India's Cooperative Sector

The cooperative sector in India is continuing to play a crucial role in the economic landscape of the country. With over 8.32 lakh registered cooperative societies and approximately 32.8 crore members, these societies operate in 30 different sectors, including housing, dairy, agriculture, and credit and thrift. The Ministry of Cooperation, established in 2021 under the stewardship of Shri Amitbhai Shah, has focused on modernizing and strengthening the sector through multiple initiatives.

The cooperative movement has seen significant expansion, particularly in states like Gujarat, Maharashtra, and Uttar Pradesh, where the sector’s impact is highly visible. The cooperative model not only provides economic benefits but also contributes to social welfare by addressing the needs of rural and urban populations alike.

According to recent data, there are over 637,000 functional cooperative societies across India. Gujarat leads with 76,725 operational societies, followed by Maharashtra with 216,160 and Tamil Nadu with 20,846. These societies significantly contribute to the local and national economy, with dairy cooperatives and rural credit systems playing an important role in ensuring economic stability for millions of households.

However, there are regional variations, with states like Bihar, Assam, and Uttar Pradesh having lower functional society counts compared to states like Gujarat and Maharashtra. This distribution highlights the need for tailored policies to enhance cooperative functionality in specific regions.

Under the vision of “Sahakar-se-Samriddhi” (prosperity through cooperation), the Ministry of Cooperation has implemented several key reforms to revitalize the cooperative sector, particularly in states like Gujarat, Andhra Pradesh, and Jharkhand. Some major initiatives include:

Revitalizing Primary Cooperatives:
Ensuring the economic vibrancy and transparency of primary cooperatives.
Strengthening Cooperative Banks:
Focusing on the growth and modernization of urban and rural cooperative banks.
Income Tax Relief:
Extending relief measures for cooperative societies under the Income Tax Act.
Reviving Cooperative Sugar Mills:
Aiming to restore and modernize sugar mills under cooperative management.
National Multi-State Societies:
Launching three new national level multi-state cooperative societies.
Capacity Building and IT Integration:
Incorporating technology for better governance and ease of doing business.

Despite its significant contributions, the cooperative sector faces multiple challenges. These include financial constraints, governance issues, and regulatory hurdles. Many cooperatives are undercapitalized, limiting their ability to expand and modernize. Additionally, the adoption of modern technology has been slow, hindering competitiveness in an increasingly digital economy.

To address these challenges, the Ministry of Cooperation has focused on improving financial support, governance mechanisms, and technology adoption across cooperatives.

A key area of focus has been promoting digitalization and transparency in cooperative societies. The government has launched several initiatives to integrate technology, making cooperative societies more efficient and transparent:

Computerization of PACS:
The PACS (Primary Agricultural Credit Societies) have been linked to an ERP-based system to ensure smooth operations and better governance. This initiative aims to improve loan disbursal processes and reduce transaction costs.
Long-Term Credit Structures:
NABARD is overseeing the computerization of Agricultural and Rural Development Banks (ARDBs) to bolster the cooperative credit structure.
E-Services through PACS:
The government has partnered with the Ministry of Electronics and Information Technology to provide over 300 e-services through PACS, including banking, insurance, and health services.
Central Registrar Portal:
A dedicated portal for the office of the Central Registrar of Cooperative Societies has been developed, enabling online services to enhance transparency and efficiency.
Strengthening IT in Cooperative Banks:
Through initiatives like the on-boarding of Core Banking Solutions (CBS) in Rural Cooperative Banks (RCBs), the government is modernizing the banking infrastructure to enable digital banking services.

One of the innovative initiatives introduced in 2023 is the “Cooperation among Cooperatives” project. Launched in Gujarat, the project distributes Micro-ATMs to dairy cooperatives, enabling them to provide financial services at the doorstep. The scheme is now being expanded nationwide, with over 9,900 micro-ATMs already distributed as of February 2025.

The Indian cooperative sector remains a vital component of the economy, and with the government’s continuous efforts in digitalization, modernization, and capacity building, it is set to play an even more significant role in India’s socio-economic development. Moving forward, the focus will remain on overcoming challenges related to financing, technology adoption, and governance, while expanding the reach and efficiency of cooperative societies across the country.

(This blog is based on the information tabled in the upper house on 26th March 2025 in response to my question on the topic.)

Parimal Nathwani Rajya Sabha Member