tno — Institutional Agencies in Agricultural Credit (MEARINGIANDIDERINETONS OF CO-OPERATION Co-operation generally means working together to achieve aco! association of persons. It also implies joint effort and coordinat D members of the association. The concept of co-operation is not new to India. There were various instances, where people organized into an unit to achieve common goals. The examples of co-operative life can be cited are: Hindu Sanyunkt Parivar Pratha (Hindu joint famil; s), Panchayati Pratha (Panchayati system) etc. According to the - MT. Herrick defined co-operation “as the act o persons, voluntarily united, for utilizing reciprocally their own forces, resources or both under their mutual arrangement to their common profit or loss”. Hubert Calvert defined that “Co-operation is a form of organization, wherein persons voluntarily associate together as human beings on the basic of equality for the promotion of common economic interest of themselves”. According to Sir Horace Plunkett “Co-operation is self help made effective by organization”. Thus co-operation signifies protection of weak, provision of equal jus tice to all in the society and promotes societal welfare. Each for all and all for each is the motto of co-operation. “MAXIMS OF CO-OPERATION: , the founder of Irish co-operation sums up co-operation in three famous maxims viz., better farming, better business and better living. It means helping the farmers to get a better production in the farm business throug" the adoption of requisite technology. The farmers’ objective of higher production § realized only when the resources are available in adequate quantities. If the forme! does not possess capital to acquire necessary inputs, the same should be provided bY an agency at the right time. A well developed cooperative institutional set up mee this particular requirement of the farmers. Copereive provice hig | dear fealtyuncer 379 Tred ho ‘camel b > ney Farmers should get a better deal in buying the inputs as well as disposing the products. The toiling efforts of the farmer bear fruit only when an efficient marketing system ssible to him. Farmers as a group enjoy better bargaining power. In this context ig acct TS as i iaeratives should provide inputs at reasonable rates and arrange the disposal of produce at favourable prices. Checlper. Toonspork breoure Iulia. produce This means the involvement of co-operative societies in supplying the consumer goods as per the requirements at reasonable prices. This facilitates the consumers to pay Tess than what they pay in open markets. The successful co-operatives are instrumental in preventing private traders from taking undue advantages through exorbitant prices. All the consumer items should be provided through the co-operatives. Thus, the co- operative effort helps the producers in fulfilling their objective in production and consumers to get their domestic requirements at reasonable prices. The essential principles of co-operation’ are discussed below. 1. The-admission. into-a~co-operative society is open to everybody independent of caste,-creed-and religion or any social and political affiliations. It does not allow any discrimination. Not only the membership is open to whomsoever with a common interest wants to join, but also voluntary as well. There is no element of compulsion exercised.on any individual to join as a member. His decision to join as a member should be borne out of his unfettered regard for the co-operative ideology. Once an individual joins as a member, there is no such compulsion to continue as such. He has every fre ithdraw from a society, if he intends to do so. The basic idea is that when one knows the advantage of associating with a co-operative institution, he should join with a good faith. This particular principle should be taken in right Perspective, in the sense that open membership does not meanthat any individual 4S a matter of right without common objective of the society candemand:for an admission with least care for success of the society. Co-operatives are organized and managed Dased on the principle of democracy. Each member is given the right to vote respective of the magnitude of his share capital. “One man and one vote” is the important principle of co-operation. The working of the elected board of mem- bers is governed by the acts, rules and byelaws guiding the matters of the co- Operatives, The spirit of service evokes loyalty among the members of the Society, which is onto to the ¢ to the profit motive of business organizations. Co- operatives’ main aim is to cater to the needs of the members. iy The funds of the society, are contributed by the members in the form.of shase sapital. Members are generally weak in their ‘ancial strength. Therefore, the society needs to maintain the funds efficiently. le society can borrow requisite fi i Ss x f Stedit and provide the same to the most needed members for productive pur-380 poses. This may not be possible with individuals. Therefore, the Principle of se help and mutual help can work for welfare of the members. ee AEST Co-operatives are discour, a 2 enterprises. However, thee m making more and more profits like business enterpris . Eowerer, they ns squad ToTun with some minimum profits B. Af required to run with some mini i ae eT Ne coer . ; ‘i Fit (25%, ‘ ratives keoping certain percentage OF Pro ee inbers based on theit share capita” Gptbute the remaining pro . ‘ The vital strength for growth of th * [Groperative is the unity and non-interference of political parties. The membos i th of socie! i ives 3 tinuously work for the grow’ society with hay of co-operatives should con! yor any teligion and politics. The th har mony, integration and unbiasedness to’ tes: The poi and religious di h a 7. ; Co-operative movement was infact started with financia provisions from Rochdale pioneers. Education to members and training to office. bearers and executives in co-operatives are imperative for promoting awareness and efficiency in the operations of co-operatives. 8. The co-operatives should aim at inculcating. the habit of thrift ‘mbers. Thrift and service are part and parcel of co-operation, There should be incentive for members who sav! ney with co-operatives ift is very basis of self-help, but it must preceedkcredit. This means priority should be given to in sanctioning of credit. EERE Hh members are illiterate, first they should be made erate. Without education, members cannot understand what is going on inthe Co-operative society. Their participation will also be poor. Hence the cooperatives should make all efforts to teach their members about the society and all the dealings of the society should be made public, and 10 Gain: Honorary personnel should simply supervise and frect the peratives to get the desired targets. But to have elf: ciency in the society, trained secretaries with salaries are now helping the co- operatives. If the society is started with poor members, then it is better to have ~ honorary office-bearers, because such societies cannot afford to bear the burden of salaries to its office bearers, ‘CO-OPERATIVE MOVEMENT IN INDIA The co-operative movement in the country in the pre-independence era can be categorized int viz., initiation sta; 2 : 5 ge (1904-1911), modification stage (1917 1918), expansion stage (1919-1929) and restructuring ce (1930-1946). : = es pa arly mone enders rates of interest from the Felpiess peosants The Taree cee Se i i 0 0 5. A armers were forced to even to se! belongings to leat the del clear the-debts. This situation triggered a sort of agitation and in S0™ ‘part? of the ‘country, the farmers started mae or aeuauon 4 Th Poona fd tevolting against the_moneylenders. volts that'were found in Poona ani 3 % LM and Ahmednagar areas, even attracted the attent®of the Government whighhaving under ing 1892]the Madras Gover appointed Frederick Nii ‘ M Sovernment a rederick Nicholson ‘to s| A aigge balls organized on co-operative lines in Gomes oe ee hese tted ‘report and raised a slogan “Find Raiffeissen” pe Tndian Famine Commi sion. in. 1901 also suy orted the idea of Frederick Ni holson, OF the formation of credit societies on Raiffcineen model. Another committee in 1901 headed by Sit Edward Law also favoured the credit societies'to be started on Railfelssen / model. These recommendations resulted in the enactment eS of co-operative credit so- cieties Act of 1904, Pp redit so: ce aie ana LS Salient Features)of 1904 Act “ ‘ban classification of ae was made. Rifral Societies are those having four-fifths of farmers, while urbé e in societies are those with four-fifths of their members representing non-agriculturists. 2. Registrar was supposed to organise and control the societies. 5. Loans could be given, to members on personal(¥)real (immovable) security, and, 4 . One-man one vote was specified in the Act. a a i The shortcomings of the Act of 1904 were rectified by enacting another co-operatives societies Act_of 1912. The new act provided legal protection to all types of co- \* operatives including central financing agencies and supervising unions. The distinc- tion between rural and urban societies was given a new focus. The liability-was 2' limited in the case of primary societies and unlimited for central societies. Since this act gave provision for the registration of all types of co-operative societies, it led to3' the emergence. of rural co-operatives both on credit front and non-credit front, but this growth was uneven spatially. As a sofsequense of this observation in 1914, the Government appointed a committee under the chairmanship of Sir Edward Mac Lagan to probe into the performance of the societies. The report of Mac Lagan committee - came out in 1915, The Mac Lagan committee’s recommendations and Act of 1912, introduced co-operative planning process in India. The observations of Mac Lagan committee were 2 e 1. Illiteracy among the members ‘ 2. Misappropriation of funds, é Rampant nepotism, = eS 4 el one Delays in sanction of loans and Irregular repayment of loans. These observations prompted Mac Lagan to offer the following suggestions for fective functioning of the societies. All_ members should be made aware of the co-operative principles Dealings should be strictly confined to_the me! 1 = - Honesty should be the main criterion for one to take loan, | “Applications should be carefully scrutinized before advan should be careful follow_up for effective utilization of loan, Pepe cing_loan and thereon cheep fevelt er crnive A nes \ tlhe, ae BG ya = sibving, (ulses | elien a Vie oe 5. Loans should not be given for speculative purposes, | ; 6. Ultimate authority should be with all the members but not Me the office bearers 7. Thrift should be encouraged so also building up of reserve fund, 8. One member-one vote should be strictly followed, 9. Capit should be raised as far as possible from the savings of the members uly, Pyovicres = LIOR a) 3) | Expansion Stage (1919-29) ~ tawedr \ Unde he RESCHAORINEDIEIT co-operation became x provi se which gave further impetus to the movement. The economic prosperity’ during the period Eotveen 1920-29, contributed to further growth of the movement. The same .LI® period also witnessed the birth of \ first in gC and subsequently land mortgage banks were registered in jan + CF (1926). The 1) also highlighted the tS glaring lacunae, particularly with reference to undue delays and inadequacy of credit WAL Meanwhile 9BSJand the Co. 4 came into force with the former aiming at the Browth of co-operative movement, while the latter for developing the long term \) mee °° (uikce vind) 10. Punctual repayment should be insisted. ’ The economic dey sioTin early thirties and abnormal fall in prices of agricultural commodities Ted to the collapse of the co-operative movement. Various enquiry gommitiees viz., Vijayaraghava Charya Commitice in Madras, Rehabilitation Enquiry ‘ommittees of Travancore and Mysore, Kale Committee in Gwalior, Mehta and Bhansali Committee in Bombay and Wace Committee in Punjab etc., were appointed for examining the possibilitie; i izati icties. The movement picked up momentum during the period of second world war, when there was a rise in the prices of agricultural commodities. This resulted, in the recovery of Ve oul of the soci be dition af | ye etterment_of finacial condition of the co-operative institutions. |, heading the appointed by , 'e Government of India, recommended in the adoption of limited, liability to the co-operatives, assessin, credit-worthiness based on repayment capacity of the farmer, subsidizin ini: a IN. Of small co-operative societies, linking of credit with marketing, etc. The Coroperatve Planing Commit: 98 ‘ner the chairmanslip of RG. Suraiya g attributed the limited progress of co-operatives to the Inissez-faire policy of the State, the illiteracy of the Bee e yt “aissezfaire pol iliteracy , sien, 40 ‘WD Post Independence Period: “> everyting aun buy pels erhonsg orbs) ASts aohhision: n which was set up in March, 1950 1, inc we eyest ‘EAT Fi ‘arch, 1950 prepared its"firstfive yeu" BlaMLin-1951. The main objectives with regard to cocoperspines were ae fone 1. Involvement of co-operatives in rural development programmes 2. Development of a well organized credit system 3. Extending co-operatives lo the ficlds of industry, hor “etc. and == — 4, Training of higher personnel engage ng, marketing, farming lin co-operatives.383 appointe under the chairmanship of brought out tha the co-operative credit was unevenly distributed, inade to the quate and mostly lent asset oriented large cultivators. The weakest link ofall in’a chain, ‘ which was weak at almost all points is the primary credit societies. It satisfies none of the requisites of either good co-operation Or Sound credit. The report further observedl that "< operation has failed in India but must succeed”. The Committee recommended an integrated scheme-as a remedy to the exsting situation, the ealient Rtinee of which were ; we inet is er 1. State partnership in co-operative institutions at all levels Ets) Tore 2. Coordination between co-operative credit, marketing and processing —~_V'°t 3. Development of warehousing and . Training of co-operative personnel at all levels, 4, Training P P els During 1952, Bharat Sevak Samaj and N. operation were formed to review, assess, ¥ in national plan process. On the recom lational Advisory Committee for public co- and help in encouraging people to participate mendation of_All India Rural Credit Survey 5 Committee (1954), National Co-operative Development and Warehousing Board (NCDWB) was established by the Government in 1956, , ° ~— Thus, imggcqnd five-year plan (1956-61) the establishment of warehousing co-operatives was stressed” Apart from these, the second five year plan also initiated the setting up of co-operati and under the chairman- le Co-operative aspect was important as Co-Operative society cannot afford to enlarge itself into an impersonal institution. The membership should not be too large or the area too extensive. Novillage included in_a society should be at a distance of more than 3 or 4 miles from the headquarter village. Later the the chairmanship o} ‘elt that the co-operatives should provide loans to the farmers for the agricultural o erations and land improvements and’tq loans should be confined to the farmers only under distressed conditions. Regarding the supervision of the societies at grass-root level, ie., primary co-operative credit Societies, the under the chairmanship of opined that the District Co-operative Banks should assume this farming. National Co-operative Develo: was also established 421963, National Federation of Co-operative Sugar Factories was also established during this plan period. Thi i stituted in July, in its final report Submitted in Jul ly 1969 recommended the setting up o} Farmers Development Agency (SFDA), the creation of Rural Electrification Corporation (REC), the Teorganization of primary societies into viable units, rehabilitation of weak central co- perative banks, active administrative and policy measures to check overdues, greater flexibility in the conversion of short term loans into medium term loans, simplification of application form and disbursal of part of the loan in kind, efc. During the same plan, ——— 1 i . 228, Reserve bank of India: All India Rural credit survey Report, Vol. Il, Bombay, 1954, p. *Report of the committee on cooperative credit. Government of India, 1960 pp. 201-202. eA Tesponsibility. During the MHiRaLEN an (1961-66), stress was given to revitalise dormant societies apart fom RASS MPS oe perative credit and co-operative ise ACS384 ves was initiated. In 1962 Yaikunth Mehta Nationa] anew concept of ania Was ICOM) was set UP in Poo} ‘ i mrt istrict c ss Institute of Co-operative Manager ~anization of dis! eD gave importance to the rehabilation and reor} of fertilizer co-operating = it. Anew sinks for smooth flow of co-operative credit; TEX (IFFCO) was establisheq ili operative Lt an i mers Fertilizer Co-operaty : aK can eee St ‘co-operatives in ourth-five-year-plan opened vistas for at Kandla. Succ Success: 3 in four ie (1474-79). N introducing new fertilizer projects. duy ing stn 5 a lan Ore a) National Bank = eae ana Developme and ther economic activities. Strengthening eee yee also given importancé five year plan emphasizes on special recovery camps, retail sale of fertilizers by co-operatives, strengthening Natibcal Site Consumer Federation (NSCF) and introduction of single window system it. Eighth five year plan (1992-97) emphasized the replication of Anand Pattern acess regarding mnilk co-operatives, strengthening processing co-operatives, ees re : ent of India following the recommenda. tions of felt that co-operatives were the only alternative to promote agricultural credit and development of rural areas. Accordingly, co-operatives received substantial help in the provision of credit from the Reserve Bank of India asa part of loan policy and large-scale assistance and encouragement from the Central and State Governments for their development. Many schemes of Government with components of subsidies and concessions to the weaker sections were routed through the co-operatives. As a result, the co-operative institu- tions registered remarkable progress in the post-independence period. ea eo _ vidios Co-operative credit societies and non-credit co-operative societies now have tier structure and two-tier structure in all the States’ i fe co-operative credit structure in Vere Nae Xb ost -tier system) oa system) State Co-operative Bank Central Land Development Bank (At = level) (At State level) District Central Co-operati i ' inte malea) Primary Land Development Banks { (REDB) (At taluk level) Primary Agricultural Co-operati Credit Societies (BAGG) (At village level) Figure 38, Ketel igi 1 Sketch of the co-operative credit structure.SINGLE WINDOW SYSTEM The farmers in Andhra Pradesh depended on PACS (in,three-tier structure) for their sho: =term credit requirements and on PLDBs (in two-tier system) for hort .and.medium-te iE 1 long-term credit needs till 1987, which meant that the farmers had to obtain their total loan requirements from two different types of co-operative institutions and furthermore, the performance of PLDBs was not.satisfactory. Re i arketing of the farm produce, the farmers faced hardships in getting the services of market- ing co-operative societies under three-tier system. To help co-operatives serve ina more useful way, the Government of Andhra Pradesh thought that it was appropri- an gO IO tih387 ate to bring some organizational changes in the working of co-operatives in the State. Accordingly, a Committee under the chairmanship of Sri Mohan Kanda was consti- tuted to come out with meaningful and practicable alternatives in this regard. The Committee submitted its report in May 1985. It recommended for the establishment of ‘single window system’ and to this effect a bill was introduced and passed in ‘Assemb! ly in January 1987. The main idea of introducing this system is to supply all types of agricultural credit required by the farmers through PACS. The single window system is a three-tier structure in co-operative credit and two-tier structure in co- operative marketing. The organizational structure is sketched out in Figure 38.2. Structure) _—.-- SUEEREGRY CSHB rructure) ST, and LT) “ The A.P. State Co-operative bank for The A.P. State Co-operative Marketing SwS a and Rural Development Federation Ltd. District Co-operative Bank for District Co-operative Marketing Agriculture and Rural Development Societies Primary Agricultural Co-operative Credit Societies (NCS) ei | Figure 38.2 Single window system. J yes : Consequent to the introduction of single window system in A.P. 6,801 PACS were reduced bg s7 and 218 Primary Co-operative Agricultural Development Banks (PCADBs) were merged with District Co-operative Central Banks and 125 Primary. Co-operative ing lies .were,amalgamated with DCMS during 1987. w.systém pre: (1) to advance the ST, MT farm inputs; (3) to distribute essential arketing of the farm produce of the farmera eee Akin to the objectives of FSS, LAMPS were orgainsed for the first time in December 1971 based on_the recommendations of the (EASES =Ppointed by the Government of India in tribal areas of the country. According to its framed objectives, these societies are expected to provide through single window, all_types_of credit including consumption credit. Intensification and modernization of agriculture with appropriate388 technical_ guidance and improving the marketing of agricultur in the tribal areas, are their other allied objectives: oS a Membership and Area of Operation: All:tribes can become members of the society on voluntary basis like FSS. The area_of operation of the society is larger than that of the PACS covering an area of block’and some times covering an area, as big asa ‘al and forest products — = aoe 2 ieee 2. Sources of Capital: Share capital.of members and State Government, entrance fee, teserve fund, deposits collected from the members and non-members and_loans taken _from co-operative institutions and_Government are the various sources of capital. 2 73 Management of LAMPS: These are managed by a irectors. In general, there are 1] members in the Board, of whom five come from tribal members, two from non-tribal members, two nomi the i y = tives and two nominees from the lead bank of the concerned district. One-of the nominees acts as the Managing Director of the LAMPS. NeroFarmers Service Societies are well organized an a ers Sn baseq on the principles of co-operation and governed by aera yelaws. Since the Primary Agricultural Co-operative Credit Societies, (PACS) are biase affluent sections of rural areas, the Nation: issi ture (NCA) strongly. that separate societies for meeting the urgent needs_of weaker tions in the Tural areas were imperative. Consequent to the recommendation of the Commission, FSS were organized in the year 1971, on the lines of co-operatives to provide an integrate, ‘credit Service to the weaker sections of the rural areas, viz., small farmers, Marginal farmers, agricultural labourers and ruraLartisans. Following are the proposed functions of the FSS as suggested by the Commission: (1) to supply all types of loans to weaker sections, viz., crop loans, medium-term loans and long-term loans (2) to provide adequate supplies of requisite inputs and technical guidance for the development of agriculture ‘on timely and regular basis; (3) to encourage dairy, poultry, fisheries, farm forestry and other subsidiary occupations in rural areas; (4) to make arrangements for bringing about improvements in agricultural markets; and (5) to mobilize deposits and small savings from weaker sections through incentives. . The societies have been launched in SEDA and MFAL districts. Each society has a jurisdiction of a block or a portion thereof. A district union of these - ~societies is-present at the districFTéVeTT6 suggest ways and means of improving and a Functions * organizing the societies for executing Specific activities. The membership of the societies is open to those who are eligible to receive assistance under SFDA/MFAL programmes. __ ana —\, ‘apital Structure] The various financial sources for thé society are: share capital, | a Stare copia tn | tributed By members, Iead bank and State Got ME. In the case of large-sized FSS_| the limit e share capital is Rs. one lakh but for a small society the same is Rs. | Others may be associate members but they do not have any voting rights. ~— The lead bank of the district generally sponsors the FSS in financial | fers. Se and funds from Various sources and _loans. See) includes share capital con- 50,01 ‘unds from different-sourcé$)include the funds contributed by commercial . - = L co-operative societies, subsidies from SFDA and MFALs and’ commissions accrued to the societies through the supply of essential inputs angi rest on advances? Cc aro389 i Management\ Depending upon the size of the society, the number of directors in the board varies from 9 to 13. One full-time Managing Director is deputed by the lead bank. Among the remaining directors, five will be elected from the members of the society, of which, three are from small_and marginal categories and two from other farmers. The remaining directors are representatives of financing. institutions, Block . Development Office, Department of Agriculture and Co-operative societies. » BDO , a im A i