Unified Cooperative Policy Framework: India’s Push for Reform at National and State Levels -

India’s cooperative movement, rooted in grassroots participation and economic democracy, has long played a pivotal role in empowering farmers, artisans, small-scale traders, and marginalized communities. However, despite its potential, the cooperative sector has often struggled due to fragmented governance, political interference, and outdated legal structures. Recognizing these gaps, the Government of India has recently initiated efforts to bring in a National Cooperative Policy, with several states also drafting their own State Cooperative Policies to streamline and modernize the functioning of cooperatives. This dual policy push marks a significant moment in India’s economic decentralization strategy.

What is a Cooperative?

A cooperative is an autonomous association of people united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically controlled enterprise. From dairy cooperatives like Amul, to credit societies, housing cooperatives, and agriculture marketing societies, cooperatives are present across all sectors of the Indian economy.

As of 2024, India has more than 8.5 lakh cooperatives and over 30 crore members, making it one of the largest cooperative networks in the world. However, despite this size, the sector’s contribution to GDP and formal employment remains limited due to policy inconsistencies and lack of professionalism.

What is the National Cooperative Policy?

The National Cooperative Policy, being drafted by the Ministry of Cooperation (established in 2021), aims to provide a comprehensive and unified framework for the development of cooperatives in India. The new policy is expected to focus on:

Ease of doing business for cooperatives
Professionalization and capacity-building
Digital transformation and transparency
Access to finance and markets
Reducing bureaucratic interference

According to Union Minister Amit Shah, who also heads the Ministry of Cooperation, the new policy will serve as a guiding document for the next 25 years, in line with the vision of “Sahakar se Samriddhi” (Prosperity through Cooperation).

The draft is currently being finalized after consultation with stakeholders and is expected to be implemented by late 2025 or early 2026, following Cabinet approval.

Why is a New National Policy Required?

Fragmented Legal Framework: Cooperatives in India are governed by multiple laws Central Acts, State Acts, and sector-specific statutes which create confusion and inefficiency.
Lack of Professionalism: Many cooperatives lack trained staff, digital infrastructure, and modern accounting practices, limiting their competitiveness.
Limited Financial Access: Small cooperatives struggle to obtain credit due to weak balance sheets and outdated governance.
Inconsistent State Policies: There is a wide disparity in how different states regulate and support cooperatives.
Need for Integration: With initiatives like multi-state cooperative societies (MSCS), there is a growing need for coordination between Central and State policies to avoid jurisdictional overlaps.

State Cooperative Policies: The Federal Push

Several states have started drafting or revising their own cooperative policies in alignment with the proposed national framework.

Maharashtra, Gujarat, and Kerala traditionally strong in cooperative movements are reworking their cooperative strategies to emphasize professional governance, digitalization, and youth involvement.
Karnataka recently announced plans to create a state-level cooperative development authority, focusing on regulating credit cooperatives and agricultural societies.
Uttar Pradesh and Madhya Pradesh are framing new cooperative laws to support women-led cooperatives, SHGs, and rural employment initiatives.

These policies are expected to bring clarity in roles, increase financial inclusion, and make cooperatives more business-oriented without compromising their social goals.

How Will These Policies Help?

Unified Governance: A national policy will create uniform standards while allowing state-level customization.
Digital and Data-Driven Cooperatives: With portals like Sahakar Se Samriddhi and the CRCS-Sahara refund portal, the government is already pushing for tech integration.
Stronger Financial Backbone: New credit lines, cooperative banks, and NABARD-backed lending schemes are being designed for cooperatives.
Promotion of Multi-State Cooperatives: The government has already launched three national-level multi-state cooperatives in 2023 for seeds, exports, and organic products.
Transparency and Accountability: Mandatory audits, digital membership records, and online voting mechanisms are being proposed.

When Will It Be Implemented?

The draft National Cooperative Policy was circulated for feedback in late 2023.
The final policy is expected to be released by end of 2025, following stakeholder consultations and legislative review.
State-level implementations are already in progress, with states aligning their local laws and policies to the upcoming national standards.

Conclusion

India’s cooperative sector is at a critical juncture. With a robust national framework and complementary state policies, the country has an opportunity to revive its grassroots economy, democratize finance, and foster community-based entrepreneurship. However, success will depend on how well these policies are implemented balancing central vision with local flexibility, and ideology with professionalism.

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