The Co-operative Movement in India

The Need in India

In India, the co-operative movement was born mainly to rescue the Indian farmer from the grip of the moneylender. In the nineteenth and early twentieth centuries, farmers were deeply in debt, forced to borrow from village moneylenders (sahukars) at very high rates of interest, and often lost their land when they could not repay. To provide farmers with cheap and reliable credit, the government decided to encourage co-operative credit societies on the successful European model, especially Raiffeisen's rural credit co-operatives.

The Key Milestones

Co-operative Credit Societies Act, 1904 — This was the first co-operative law in India and marks the formal beginning of the organised co-operative movement in the country. It allowed the formation of co-operative credit societies, chiefly to give farmers loans at reasonable rates and free them from moneylenders. However, it recognised only credit societies and did not properly provide for non-credit (marketing, purchase, etc.) societies or for federal (higher-level) organisations.

Co-operative Societies Act, 1912 — To remove the shortcomings of the 1904 Act, this Act was passed. It allowed the registration of all kinds of co-operative societies — not just credit societies — and also permitted the formation of central and higher-level (federal) co-operative societies such as central co-operative banks. This greatly widened the scope of the movement.

Montagu–Chelmsford Reforms, 1919 — Under these reforms, 'co-operation' became a provincial (state) subject, meaning each province could make its own co-operative laws. This is why, in later years, individual states (including Bombay/Maharashtra) passed their own co-operative acts. …