas refers to rural entrepreneurship. In simple words, rural entrepreneurship

implies entrepreneurship emerging in rural areas. Or, say, rural entrepreneurship implies rural

industrialisation. Thus, we can say, entrepreneurship precedes industrialization.

Definition:

Rural industries and business organisations in rural areas generally associated with agriculture and

allied activities to agriculture. According to KVIC (Khadi and Village Industry Commission), "village

industries or Rural industry means any industry located in rural areas, population of which does not

exceed 10,000 or such other figure which produces any goods or renders any services with or without

use of power and in which the fixed capital investment per head of an artisan or a worker does not

exceed a thousand rupees".

The modified definition of rural industries has been given by Government of India in order to enlarge its

scope. According to Government of India, "Any industry located in rural area, village or town with a

population of 20,000 and below and an investment of Rs. 3 crores in plant and machinery is classified

as a village industry."

Types of Rural Industries:

All the village industries come under the following broad categories :

Agro Based Industries: like sugar industries, jaggery, oil processing from oil seeds, pickles, fruit

juice, spices, diary products etc.

Forest Based Industries: like wood products, bamboo products, honey, coir industry, making eating

plates from leaves.

Mineral based industry: like stone crushing, cement industries, red oxide making, wall coating

powders etc.

Textile Industry: like spinning, weaving, colouring, bleaching.

Engineering and Services: like agriculture equipments, tractors and pumpsets repairs etc.

Q.

Manrega

Ans : The Mahatma Gandhi National Rural Employment Guarantee Act aims at enhancing the livelihood

security of people in rural areas by guaranteeing hundred days of wage-employment in a financial year

to a rural household whose adult members volunteer to do unskilled manual work. The National Rural

Employment Guarantee Act (NREGA) was renamed after the Father of Nation Mahatma Gandhi as

Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) on 2ndOctober 2009,

commemorating Golden Jubilee of Panchayati Raj in India. It was on 2nd October, 1959 that Pt.

Jawaharlal Nehru, the first Prime Minister of India had laid the foundations of Panchayati Raj at Naguar

in Rajasthan.

The National Rural Employment Guarantee Act was enacted by legislation on August 25, 2005 and

came into effect on February 2, 2006. It was introduced with an aim of improving the purchasing power

of the rural people, primarily by providing semi or un-skilled work to people living in rural India,

whether or not they are below the poverty line. The Act was brought about by the UP A coalition

government supported by the left parties, in accordance with the promise the UPA had made before the

2004 general elections. Dr. Jean Dreze, a Belgian born economist, at the Delhi School of Economics, has

been a major influence on this project.

In 2009-10, the Central Government outlay for scheme was ? 39,100 crore. The Act directs state

governments to implement MNREGA schemes. Under the NREGA, the Central Government meets the

cost towards the payment of wage, three-fourths of material cost and some percentage of

administrative cost. State governments meet the cost of unemployment allowance, one-fourth of

material cost and administrative cost of State council. Since the State governments pay the

unemployment allowance, the Act is a heavy incentive for them to offer employment to workers.

However, it is up to the State Government to decide the amount of unemployment allowance, subject to

the stipulation that it not be less than one-fourth the minimum wage for the first 30 days, and not less

than one-half the minimum wage thereafter. The Act also stipulates that 100 days of employment (or

unemployment allowance) per household must be provided to able and willing workers every financial

year.

All adult members of a rural household, resident in the area, willing to do unskilled manual work can

apply to work under the scheme. Even if a person is already employed/engaged in work, he/she has the

right to demand employment under NREGA. Priority is given to women and at least one-third of the

beneficiaries have to be women who have registered and requested for work under the Scheme.

The process of registration is simple. A household interested in availing of the NREGA benefits has to

make an application for registration through the prescribed written form or orally. The registration

form and process are free of cost and can be made to the Gram Panchayat. The Panchayat

authenticates the registration by verifying whether the applicant resides in that village and is an adult.

The unit of registration is the household. After verification, the Gram Panchayat issues a Job Card to the

household.

A Job Card is the basic legal document, which enables the registered household to demand guaranteed

employment. The Job Card is issued within 15 days of application and is valid for five years. The

household Job Card has the name and photograph of each registered member. However, a Job Card

does not automatically entitle a person to receive employment.

In order to get employment, the job seeker has to submit a written application to the Gram Panchayat

or Programme Officer at block office. Individual members can apply for work within a households'

entitlement for 100 days, provided the demand is for at least 14 days of continuous work. The Gram

Panchayat issues a dated receipt for the application. The entitlement of 100 days can be shared within

the household and more than one person in the household can be employed simultaneously or at

different times.

The Gram Panchayat/Programme Officer sends letters to the applicants informing them where and

when to report for work. A public notice displayed at the Gram Panchayat and at the Programme

Officer's block office, also provide information on the date, place of employment and the names of those

provided employment. If the job seeker does not get employment within 15 days of submitting the

application or from the date when work is sought, whichever is later, a daily unemployment allowance

has to be paid as per the Act. And in case, if the applicant does not report to work within 15 days of

being notified, he or she will not be entitled to the unemployment allowance. The applicant can,

however, re-apply for work.

Normally, work is provided within 5 km of applicant's residence. If employment is provided beyond 5

km radius of the applicant's residence then he/she is entitled to 10 per cent additional wages towards

transport and living expenses. The Act stipulates that persons older in age and women should be given

preference for work nearer to the village.

At the work sites, some facilities are to be provided which include safe drinking water, shade for

children and periods of rest, first-aid box for emergency treatment of minor injuries and other health

hazards connected with work. If more than five children below six years are present at the work site, a

person has to be engaged to look after them.

Creation of durable assets and strengthening the livelihood resource base of the rural poor is an

important objective of the Scheme. The kinds of works permissible according to priority are: water

conservation and water harvesting; drought proofing, including afforestation and tree plantation;

irrigation canals including micro and minor irrigation works; provision of irrigation facility to land

owned by households belonging to the SCs and STs or to land beneficiaries of land reforms or that of

the beneficiaries under the Indira Awas Yojana; renovation of traditional water bodies including

desalting of tanks; land development; flood control and protection works including drainage in water

logged areas; rural connectivity to provide all-weather access; or any other work which may be notified

by the Central Government in consultation with the State Government. Work through contractors,

however, is not permissible.

The work is identified and recommended by the Gram Sabha and the Gram Panchayat consolidates and

sends the recommendations of Gram Sabha to the Programme Officer. In the selection of works a 60:40

wage-material ratio has to be maintained. The wages are paid every week, or in any case 'not later than

a fortnight after the date on which such work was done'. The wage is paid either as daily wage or as

piece-rate. If wages are paid on a piece-rate basis, the schedule of rates has to be such that a person

working for seven hours would normally earn the minimum wage.

The programme is being continuously and concurrently evaluated by both external and internal

evaluators. The authority to conduct social audit is vested in Gram Sabha which sets up a village level

monitoring committee to oversee each work. Moreover, any contravention of the Act, on conviction, is

liable to fine which may extend to one thousand rupees. A Grievance Redressal Mechanism has also to

be set up at the block, district and state level.

The programme has not been without criticism. It has been argued that the programme has to be no

more effective than other poverty reduction programmes in India, with key exceptions such as

Rajasthan. Another criticism is financial. Being one of the largest initiatives of its kind in the world, it is

feared that the programme will end up costing 5 per cent of GDP. Further concerns include the fact

that local government corruption leads to the exclusion of specific sections of society.

Q. Panchayiti rajya

Ans: The panchayat raj is a South Asian political system mainly in India, Pakistan, and Nepal.

"Panchayat" literally means assembly (yat) of five (panch) wise and respected elders chosen and

accepted by the village community.

Traditionally, these assemblies settled disputes between individuals and villages. Modern Indian

government has decentralized several administrative functions to the village level, empowering elected

gram panchayats. Gram panchayats are not to be confused with the unelected khap panchayats (or

caste panchayats) found in some parts of India.

Panchayati or Panchaayati Raj is a system of governance in which gram panchayats are the basic units

of administration. It has 3 levels: village, block and district.

The term 'panchayat raj' is relatively new, having originated during the British administration 'Raj'

literally means governance or government. Mahatma Gandhi advocated Panchayati Raj, a decentralized

form of Government where each village is responsible for its own affairs, as the foundation of India's

political system. His term for such a vision was "Gram Swaraj" (Village Self-governance).

It was adopted by state governments during the 1950s and 60s as laws were passed to establish

Panchayats in various states. It also found backing in the Indian Constitution, with the 73rd amendment

in 1992 to accommodate the idea. The Amendment Act of 1992 contains provision for devolution of

powers and responsibilities to the panchayats to both for preparation of plans for economic

development and social justice and for implementation in relation to twenty-nine subjects listed in the

eleventh schedule of the constitution.

The panchayats receive funds from three sources-(i) local body grants, as recommended by the Central

Finance Commission, (ii) funds for implementation of centrally-sponsored schemes, and (iii) funds

released by the state governments on the recommendations of the State Finance Commissions.

In the history of Panchayati Raj in India, on 24 April 1993, the Constitutional (73rd Amendment) Act,

1992 came into force to provide constitutional status to the Panchayati Raj institutions. This Act was

extended to Panchayats in the tribal agreas of eight States, namely Andhra Pradesh, Gujarat, Himachal

Pradesh, Maharashtra, Madhya Pradesh, Orissa and Rajasthan from 24 December 1996. Noto

panchayati raj system exists in all the states except Nagaland, Meghalaya and Mizoram. Also all the

UTs except Delhi.

The Act aims to provide 3-tier system of Panchayati Raj for all States having population of over 2

million, to hold Panchayat elections regularly every 5 years, to provide reservation of seats for

Scheduled Castes, Scheduled Tribes and Women, to appoint State Finance Commission to make

recommendations as regards the financial powers of the Panchayats and to constitute District Planning

Committee to prepare draft development plan for the district. The 3-tier system of Panchayati Raj

consists of (a) village level panchayat (b) block level panchayat (c) district level panchayat.

Powers and responsibilities are delegated to Panchayats at the appropriate level:-

i. Preparation of plan for economic development and social justice.

ii. Implementation of schemes for economic development and social justice in relation to 29 subjects

given in Eleventh Schedule of the Constitution.

iii. To levy, collect and appropriate taxes, duties, tolls and fees. Intermediate level panchayat

Panchayat samiti is a local government body at the Tehsil or Taluka level in India. It works for the

villages of the Tehsil or Taluka that together are called Development Block. The Panchayat Samiti is the

link between the Gram Panchayat and the district administration. There are a number of variations of

this institution in various states. It is known as Mandal Praja Prishad in Andhra Pradesh, Taluka

Panchayat in Gujarat, Mandal Panchayat in Karnataka, etc. In general it's a kind of Panchayati raj at

higher level.

Constitution:

It is composed of ex-officio members (all sarpanchas of the panchayat samiti area, the MPs and MLAs of

the area and the SDO of the subdivision), co-opted members (representatives of SC/ST and women),

associate members (a farmer of the area, a representative of the cooperative societies and one of the

marketing services) and some elected members.

The samiti is elected for 5 years and is headed by the chairman and the deputy chairman. Departments

The common departments in the Samiti are as follows:

1. General administration

2. Finance

3. Public works

4. Agriculture

5. Health

6. Education

7. Social welfare

8. Information Technology and others.

There is an officer for every department. A government appointed block development officer is the

executive officer to the samiti and the chief of its administration the department of:

Functions

1. Implement schemes for the development of agriculture.

2. Establishment of primary health centres and primary schools.

3. Supply of drinking water, drainage, construction/repair of roads.

4. Development of cottage and small-scale industries and opening of cooperative societies.

5. Establishment of youth organisations. Sources of Income

The main sources of income of the panchayat samiti are grants-in-aid and loans from the State

Government. District Level Panchayat.

In the district level of the panchayati raj system you have the "zilla parishad". It looks after the

administration of the rural area of the district and its office is located at the district headquarters. The

Hindi word Parishad means Council and Zilla Parishad translates to District Council. It is headed by the

"District Collector" or the "District Magistrate" or the "Deputy Commissioner". It is the link between the

state government and the panchayat samiti (local held government at the block level).

Constitution:

Members of the Zilla Parishad are elected from the district on the basis of adult franchise for a term of

five years. Zilla Parishad has minimum of 50 and maximum of 75 members. There are seats reserved for

Scheduled Castes, Scheduled Tribes, backward classes and women.

The Chairmen of all the Panchayat Samitis form the members of Zilla Parishad. The Parishad is headed

by a President and a Vice-President.

Functions:

1. Provide essential services and facilities to the rural population and the planning and execution of the

development programmes for the district.

2. Supply improved seeds to farmers. Inform them of new techniques of training. Undertake

construction of small-scale irrigation projects and percolation tanks. Maintain pastures and grazing

lands.

3. Set up and run schools in villages. Execute programmes for adult literacy. Run libraries.

4. Start Primary Health Centers and hospitals in villages. Start mobile hospitals for hamlets,

vaccination drives against epidemics and family welfare campaigns.

5. Construct bridges and roads.

6. Execute plans for the development of the scheduled castes and tribes. Run ashramshalas for adivasi

children. Set up free hostels for scheduled caste students.

7. Encourage entrepreneurs to start small-scale industries like cottage industries, handicraft,

agriculture produce processing mills, dairy farms, etc. implement rural employment schemes.

8. They construct roads, schools and public properties. And they take care of the public properties.

9. They even supply work for the poor people, (tribes, scheduled caste, lower caste) Sources of Income

1. Taxes on water, pilgrimage, markets, etc.

2. Fixed grant from the State Government in proportion with the land revenue and money for works and

schemes assigned to the Parishad.

Q.Participatory and people orientation approach for rural development

Ans: In India, since the Independence, there has been a concerted effort to reconstruct the rural India

and the rural sector of the economy. Prior to this Tagore and Gandhi suggested the development of the

villages in their natural surroundings where nature could best attract to the people with its beauty.

Gandhiji wanted total transformation of villages by developing them from within into viable units. Pt.

Nehru tried to give practical shape to these ideas through urbanization, industrialization and modern

technical knowledge without breaking up the old foundation of the country. As a result, several pilot

projects were initiated all over the country which were concerned with the problems of housing, trans-

port, communication, marketing and other infrastructural facilities like irrigation, school and health,

etc.

A review of rural development programmes and their strategies in India reveals that its concept has

substantially changed with the passage of time. For long rural development meant "expansion, de-

velopment and modernisation of agriculture" and it was deemed to be synonymous for agricultural de-

velopment.

Perhaps this idea was based on the assumption that agriculture is the prerequisite of rural way of life.

However, this concept changed with the Community Development Programme launched in 1952, which

aimed at transforming the traditional way of life for rural communities and assisting people to improve

their way of life to meet the constitutional commitment of equity and justice.

In real sense planned effort to rural development was initiated with the launching of Community

Development Programme in the early fifties although programme was not very successful but it had

promoted the growth of a network of basic extension and development services at the grass root level

in village, thereby creating awareness in the rural communities of the potential and means of

development which made quicker adoption of major technological advances later in the mid 60's in

agriculture possible.

The benefits that accrued from these programmes were felt more by the better placed farmers and

better endowed regions. This increased the regional disparities and the gap between the rich and the

poor. Hence, the need was felt acutely to direct the development programmes towards the backward

regions and towards the weaker section of the society. The Fourth and Fifth Plans initiated a number of

programmes with a view to achieve economic equity and social justice.

The Five Year Plans also included following features aimed at rural development. These are:

(a) Clear cut agricultural development strate

(b) Animal husbandry, dairy and fishery development,

(c) Forestry including development of social forestry,

(d) Agricultural research and education,

(e) Co-operation and credit,

(f) Rural development and poverty alleviate

(g) Irrigation, Commend area development flood control,

(h) Village and small industries, and

(i) Employment, man power planning and boor policy.

On April 1, 1978 Integrated Rural Development Programme was introduced not only to in grate all

ongoing programmes pertaining to areas but to launch a rigorous drive for eradicate rural poverty and

providing economic benefits landless labourers, marginal farmers and villa artisans.

The major thrust of the Fifth Five Year PI' (1980-85) was on strengthening the socio-concur

infrastructure of development in the rural are alleviating rural poverty and reducing regional parities.

The Ninth Five Year Plan has focused four important dimensions of State Policy-quality of life,

generation of productive employment, re gional balances and self-reliance. With the multi- pronged

approach adopted by the Ministry of Rural Areas and Employment through a wide range of

programmes it is hoped that adequate productive employment will be generated to eradicate rural

poverty which would lead to significantly better living conditions, Rural development, thus, implies both

the economic betterment of people as well as greater social transformation.

Increased participation of people in the rural development process, decentralization and greater

access, better enforcement of land reforms and greater access to credit and inputs go a long way in

providing the rural people with better prospects for economic development. Improvement in welfare

measures like education and health etc constitute the social aspect of the rural development

Eradicating rural poverty, increase in rural employment and productivity constitutes the main tasks of

such development.

The term 'rural development' is used in a wider connotation which implies the integrated development

of rural areas. Here the emerging focus is the human development which strikes a harmonious balance

between the individual, the community and the country and which carried the planning to the grass-

root level into the hands of rural people, the beneficiaries, who can meaningfully contribute to its

formulation and implementation.

The rural development is also area culture specific which provides for alternative regional strategies for

spatial- functional organization. The goals of the economic equity, social justice and self-reliance

demand that man should be considered as the focus of development and the poor and the deprived

should get the top priority. It is well reflected in the World Bank Policy Paper (1975) which states:

"Rural development as a strategy designed to improve the economic and social life of a specific group of

people - the rural poor.

It involves extending the benefits of development to the poorest among those who seek a livelihood in

the rural areas. The group includes small scale farmers, tenants and the landless"

Q. What are the Different Types of Cooperative Societies?

Ans.: The main types of cooperative societies are given below:

1. Consumers cooperative societies:

Consumers' cooperatives are formed by the consumers to obtain their daily requirements at reasonable

prices. Such a society buys goods directly from manufacturers and wholesalers to eliminate the profits

of middlemen.

These societies protect lower and middle class people from the exploitation of profit hungry

businessmen. The profits of the society are distributed among members in the ratio of purchases made

by them during the year.

Consumer's cooperatives or cooperative stores are working mainly in urban areas in India. Super Bazar

working under the control of Government is an example of consumers' cooperative society.

2. Producers cooperatives:

Producers or industrial cooperatives are voluntary associations of small producers and artisans who

join hands to face competition and increase production. These societies are of two types.

(a) Industrial service cooperatives:

In this type, the producers work independently and sell their industrial output to the cooperative

society. The society undertakes to supply raw materials, tools and machinery to the members. The

output of members is marketed by the society.

(b) Manufacturing cooperatives:

In this type, producer members are treated as employees of the society and are paid wages for their

work. The society provides raw material and equipment to every member.

The members produce goods at a common place or in their houses. The society sells the output in the

market and its profits are distributed among the members.

3. Marketing Cooperatives:

These are voluntary associations of independent producers who want to sell their output at

remunerative prices. The output of different members is pooled and sold through a centralised agency

to eliminate middlemen. The sale proceeds are distributed among the members in the ratio of their

outputs.

As a central sales agency, the society may also perform important marketing functions such as

processing, grading and packaging the output, advertising and exporting products, warehousing and

transportation, etc.

Marketing societies are set up generally by farmers, artisans and small producers who find it difficult to

face competition in the market and to perform necessary marketing functions individually. The National

Agricultural Cooperative Marketing Federation (NAFED) is an example of marketing cooperative in

India.

4. Cooperative Farming Societies:

These are voluntary associations of small farmers who join together to obtain the economies of large

scale farming. In India farmers are economically weak and their land-holdings are small.

In their individual capacity, they are unable to use modern tools, seeds, fertilizers, etc. They pool their

lands and do farming collectively with the help of modern technology to maximum agricultural output.

5. Housing Cooperatives:

These societies are formed by low and middle income group people in urban areas to have a house of

their own. Housing cooperatives are of different types. Some societies acquire land and give the plots to

the members for constructing their own houses.

They also arrange loans from financial institutions and Government agencies. Other societies

themselves construct houses and allot them to the members who make payment in instalments.

6. Credit Cooperatives:

These societies are formed by poor people to provide financial help and to develop the habit of savings

among members. They help to protect members from exploitation of money lenders who charge

exorbitant interest from borrowers.

Credit cooperatives are found in both urban and rural areas. In rural areas, agricultural credit societies

provide loans to members mainly for agricultural activities. In urban areas, non-agricultural societies or

urban banks offer credit facilities to the members for household needs.

In India, several national federations of cooperative societies have been formed. National Cooperative

Consumers Federation, National Federation of Cooperative Sugar Factories, National Agricultural

Cooperative Marketing Federation, National Cooperative Dairy Federation, National Cooperative

Housing Federation, All India State Cooperative Banks Federation is some examples.

Q. Define co oprerative societies What are the essential characteristics of Cooperative Society?

Ans.: The following are the some of the definitions of cooperative organisations.

(1) International Labour Organisation- "Cooperative is an association of person usually of limited

means, who have voluntarily joined together to achieve a common economic, end through the formation

of a democratically controlled business organisation, make equitable contribution to the capital

required and accepting a fair share of risks and benefits of the undertaking."

(2) Hubert Calvest- "Cooperative is a form of organisation wherein persons voluntary associates

together as human beings on the basis of equality for the promotion of the econo interests of

themselves."

(3) The Indian Cooperative Societies Act, 1912 - Section 4 of this Act definies cooperatives "as a society

which has its objectives the promotion of economic interest, its members in accordance with

cooperative principles."

Cooperative Society is that society which has been registered under the Cooperative Societies Act,

1912, or under any other law for the time being in force in any state registration of cooperative

society."

(4) Mr. Talmaki - "Cooperative society is an association of the weak who gather together for a common

economic need and try to lift themselves from weakness into strength through business enterprise."

Characteristics of Cooperative Soceity:

Based on the above definitions, we can derive the following characteristics of cooperative

organisations.

1. Voluntary association:

Everybody having a common interest is free to join cooperative society. There is no restriction on the

basis of caste, creed, religion, colour, etc. Anybody can also leave it at any time after giving due notice

to the society. That is specialty of any cooperative society. There should be minimum of 10 members to

for cooperative society but there is no maximum limit for the membership.

2. Separate legal entity:

A cooperative society after registration is recognised as separate legal entity by law. It acquires an

identity quite distinct and independent of its member can purchase, dispose its own assets, can sue and

also can be sued. The income of cooperative society is legally taxable as per the Income Tax Act, 1961.

3. Democratic management:

Equalities is the essence of cooperative enterprises, governed by democratic principles. Every member

has got equal right over the function management of that society. As such each member has only single

voting right irrespective of the number of shares held or capital contributed by them. In case of

cooperative society, no member detects the terms and conditions of the functioning because "one man

one vote" is the thumb rule.

4. Service motive:

The main objective being formation of any cooperative society is for mutual benefit through self-help

and collective effort. Profit is not at all in the agenda of the cooperative society. But if members so like,

they can take up any activities of their choice to generate surplus in order to meet the day-to-day

expenses.

5. Utilisation of surplus:

The surplus arising from the operation of business is partly kept in a separate reserve and partly

distributed as dividend among the members. According to Indian Cooperative Societies Act - 1912, each

society must transfer at least one-fourth of its profits to general reserve. It may distribute maximum

upto 90 per cent of its surplus as dividend to its members and can spent another 10 per cent for the

welfare of the members.

6. Cash trading:

One exception in the cooperative society is that like other business if never go for credit sales. It sells

the goods on the basis of cash only. Hence, the cooperative society hardly come across with the

financial hardship because of non-collection of sales dues. Members can only purchase on the basis of

credit, which is an exception to the present rule.

7. Fixed rate of return:

All members are supposed to contribute capital for the formation of a cooperative society or at the time

of joining as a member of the cooperative ^society. In return to the capital invested, the members are

assured of a fixed rate of return maximum to the extent of 9 per cent per annum on the sum deployed

by them. This amount is being paid from the surplus generated by the society on that year. This is an

incentive extended by the society to its members.

8. Government control:

All the cooperative societies of the country are regulated by the Government through its different rules

and regulations framed from time to time. Cooperative societies of the country are required to register

themselves as per the Indian Cooperative Societies Act, 1912. Sometimes different State Governments

also frame laws regarding the registration and functioning of cooperative societies for their states.

9. Capital:

The capital of the society is raised from its members by way of share capital. However, the major part

of finance is raised by the society through taking loan from the Government or by accepting grants and

assistance from the Central or State Government or from the apex cooperative institutions like state

and central cooperative banks operating in that state.

Q. 1.5 CAUSES OF SLOW PROGRESS Despite rapid growth the overall progress of cooperative

movement during 100 years of its existence is not very impressive. It is therefore necessary to know the

causes of poor performance of the movement and on that basis take such steps as would promote a

faster growth of cooperative movement in India.

a. Government Interference: The cooperative movement in India was initiated in 1904 under the

auspices of British government. Right from the beginning the govt has adopted an attitude of

patronizing the movement. Cooperative institutions were treated as if these were part and parcel of the

administrative set up of the government. The govt interference thus became an essential elements in

the working of these institutions. As a result people’s enthusiasm for the movement did not grow. The

movement’s independence and self-reliance existed only on paper and files. After attainment of

independence in particular after beginning of the planning, some healthy changes in the attitude of the

govt did take place. It was not given proper importance that it deserves in any plan. But even the

cooperative movement has not become full-fledged people movement. Even today quite often

cooperative societies are imposed upon the people. This does bring about an increase in the

membership of the societies. But the spirit of cooperation cannot flower fully in these circumstances.

Neither it growth took place according to any plan nor did it become a people’s movement. It just grew

very slowly and that too haphazardly. It was a state driven institution. b. Mismanagement and

manipulation : The essence of the cooperative movement is that it gives the farmers the status of

shareholders and assures them agricultural, educational and medical facilities. Under the Maharashtra

State Cooperatives Act, a minimum of 11 farmers is required to form a cooperative. Today the

shareholder membership averages between 15,000 and 25,000 8 farmers. The relationship between the

shareholder farmer and the cooperative is simple - the farmer is committed to contributing a certain

amount of cane per season and the mill is bound to take this cane. The strength of the movement was

the involvement of the farmers who were shareholders in the sugar mill regardless of the size of their

holdings. Over the years, this truly democratic idea got corrupted and farmers with larger holdings

grew more powerful. In practice, this altered the power structure of the cooperatives. In the elections

to the governing bodies of the sugar factories, money became such a powerful tool that the top posts of

chairman and vice-chairman usually went to the richest farmers even though the majority of members

were farmers with small- or medium-sized holdings. 5 c. Lack of Awareness: People are not well

informed about the objectives of the movement, the contributions it can make in rebuilding the society

and the rules and regulations of cooperative institutions. Unfortunately, no special efforts have been

made in this direction. People look upon these institutions as means for obtaining facilities and

concessions from the govt. So long as people expect to get something from the govt, they see to it that

societies somehow continue to function. Lack of education, dirty politics of the village, casteridden

elections to the offices of cooperative societies, bureaucratic attitudes of the govt officers at the lower

rank are some of the hurdles in spreading the correct information about the cooperative movement and

in educating the people abut its true character and vital role in the society. d. Restricted Coverage: The

cooperative movement has also suffered on account of two important limitations on its working. One is

that the size of these societies has been very small. Most of these societies are confined to a few

members and their operations extended to only one or two villages. As a result their resources remain

limited, which I make it impossible for them to expand their means and extend their are of

operations .Two, the most of the societies have been single purpose societies. For this reason these

societies are unable to take a total view of the persons seeking help, nor can they analyze and solve

problems from different angles.. the help these societies render thus can not be adequate. By assessing

the persons and the problems only from one angle , these societies neither help properly the person nor

make a optimal use of their resources . Under these circumstances it has not been possible for these

societies to make much progress. e. Functional Weakness: The cooperative movement has suffered from

inadequacy of trained personnel right from its inception. Lack of trained personnel has been caused by

two major factors. In the first place, there has been a lack of institutions fort this purpose of training

personnel. Secondly because of it unsatisfactory working of cooperative institutions, efficient personnel

did not feel attracted or motivated towards them. The functioning of the cooperative societies ,too

suffer from several weakness. 6 Some of these are, taking no care of the need of credit seekers or their

repaying capacity at the time of granting loans, making no adequate provision for the return of loans,

unsatisfactory keeping of accounts, factional politics in it management, lack of coordination among

various divisions of the 9 cooperative structure, too much dependence on outside sources of

finance ,lack of adequate auditing. Such weakness have prevented theme from progressing on healthy

lines. Thus there are several pitfalls. Poor infrastructure, lack of quality management, overdependence

on government, dormant membership, non-conduct of elections, lack of strong human resources policy,

neglect of professionalism, etc. are the limiting factors. Indian cooperatives are also unable to evolve

strong communication and public relations strategies which can promote the concept of cooperation

among the masses.