COOPERATION
COOPERATION AND PLANNED DEVELOPMENT IN a planned economy pledged to the values of socialism and democracy, cooperation should become progressively the principal basis of organi- sation in many branches of economic life, notably in agriculture and minor irrigation, small industry and processing, marketing, distribu- tion, supplies, rural electrification, housing and construction, and the provision of essential amenities for local communities. Even in medium and large industries and in transport, an increasing range of activities can be undertaken on cooperative lines. The socialist pattern of society implies the creation of large numbers of decentra- lised units in agriculture, industry and the services. Cooperation has the merit of combining freedom and opportunity for the small man with benefits of large-scale management and Organisation as well as goodwill and support from the community. Thus- a rapidly growing cooperative sector, with special emphasis on the needs of the peasant, the worker and the consumer becomes a vital factor for social stabili- ty, for expansion of employment opportunities and for rapid economic development. Along with a growing public sector and a private sector which functions with responsibility to the community as a whole, the influence of cooperation extends far beyond the particular activities organised on cooperative lines, and gives to the social structure and the national economy, balance, direction and a sense of values.
2. Economic development and social change are equally vital elements in the reconstruction of India's social and economic struc- ture. Cooperation is one of the principal means for bringing about changes of a fundamental nature within the economy. As was stated in the Second Five Year Plan, in a country whose economic structure has its roots in the village, cooperation is something more than a series of activities organised on cooperative lines; basically, its purpose is to evolve a scheme of cooperative community organisation which touches upon all aspects of life. Within the rural economy, in par- ticular, cooperation is the primary means for raising the level of productivity, extending improvements in technology and expanding employment so as to secure the basic necessities for every member of the community.
3. At the level of the village, cooperation implies the devel- opment of land and other resources and various services in the common interest of the village as a whole and a continuing obligation on the part of the village community towards all its members. It is, there- fore, visualised that as part of a larger cooperative rural economy, the broad aim of policy should be to develop the village as the pri- mary unit of organisation in agriculture and in many other economic and social activities which bear closely on the welfare of the rural population. At the same time, artisans and others, according to their community of interest, will enter into cooperative associations which seek to serve, their special needs. Programmes for land reform and for village and small industries, development of panchayats and the fundamental emphasis in community development on the obligations and functions of the community, all point in these directions. In due course, as the agricultural base is strengthened and efforts to diver- sify the occupational structure of rural areas are intensified, an increasing number of cooperative activities will call for organisation for larger areas. Once the processes of social and economic change gather force and the rural community attains higher levels of skill and productivity, cooperation has to meet larger and more complex de- mands. Diverse forms of cooperative organisation will continue to develop in tune with new needs and possibilities.
4. Over the past year, policies for the development of coopera- tion have been carefully reviewed in relation specially to the pro- grammes for the, Third Five Year Plan. The conclusions reached re- garding the, lines along which cooperative credit and cooperative 9farming should be organised form the basis of programmes for the Third Plan. The Third Plan provides for specific programmes for cooperative credit and supplies, for marketing and processing, for consumer cooperatives and for industrial and other cooperatives. These are but different directions of activity, each important in itself, yet forming an integral part of a larger effort aiming at the development of a growing cooperative sector in India's economy.
5. For the development of cooperation, the Third Plan provides Rs. 80 crores as against the estimated expenditure of Rs. 34 crores in the Second Plan.
COOPERATIVE CREDIT 6. In November, 1958, in its Resolution on Cooperative Policy, the National Development Council agreed that cooperatives should be organised on the basis of the village community as the primary unit, and that responsibility and initiative for social and economic development at the village levels should be placed fully on the village cooperative and the village panchayat. The co-operative and the panchyat were to be regarded as the primary agencies for carrying out the
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106 THIRD FIVE YEAR PLAN
community development programme which aims at the, improvement of all aspects of rural life through the efforts of the people. The village agricultural plan was considered to be the foundation of the programme for cooperative development and was to be given the highest priority.
7. Since these decisions were reached, problems relating to the development of cooperative credit in the, context of the larger needs in the Third Plan were examined by the Committee on Cooperative Cred- it. In September, 1960, the National Development Council considered proposals based upon the report of this Committee, and agreed that while, as a general rule, cooperatives should be organised on the basis of the village community as a primary unit, where villages were too small, the number of villages to be served by a cooperative socie- ty could be increased in the interest of viability. The aim should be to ensure viability with the inclusion of the smallest number of villages necessary, so that cooperative societies could achieve both viability and the essential characteristics of cooperation, namely, voluntary basis, close contact, social cohesion and mutual obligation. However, such extension should be subject to certain maximum limits, namely, a population of 3000 (that is, 600 families or about 500 cultivators' families) and a distance of not more than 3 or 4 miles from the headquarters village.
The broad test of viability should be the ability on the part of a cooperative society to meet the requisite expenses without depending upon financial assistance from Government except for a limited period. However, potential viability should always be assessed on the basis of a programme for fulfilling certain essential conditions, such as bringing into the cooperative all rural families, effective implemen- tation of the village agricultural production plan, linking credit with production and with marketing, supervision of the use of the credit, undertaking the functions of distribution and supply, and attracting local savings to the maximum possible extent as share capital and as deposits. While a population of 3000 might ordinarily be too high for a primary village society, it was considered desirable to avoid laying down unduly rigid rules on the subject of organisation and size of cooperative societies. Within this broad framework, cooperative societies should be allowed to develop on their own. Particular care, should be taken to ensure that existing societies were not interfered with merely because they did not strictly comply with the pattern of organisation now envisaged. The, aim should be gradually to fit them into the new arrangements.
8. The pattern of organisation set out above was to be support- ed under appropriate conditions by State participation in share capi- tal. The State could participate in the share capital of a primary society only if, 60 per cent of the members desired this, and the proposal was supported by the central bank to which the society was affiliated. The State's contribution had to be matched in equal measure by the members of the society, the maximum contribution from the State being generally placed at Rs. 5000 and in exceptional cir- cumstances, at Rs. 10,000. The amount to be provided by the State, could be retained for a period of 5 to 8 years and retired later. As a normal rule, State participation in primary societies should be, indirect, that is, through apex and central cooperative banks. Where, for special reasons, State participation in share capital is direct, nomination of directors to the managing committees of primary societies should be avoided. If such nomination is considered essential, the authority to nominate directors should be delegated to central cooperative banks.
To enable cooperative societies to admit all classes of cultiva- tors, including marginal and sub-marginal cultivators, landless ten- ants, etc. as members, and provide them with adequate credit on the basis of their production requirement and repaying capacity, it was also agreed that State Governments should make an outright contribu- tion to the funds of each society at 3 per cent of the additional loans made during the year over those advanced by it in the preceding year. An outright contribution of 1 per cent to bad debt reserves should be made to central cooperative banks in respect of the addi- tional finance provided by them. In the intensive agricultural dis- tricts, where credit is sought to be made available to the full scale of production requirements, the outright grants are at a slightly higher level, being 4 per cent for primary societies and 2 per cent for central banks. The continuance of these outright grants is con- tingent on the condition that the weaker sections of the community, who have hitherto been unable to get adequate credit, should now receive the necessary assistance. The outright grants received by primary societies and central banks were to be credited by them to special bad debt reserves which would be in addition to the normal bad debt reserves created from profits. It is envisaged that at an appro- priate stage, a careful assessment of the extent to which outright grants have led to the extension of credit facilities, should be undertaken.
9. Besides participation by the States in the share capital and outright grants for special bad debt reserves, new service coopera- tives and existing cooperatives which take up approved programmes for strengthening and revitalisation, increase of membership, share capi- tal, linking credit with marketing, etc. receive a management grant upto a maximum of Rs. 900 spread over a period of 3 to 5 years. The management grant is intended to be given only to those, societies which actually undertake various service functions, namely, disburse- ment of credit, supply of production requisites, and arrangements for marketing of agricultural produce.
10. Over the period of the first two Plans, the number of pri- mary agricultural credit societies has risen from about 105,000 to about 210,000
COOPERATION 107
and their membership has gone up from 4.4 million to about 17 million. Over this period the total loans advanced by primary agricultural societies have risen from about Rs. 23 crores to about Rs. 200 crores. As the following statement will show, progress during the Second Plan was more marked than during the First.Progress of primary agricultural credit societies-First and Second Plans.
member ship short
(million and medium t
societies numbers) term
period (number) loans
advanced
(Rs. crores)
First Plan
1950-51 104998 4.4 22.9
1955-56 159939 7.8 49.6
Second Plan
1956-57 161510 9.1 67.3
1957-58 166543 10.2 96.1
1958-59 182905 11.9 125.5
1959-60 203172 14.4 169.1
1960-61 (estimates) 210000 17.0 200.0
During the Second Plan, in respect of long-term credit, the amount of loans outstanding increased from about Rs. 13 crores to about Rs. 34 crores.
11. In formulating programmes for the expansion of cooperative credit during the Third Plan, the main consideration has been to ensure adequate support to the effort to achieve the large agricultur- al targets set in the Plan. The Plan envisages that the membership of primary cooperative societies will increase to about 37 million cover- ing about 60 per cent of the agricultural. population. The number of societies is expected to increase to about 230,000 so as to serve all the villages in the country. It is estimated that the total amount of short and medium-term credit may increase to about Rs. 530 crores and that of long-term credit (loans outstanding) to about Rs. 150 crores. Statements I and II in the Annexure set out briefly the existing position in respect of short and medium-term credit and long-term credit in different States at the end of the Second and Third Plans.
12. The agricultural programmes in the Third Plan lean heavily on the success of schemes for strengthening the cooperative movement. Of about 160,000 primary societies existing at the end of the First Plan, a large proportion were functioning in a dormant or in a poor state. In the course of the Second Plan about 42,000 societies were taken up for revitalisation. Programmes for the Third Plan provide for the revitalisation of about 52,000 primary societies. Revitalisa- tion of the older societies which were functioning badly and the further expansion of the movement will depend largely on the extent to which primary credit societies succeed in increasing their membership, mobilising local savings, improving management and linking credit with marketing and with production. These measures are essential for strengthening the internal resources of the credit organisations, both at primary and at higher levels. In those States in which the cooper- ative movement has remained weak, it is important to undertake the necessary consolidation or revitalisation as first step in implement- ing programmes for the Third Plan.
13. The Plan visualises a large increase in the internal re- sources of the cooperative movement at various levels. Thus, the share capital of primary cooperatives (other than State contribution) is expected to increase from about Rs. 42 crores in 1959-60 to Rs. 85 crores in 1965-66, in central cooperative banks from about Rs. 23 crores to about Rs. 62 crores, and in apex banks from about Rs. 9 crores to about Rs. 33 crores. It is also estimated that between 1959-60 and 1965-66, deposits of primary cooperative societies should increase from about Rs. 12 crores to about Rs. 42 crores, of central banks from about Rs. 95 crores to about Rs. 212 crores and of apex banks from Rs. 60 crores to Rs. 142 crores.
14. Short and medium-term credit provided by service coopera- tives caters to the current needs of production. Credit for longer periods for increasing the productive capacity of land is equally essential. This need has to be met in the main by cooperative land mortgage banks. At the end of the Second Plan almost all the States had central land mortgage banks or special land mortgage banking department attached to the apex cooperative bank. In 1959-60 there were 407 primary land mortgage banks. To these it is proposed to add 265 new primary land mortgage banks during the Third Plan. Debentures constitute the principal source of funds for loans advanced by central land mortgage banks either directly or through their affiliated pri- mary banks. 'The achievement of the target for long-term credit to the extent of Rs. 150 crores (loans outstanding) will depend to no small extent on the support which land mortgage banks receive from institutional investors and the success of rural debentures. In this field a very large measure of assistance has to come from national institutions like the Reserve Bank of India, the State Bank of India and the Life Insurance Corporation.
15. With a view to augmenting the resources available for long- term loans, a proposal for setting up an Agricultural Development Finance Corporation is at present being considered by the Reserve Bank of India in consultation with the Central Government. The Corporation will purchase debentures floated by central land mortgage banks in the normal course and will also provide funds for schemes for increasing agricultural production which are remunerative in character, but involve considerable investment on long periods of waiting, such as rubber, coffee, cashewnut and arecanut plantations,
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irrigation, contour-bunding and soil conservation and development of orchards and fruit gardens. The loans advanced by the Corporation will be channelled through the central land mortgage banks.
16. The Reserve Bank of India has played a very significant part in the building up of the cooperative movement during the first two Plans through its supervision over financial institutions, arrange- ments for training, loans to States for participation in the share capital of cooperative banks, and advances to cooperative banks, its loans outstanding having risen from about Rs. 14 crores in 1955-56 to about Rs. 85 crores in 1959-60. In keeping with the growing require- ments of the economy and the agricultural objectives and credit needs in the Third Plan, the Reserve Bank will be called upon to play an even larger role. The Bank has necessarily to relate its advances to the financial strength and administrative efficiency of the borrowing institutions and at the same time, to take account of factors such as supervision of the utilisation of loans, and past performance in their recovery. It has also to consider the extent to which the cooperative structure in each State succeeds in mobilising deposits and in build- ing up its own resources. Special efforts are being made by the Reserve Bank to assist the State Governments in reorganising the financial structure of the cooperative movement in States in which inadequate progress has been made during the first two Plans.
17. The State Bank of India has also been of considerable as- sistance to the cooperative movement. Following a policy of respon- siveness to the financial needs of cooperative institutions, specially those engaged in marketing and processing, the State Bank has provided free remittance facilities and loans on easy terms and conditions. It has also given support to the operations of land mortgage banks by subscribing to debentures issued by them from time to time and afford- ing interim accommodation for short periods pending the flotation of debentures. With the enlargement of operations of marketing and processing societies, on the, one hand, and extension of the network of the offices of the State bank and its subsidiaries on the other, the policies and procedures which have been evolved should enable the Bank to expand its assistance to cooperatives on a much larger scale during the Third Plan.
COOPERATIVE MARKETING 18. Development of cooperative marketing was given a place of special importance in the scheme of integrated rural credit recommend- ed in the Rural Credit Survey. Primary marketing societies were to be established at important markets or at other suitable centres and primary agricultural credit societies were to be affiliated to them. Marketing societies were to be assisted with personnel and the State was to participate in their share capital. Broadly on these lines, during the Second Plan, 1869 primary marketing societies have been assisted through the National Cooperative Development and Warehousing Board. With the addition of about 600 more primary marketing coopera- tives proposed to be set up during the Third Plan period, there will be a marketing society at or near each of the 2500 mandis in the country. Besides these marketing societies, reference may be made to sugarcane supply societies which exist in large numbers, particularly in Bihar and Uttar Pradesh cotton ginning and pressing societies which have developed most successfully in Gujarat and Maharashtra, and milk supply unions and' societies which have come up in recent years in several States.
19. In addition to their role in the sale of agricultural pro- duce on terms favourable to the producer, marketing societies are intended to serve as distributors of articles required by cultivators for agricultural production. They are also essential for linking up the grant of agricultural credit with marketing. Statistics concern- ing the activities of marketing societies are inadequate in several respects. However, it is estimated that the total volume of agricul- tural business conducted by marketing societies may at present be of the order of Rs. 200 crores. Their marketing operations are expected to rise to about Rs. 400 crores. Efforts will be directed towards handling by cooperatives of a steadily increasing proportion of the marketable surplus of foodgrains and commercial crops. Participation by cooperatives in the export trade will also be encouraged. Market- ing societies receive finance, from cooperative, financing agencies and also to an increasing extent from the State Bank of India. Their principal problems are to secure sufficient finance for current opera- tions, to improve management and to ensure continued support from their members. Price stabilisation policies will greatly facilitate the growth of cooperative marketing and the expansion of credit. At the instance of the National Cooperative, Development and Warehousing Board, the special problems of cooperative marketing in relation to jute in West Bengal, wheat in. Rajasthan and paddy in Andhra Pradesh are at present being investigated.
The programme for the construction of godowns at mandi centres and rural godowns is closely linked with the programme for marketing. In the course of the Second Plan, about 1670 godowns have been set up; about 980 additional godowns are expected to be established during the Third Plan. At the end of the Second Plan, about 4100 rural godowns had been set up. Their number is expected to rise by about 9200 during the Third Plan.
COOPERATIVE PROCESSING 20. Development of cooperative processing is essential not only for increasing rural incomes and facilitating credit for production but also for building up a cooperative rural economy. Where
COOPERATION 109
cooperative processing units have been successfully established, they have proved invaluable as instruments of development in several allied fields. Cooperative processing is, however, a recent development. Comparatively greater progress has been achieved in sugar and cotton ginning and pressing than in other processing industries. By 1960-61, 30 cooperative sugar factories may be established. The Industrial Finance Corporation has greatly contributed to the development of the cooperative sugar industry. In the third Plan, besides continuing to assist cooperative sugar factories, the Corporation should be able to extend its support to the development of cooperative processing in other fields. An important recent development is the setting up of the National Federation of Co-operative Sugar Factories with the object of improving operational efficiency of existing factories and promoting new units.
In the course of the Second Plan, 378 cooperative processing units other than sugar factories were assisted. these included 84 cotton ginning and pressing units, 109 rice mills and hullers, 20 oil mills, 17 jute baling plants, 26 groundnut decorticators and 122 other units. Programmes drawn up for the third Plan include the setting up of 783 cooperative processing units. These comprise 48 cotton ginning and pressing plants, 36 rice mills, 29 jute baling plants, 33 oil mills, 63 groundnut decorticators, 77 fruit-canning units, 411 rice hullers and 86 other units.
21. The rapid development of the cooperative sugar industry in recent years suggests a twofold approach to the organisation of coop- erative processing units in other fields. In the first place, it would now be desirable to formulate overall programmes regarding the number of new units in each branch of industry which are required in consequence of increase anticipated in the production of agricultural raw materials and in the consumption of the final product. Within this plan, the share of expansion to be assigned to the cooperative sector should be determined on the cooperative sector should be determined on broad considerations. To facilitate the working out of specific pro- posals, designs of plants, estimates of investment and working costs and other technical data should be made readily available. At the same time, as in the case of cooperative sugar factories, arrangements for financing other types of processing units should be indicated, the contribution expected from growers, State Governments, State Financial corporations and other institutions being states specifically in advance. Arrangements on these lines should be evolved in the near future by the Central and State Governments in consultation with the National Cooperative Development and Ware housing Board. Against this background, as an aspect of local planning and with a view to strengthening the rural economic structure in each district in its cooperative aspects, concrete proposals should be invited. Given the necessary conditions, there is vast scope for the development of cooperative processing not only in relation to new units but also, progressively, by way of reorganisation on cooperative lines of units which are, at present, privately owned. This latter aspect is impor- tant on wider considerations, both because it is the aim of public policy to reorient the organisation of processing industries from a private to a cooperative basis, and because in many of these indus- tries there is at present either excess capacity or only limited scope for adding too existing capacity. It is essential that proposals for expanding processing industries should be coordinated with programmes for the related village industries. In the organisation of large cooperative undertakings, for processing and other purposes, attention should also be given to the position of workers and employees. They should have the opportunity to participate in the management of the cooperative enterprises in which they serve.
COOPERATIVE FARMING 22. The role of cooperative farming in the reconstruction of the rural economy was stressed both in the First and in the Second Plan. The goal indicated in the Second Plan was that such essential steps were to be taken as, would provide sound foundations for the develop- ment of cooperative farming, so that over a period of ten years or so, a substantial proportion of the agricultural lands were cultivated on cooperative lines. With the growth of population and the need to secure rapid increase in agricultural production and rural employment, it is essential to intensify efforts to develop cooperative farming throughout the country and to realise as speedily as possible the objective set in the Second Plan. In the main, cooperative farming has to grow out of the success of the general agricultural effort through the community development movement, the progress of coopera- tion in credit, marketing, distribution and processing, the growth of rural industry, and the fulfilment of the objectives of land reform. The contribution of cooperative farming to rural Progress will be significant in the measure in which it develops as a voluntary mass movement under genuine local leadership and as a logical growth of community development and cooperation at the village level. Given the approach of community development and the acceptance by the village community of its responsibility for the welfare of all its members, the main problems of cooperative farming are organisational, technical and educational. The problems of internal management with which many cooperative farming societies are faced need to be studied systemati- cally and practical solutions appropriate to different regions found for them.
23. These problems were reviewed in general terms by the Working Group on Cooperative Farming which surveyed a number of existing cooperative farming societies and, in addition to
110 THIRD FIVE YEAR PLAN
recommendations regarding organisation and patterns of assistance, suggested a scheme of pilot projects which is intended to lead the way towards a more rapid expansion of cooperative farming. Proposals formulated with reference to the recommendations of the Working Group wore considered by the National Development Council, in September, 1960. The Council decided upon the broad principles guiding the orga- nisation of cooperative farming societies and the assistance to be given to them.
For implementing the programme of cooperative farming, the Minis- try of Community Development and Cooperation have constituted a Na- tional Cooperative Farming Advisory Board. Similar Boards have been set up in some of the States. The Working Group on Cooperative Farm- ing had suggested 3200 cooperative farming societies being set Lip as pilot projects, roughly 10 in each district, and these constitute the first phase in the development programme for cooperative farming. For carrying out the programme during the first year of the Third Plan, 65 pilot districts have been recently selected. An extensive programme for orienting official and non-official workers is being carried out. Besides the pilot projects, State Governments will continue to assist cooperative farming societies which are formed on a voluntary basis.
24. In the general pattern of organisation which has been pro- posed for the development of cooperative farming, stress is laid on the principle that cooperative farming is a voluntary movement and there should be no question of compelling any cultivator to join a co- operative farming society. Membership in cooperative farming socie- ties should be confined to those who are prepared to work on the farm or in ancillary activities and, ordinarily, absentee landholders should not be admitted as members. Persons who are prevented from participation in form work on account of physical disability, Govern- ment service, age, sex or because they have land in more than one village may be admitted, although they may not be participating in farm work but, taken as a group, such persons should not exceed one-fourth of the total membership.
The question of the size of cooperative farms has to be consid- ered from two aspects, firstly, from the point of view of securing an area which will make for economic operation and. secondly, from the point of view of how best cooperative farming should be developed so as to secure the development of the village economy as a whole on the lines visualised in the Five Year Plans. While no maximum size for a cooperative farm is proposed, for the purpose of special assistance from the Government, States may prescribe suitable minima in terms of membership and area.
Members joining a cooperative farming society are expected to pool their lands for a minimum period of five years, withdrawals during this period being permitted in exceptional circumstances. Cooperative farming societies are expected to give a reasonable return on account of land contributed by members in addition to income in lieu of work done by them. While consolidation of holdings is not a condition precedent to cooperative farming, it has been suggested, that advantage should be taken of consolidation proceedings to encour- age cooperative farming. Owners of small holdings should be specially assisted to come into cooperative farming societies.
25. In the pilot projects as well as in other cooperative farm- ing societies which may be selected for assistance, provision is made for medium and long-term loans to the extent of Rs. 4000 and loan and grant for a godown-cum-cattle shed, upto Rs. 5000 and also a man- agement grant of Rs. 1200 spread over a period of 3 to 5 years. In the pilot projects provision is made for State participation in share capital, specially in cooperative farming societies which are composed predominantly of landless labourers and marginal and sub-marginal farmers. Such participation is subject to a ceiling of Rs. 2000 which should, as a rule, be matched by an equal contribution on the part of members, and is intended to be retired over a period of 10 years. Besides a measure of preference is to be accorded to cooperative farm societies in making financial assistance available both from provi- sions in community development blocks and from those relating to agricultural programmes. In addition to the provision of about Rs. 6 crores for pilot projects in cooperative farming in the plans of States, an allotment of Rs. 6 crores has been set apart at the Centre for assisting the development of other cooperative farming societies. With greater progress in the development of co-operative farming there should be no difficulty in making available such additional resources as are required for supporting the effort. As the Plan proceeds, in the light of practical experience in the pilot areas and elsewhere, it is hoped to formulate more comprehensive programmes for promoting cooperative farming.
CONSUMER COOPERATIVES 26. A large number of consumer stores came into existence for the distribution of controlled commodities during and after the second world war. In 1951-52 there were 9757 primary stores with a member- ship of 1.85 million and a total business exceeding Rs. 82 crores. However, hi later years many of these stores were wound up. In 1959- 60, there were 7168 primary stores with a membership of about 1.4 million and a total paid up capital of Rs. 2.4 crores. Of these stores less than a third were running at profit. Programmes for the Third Plan provide tentatively for assisting 50 wholesale stores and 2200 primary consumer stores. These targets will, however, need further consi-
COOPERATION 111
deration in the light of the recent report of the Committee on Consumer Cooperatives set up by the National Cooperative Development and Warehousing Board. The Committee suggests in each State an apex wholesale store linked with primary stores mainly in the urban areas and considers that at this stage for areas smaller than a State there may not generally be sufficient business to justify a wholesale store. The Committee has also suggested participation by the State in the share capital of the apex wholesale store and the primary stores. There is both urgent need and considerable scope for the development of a successful consumer cooperative movement, specially in the urban areas, but so far the movement has lagged behind. For rural areas, the distribution of essential consumer goods would fall legitimately within the functions of the service cooperative. arrangements for supply of goods being made ordinarily through the marketing societies. In the rural areas, the supply of manufactured consumer goods of standard variety which are in common demand could well be a subsidiary function of primary marketing societies or such other agencies as may already exist. Conditions for the development of consumer coopera- tives in the Third Plan are generally favourable and, if special efforts are made, rapid progress can be achieved. They will be of the greatest help not only in the stabilisation of retail prices but also in preventing the evils of adulteration in foodstuffs.
INDUSTRIAL COOPERATIVES 27. Industrial cooperatives have had a large measure of success in the handloom industry, in coir and in certain village industries. However, their expansion as a general movement has been impeded on account of various practical difficulties. Following the Resolution of the Government of India on Industrial Cooperatives in November, 1959, a series of decisions have been taken which, given the necessary climate and leadership, should facilitate the development of industri- al cooperatives during the Third Plan. Industrial cooperative socie- ties are at present following there broad patterns. In some, the members undertake production on their own account and cooperate for certain services such as supply of raw materials, etc. In others they jointly undertake production, marketing and other related activities. In the third 'group are societies whose members may work separately, but set up cooperative workshops for specific services. In industries like handloom and village industries, as also in several small scale industries, there is great scope for bringing the workers together into a cooperative. Over a large area in the field of small scale industries, however, there is likely to be greater opportunity for organising cooperatives for such objects as providing common facili- ties, initial processing of raw materials, specialised processing, joint handling of orders, and marketing.
28. Although the plans of States provide for several schemes for encouraging industrial cooperatives, assisting artisans, etc., efforts in these directions need to be intensified further during the Third Plan. At the present stage of development, the important considera- tion is that effective use should be made of the available concessions and facilities for the formation of industrial cooperatives which have now been evolved so as to strengthen the existing cooperatives and to encourage the organisation of new ones on sound lines, and to concen- trate on the solution of practical problems of finance and marketing. Among decisions which have been taken with the object of stimulating the growth of industrial cooperatives as a normal pattern of organisa- tion, special reference may be made to the following :
(1) loans for working capital at a concessional rate of interest from Government and central cooperative agencies;
(2) loans to members of industrial cooperative socie- ties for subscribing to share capital;
(3) grants for managerial staff, improved tools and equipment;
(4) subsidising for a limited period specified manage- rial and supervisory staffs of cooperative banks;
(5) sharing of expenditure with State Governments on additional staff appointed to look after the development of industrial cooperatives; and
(6) guarantee of advances sanctioned by cooperative financing agencies to industrial cooperative societies for a limited period.
On present indications the number of industrial cooperatives in the Third Plan may increase from about 30,000 to about 40,000, their membership rising from over 2 million to about 3 million and their share capital from about Rs. 10 crores to about Rs. 20 crores., It is desirable that in the light of recent decisions, the Central and State Governments should take steps to prepare further and more specific proposals for the development of industrial cooperatives and should ensure that they receive the necessary support from Government agen- cies, the All-India Boards and various financial institutions in spreading their activities.
LABOUR AND CONSTRUCTION COOPERATIVES 29. The importance of organising labour cooperatives for carry- ing out irrigation and other projects in rural areas has been stressed frequently since the First Plan. In several States, notably in Punjab, Bombay, Andhra Pradesh and Rajasthan, efforts have been made to set up labour cooperatives, labour contract societies, etc. for taking up works involving mainly unskilled and semi-skilled labour with a view gradually to diminishing the
112 THIRD FIVE YEAR PLAN
role of contractors. In works programmes for the utilisation of rural manpower to be undertaken in the Third Plan also, labour cooperatives will be required to play a major part. While the policy of entrusting construction works to the extent possible to cooperatives and; where they exist, to voluntary organisations has been accepted, the adminis- trative measures required to give effect to it need to be evolved in greater detail.
30. Labour and construction cooperatives and voluntary organisa- tions can be entrusted with advantage with works under the following categories :
(1) earth-work of all types and simple masonry works relating to multipurpose, major and medium irrigation works and flood protection schemes, minor irrigation works and construction of roads;
(2) simple Government buildings such as hostels, administrative blocks, workshops, residential tenements, school buildings and other local development works in rural areas; and
(3) supply in bulk quantities of building materials such as stones, stone blasts, shingle and sand.
To enable genuine labour cooperatives and voluntary organisations to undertake these works, certain administrative conditions have to be fulfilled, the more essential of these being the following :
(1) setting apart a certain proportion of the avail- able construction work for cooperatives and voluntary organisations, the quantum being extended as the capaci- ty of these organisations develops;
(2) ensuring continuous flow of work, the magnitude, types and the specific works to he awarded being indi- cated well in advance:
(3) giving works to cooperatives and voluntary organi- sations in preference to private contractors and, wher- ever possible, on a negotiated basis;
(4) award of works at "workable rates" on the basis of schedules of rates, which may be increased or decreased by a percentage to be decided by the competent authori- ty, the work order system being preferred wherever possible;
(5) avoidance of delays in payments and authorisation of "on account payments" for works completed;
(6) making technical personnel available for work with cooperatives and voluntary organisations; and
(7) assistance by way of loans for working capital and purchase of equipment,
In the light of the experience which different States have already gained of the working of labour cooperatives, suitable organisational patterns should be evolved.
The aim should be to build up labour cooperative organisations. and voluntary organisations as important instruments for undertaking development and providing employment through works carried out mainly on behalf of Government Departments, Panchayat Samitis and Panchayats. Once such organisations come into existence, new possibilities for enlarging their scope and extending their benefits to the community in many directions will emerge.
HOUSING COOPERATIVES 31. In 1959-60 there were 5564 cooperative housing societies with a total membership of 322,000. Housing cooperatives constructed 45,000 houses in 1959-60 as compared to 44,000 in 1958-59 and 36,000 in 1957-58. Under different housing schemes which are at present being undertaken, facilities are provided for the setting up of hous- ing cooperatives. For instance, the, subsidised industrial housing scheme allows for a subsidy up to 25 per cent of the cost in the case of cooperatives of industrial workers. Under the low income group housing scheme as well as other schemes which are being undertaken in a number of growing towns, cooperatives are either allotted land on favourable terms or assisted in acquisition of private lands. The village housing scheme also provides for the setting up of housing cooperatives in selected villages and for the production of bricks, doors, windows and other components. These various pro-visions need to be used purposefully and as a matter of sustained policy so that, in towns and villages alike, an appreciable impact can be made on the improvement of housing and living conditions. The proposal in the Third Plan to set up a Central Housing Board and to promote the estab- lishment of Housing Boards in the States will make it possible to channel larger funds to housing cooperatives. With the preparation of interim general plans and master plans for a large number of towns and of layout plans for selected villages as visualised in the Chapter on Housing, it will become easier to implement effectively the policy of supporting and developing housing cooperatives on a large scale during the Third Plan.
OTHER NON-CREDIT COOPERATIVES 32. In addition to the various types of cooperatives discussed above, reference may be made to cooperatives engaged in the supply of sugarcane and milk and in the development of fisheries and dairying and to cooperative cold storages. Sugarcane supply societies account for a total membership of 2.34 million, Milk supply societies for 233,000 and fisheries societies for 220,000. By the end of Second Plan 16 cold storages were established: 13 more will he set up in the Third Plan. The Third Plan
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includes large programmes for fisheries development and dairying. These are fields of great promise for the development of cooperative activity. Transport cooperatives should also be encouraged as a means of providing new opportunities for educated unemployed persons. The principle of cooperation ran be extended to a growing range of new activities in industry and services, such as, manufacture of implements, printing, supplies of raw materials, provision of common facilities etc. In the tribal development blocks and in areas predominantly inhabited by scheduled tribes, there is considerable scope for building up cooperatives, specially for working forest areas and developing the traditional crafts. The Central Government have recently set up a committee to consider the lines along which procedures and legislation relating to cooperation should be adapted to meet the special conditions and requirements of tribal areas.
COOPERATIVE TRAINING AND ADMINISTRATION 33. The role of trained personnel in the efficient execution of cooperative programmes was emphasised in the Rural Credit Survey, and in recent years there has been considerable development of training facilities for cooperative personnel. At the end of the Second Plan, besides the Cooperative Training College at Poona for training senior staffs of Cooperative Departments, there were 13 regional centres for intermediate and block level cooperative officers and 62 cooperative training centres for junior personnel. Special courses for land mortgage banking and marketing have also been organised at the in- termediate training centres. By the end of the Second Plan, the numbers trained included 543 senior personnel, 3417 block level and intermediate officers, 34,000 junior personnel and 382 in courses for land mortgage banking and 1253 for cooperative marketing. The All- India Cooperative Union and State Cooperative Unions have organised 368 peripatetic parties for the training of office-bearers, members of managing committees and members of primary cooperatives. In these categories, about 28,500, 12,000 and 726,000 persons respectively were trained by the end of the Second Plan.
34. For the Third Plan. the programmes drawn up by the States envisage, amongst other steps, the addition of 13 schools for training junior cooperative personnel and the continuance of the scheme for the education of members of co-operative societies through peripatetic parties. The Study Team on Cooperative parties. The Study Team training, constituted by the Ministry of Community Development and Cooperation, which has recently submitted its proposals, contemplates increase in the number of centres for training intermediate personnel to 15 and in the number of centres for junior cooperative personnel to 120. These and other recommendations of the Team are at present under consideration.
35. Steps have been taken during the Second Plan to strengthen the State Cooperative Departments, in particular, for such functions as audit, supervision and inspection. In the Third Plan a further provision of about Rs. 5 crores has been made for strengthening the personnel of Cooperative Departments at different levels.
36. In planning and carrying out intensive development in rural areas, Panchayati Raj institutions and cooperative organisations have a complementary role and must cooperate closely at every step. Zila Parishads, Panchayat Samitis and Village Panchayats should promote the development of cooperatives and should endeavour to create a climate of community effort and social responsibility such as are vital for the successful functioning of cooperatives at all levels. Regulatory powers in relation to cooperative organisations may continue to remain with the Government, but some of them can be delegated progressively to federal cooperative organisations. These will help to build up the self-regulatory character of the movement and to promote focal leader- ship.
37. Cooperation is a people's movement and initiative for coop- erative development and responsibility for regulating the working of the movement should progressively devolve on cooperative institutions and their higher federal organisations. The building up of efficient federal organisations in all sectors of cooperative activity assumes great importance in this context. As these organisations grow in strength, more powers may be, transferred to them and the departmental machinery may limit its activities to the minimum statutory duties of registration, audit, arbitration and inspection. Promotional work relating to cooperation, cooperative training, education and publicity are activities falling within the special province of cooperative unions. Cooperative unions at State and district levels should be strengthened to enable them to undertake these responsibilities, and a strong federal structure should be built from the ground.
114 THIRD FIVE YEAR PLAN
