INDUSTRIAL CO-OPERATIVES 15. In the rural areas the needs of employment will not all be met by farming. The Plan contemplates several improvements such as irrigation, soil conservation, and reclamation which may succeed in giving fuller employment to agriculturists than what they have at present. But limitations of nature will in many instances require that the agriculturists should turn to some other occupations during the slack seasons. Besides these part-time workers there are in the villages several classes of artisans who under the pressure of competition from organised industry are finding it difficult to maintain their traditional employments. Chapters bearing on village and small scale industries contain recommendations for the solution of problems connected with these classes of the rural population. We have indicated therein the advantage of establishing industrial cooperatives for such workers. While the formation of agricultural co-operatives is by now a familiar experience, industrial co- operatives are still in their infancy. Their activity is so directly in touch with the moving events of a competitive market that the uncertainties of their business often loom larger than their basic importance. Moreover, co-operative financing and marketing. agencies have yet very limited experience of doing business with industrial co- operatives. As a result of these factors, the future of industrial co-operatives is yet not so well-established as appears to be the case with agricultural co-operatives. As we have recommended elsewhere, we desire that cottage
169
DEVELOPMENT OF THE CO-OPERATIVE MOVEMENT
and small scale industries should have for themselves well-marked fields which are not encroached upon by large-scale industry. This principle will no doubt have to be translated into more specific and concrete terms as a result of further investigations and experience. When this is done the conditions for the successful operation of industrial cooperatives will be more assured. In the mean while, it is desirable that co-operatives organised for the several trades be established on a sound footing.
16. While it is possible and indeed desirable that the special advantages recommended by us elsewhere should be made available to the members of these co-operative societies, their place in the industrial structure of a planned economy will ultimately depend on their efficiency. Nothing should be done which will undermine the initiative and self-confidence of the members of these societies. Aids in respect of power, implements, raw materials, technical advice and marketing facilities should all be made co-operatively available to these societies. It is not necessary for us in the present context to suggest how the organisation of the industrial co-operatives themselves should develop from the village to the State level. We expect that according to the experience of each State, some form of federal organisation will in due course evolve. But in respect of the capital needs of these co-operatives it must be emphasised that provision for finance will have to be made commensurate with the extent to which the industrial co-operatives are expected to fulfil given targets of production. Whether the existing co-operative financing agencies can continue to offer finance for industrial activities which are somewhat special and, if so, to what extent is a matter in respect of which further enquiry by the States concerned, as also by the Reserve Bank, will have to be undertaken. We note that many of the States are establishing industrial finance corporations, designed for the most part for meeting the financial needs of comparatively small-scale units of industry. The Plan also provides Rs. 15 crores for assisting small-scale and cottage industries. We would recommend that financial aid from this provision and from such corporations should by preference be made available to co-operatively organised industries. With artisans' industry co-operatively developed and with a number of processing factories established on a co-operative basis, a growing portion of rural economic activities will come within the co-operatives sphere. For reasons mentioned earlier in this chapter, such development will conform to the requirements of democratic planning and will make it possible at later stages of planning to formulate more comprehensive schemes of economic progress.
URBAN CO-OPERATIVES 17. While in the immediate future extension of co-operation is most urgently called for in the rural area, where agricultural operations play a dominant part, the urban sector of the co-operative movement has also to develop along systematic lines, if in due course it is to make its contribution to planned development. In urban areas there are a number of artisans of small means who find it difficult to organise themselves in keeping with the requirements of modern times. It is to be desired on social as well as on economic grounds that members of this class should be enabled to reorganise themselves to be able to take full advantage of
170
THE FIRST FIVE YEAR PLAN
modern scientific methods. Small industries cooperatively using advantage like power and special techniques will be able to make a significant contribution to the industrialisation of the country. We have elsewhere expressed our preference for a decentralised type of industrialisation and how far we can go in the direction of decentralisation without loss of economic advantage will depend to a very large extent on the capacity of artisans to organise themselves on a cooperative basis. The utility of co-operation in the urban areas extends to the credit and other needs of small entrepreneurs and cottage workers. Urban banking conducted on co-operative lines has a very important role to play in this field. Co-operative banks are more democratic and more amenable to local control than even small sized joint stock banks, and hence urban banking closely associated. with other forms of urban co-operation ought to be more purposefully developed.
18. In urban areas special importance must be attached to consumers' co-operatives. Unfortunately, we notice that as yet, the development of consumers' cooperatives has not made enough progress in the country. Under the influence of rationing and governmental distribution of scarce goods, a number of consumers' societies have no doubt come into being. They have, however, as a class failed to extend their usefulness beyond these limits. Their future, therefore, in the event of removal of controls on distribution of essential articles is somewhat uncertain. The success of consumers' co- operation will primarily depend on the enthusiasm and preference that the co-operators themselves succeed in creating among their fellow citizens. It should, however, be possible for the State to adjust its policies in such a way that the legitimate interests of consumers' co- operative societies are not ignored by those departments of the Central and State Governments which have to attend to their claims. It would in our opinion be in the best interest of the planned development of distributive trades that an attempt be made to build up consumers' co-operatives over as wide a field of distribution as possible. Here again, the questions of finance and credit are likely to be very important. We must, however, remember that to the extent to which co-operatives replace private business, capital engaged in the latter will tend to be released. If a common credit policy is made effective for, all credit agencies a transfer of functions will gradually but effectively bring about an appropriate transfer of financial resources.
19. A problem of urban areas in regard to which co-operation has a special significance has been touched upon by us in our chapter on housing. While it is not necessary in this place to cover the same ground again, it must be stated that with the strong urge towards urbanisation that industrialisation is bound to promote, housing assumes crucial importance. While institutional activity such as that undertaken by governmental departments, civic bodies and employers associations, will meet the situation to a certain extent, a considerable burden of the construction of houses, especially for the middle and lower income groups, will fall on their own co-operative organisations. From the choice of a site to the letting out or use of house-room when it is ready, the work of these housing societies will impinge on a number of departments. It should be the policy of these departments to assist in the formation and progress of these societies.
171
DEVELOPMENT OF THE CO-OPERATIVE MOVEMENT
IMPROVEMENT OF PERSONNEL 20. The success of cooperatives ultimately depends upon their ability to perform their functions-whether they relate to production, finance, marketing, distribution or construction-efficiently and to the satisfaction of the members and the community. The loyalties of the members can be retained not on the basis of monopoly, agreements or under duress but on the strength of the goodwill secured by rendering service. A unit of business, whatever its form cannot survive if it does not fulfil properly the tasks which it undertakes. It also ceases to grow if the management is not watchful for new opportunities. In the agricultural sector for instance diesel engines and electric motors are being increasingly used for providing irrigation in some areas while in others tractors are utilised for cultivation and reclamation. A progressive cooperative, besides supplying seeds, fertilisers and other requisites, would provide spare parts, repair and servicing facilities at reasonable cost. These and similar measures in other fields can be adopted only if the staff consists of competent and trained men. Co-operatives are sometimes organised and administered by those who lack both the qualifications and the experience necessary for the job. This factor alone accounts for a large number of co-operatives failures and the uneven development of the movement, in the country. The importance of efficient management cannot, therefore, be too much stressed. Being a movement essentially dependent on the ability of persons in humble walks of life, who are often amateurs in the handling of business operations, the need for training and education is greater than for those who have ample resources and business experience. The co- operative society is, besides a democratic body, each member of which is equally important. Hence the need, recognized from the earliest days of the movement in foreign countries, for diffusing knowledge of the principles and practice of co-operation among all ranks of co- operators.
21. Many of the managerial and supervisory functions call for specialised knowledge and technical skill. The cooperatives ought to recruit qualified men and get the existing staff adequately trained. The present facilities for the training of higher personnel are not adequate and we have provided a sum of Rs. 10 lakhs for their improvement. We also trust that the State Governments will arrange for the training of other staff, and of workers for the cooperative movement.
22. Even though almost all the States have a cooperative department, many of them have to be helped to equip it to shoulder the new, diversified and complex responsibilities now envisaged. Until recently the main statutory functions of the department were registration, audit and inspection. Consequently the bulk of the staff was well versed in these activities. Now that the cooperatives are being recognised and utilised as an important instrument of economic planning, the staff of co-operative departments, without spoon feeding or interfering too much in the working of the Societies, should be able to provide effective guidance and knowledge and not merely be auditors and inspectors of the Government. In short a constructive attitude and determination to make a success of the cooperatives must pervade the Government departments and the people.
172
THE FIRST FIVE YEAR PLAN
FUTURE POLICY 23. In the past there have been occasional complaints to the effect that while the State generally sponsors co-operative societies and desires to accord them a preference, in actual practice agencies other than cooperatives often receive better treatment from a number of departments. There is also a tendency, in some of them, to regard only the cooperative department as responsible for co-operative development. It has already been indicated that the various forms of cooperative activity impinge on a number of departments. Therefore, unless every department and every Ministry accepts and adopts the policy of fostering cooperative methods of business, rapid and enduring results cannot be obtained. For instance the Central and State Public Works and Irrigation Departments spend fairly large amounts on works programmes every year. Except in one or two States most of the works are entrusted to contractors. We consider that every department should follow the policy of building up co-operatives which may eventually replace the contractors or other middle men. It is, however, not our intention that co-operatives should be bolstered up indefinitely, irrespective of the quality or cost of the service they offer. At the same time it is only reasonable to expect that in their formative years they should be ungrudgingly helped by the State to utilise the opportunities offered to them and enabled to consolidate their strength.