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Discuss BANE OF CO-OPERATIVES IN INDIA within the Management Of Co-operatives ( MOC ) forums, part of the Resolve Your Query - Get Help and discuss Projects category; BANE OF CO-OPERATIVES IN INDIA The major problem of cooperatives in India is the Government .plus there are some other ...



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Sunanda K. Chavan
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BANE OF CO-OPERATIVES IN INDIA - September 28th, 2010


The major problem of cooperatives in India is the Government .plus there are some other problems they are explained as given below

1) Non-accountability:

It is like if a child when given too many benefits it gets spoiled.
The same is the case with cooperatives in India. The government gave too many benefits to cooperatives like reservation of items extra benefits like finance facilities so also it was also provided with other support this was a good thing to do, but then there was no further accountability which led to these cooperatives becoming more and more lethargic.

Besides as there was no competition they became more and more costly they were not at all efficient and the worst part was that the government allowed them to function like this and pass on the burden of costs to consumers.

2) Vested interest of some people:

A lot of times people who are in position in control of cooperatives are actually people who have joined cooperatives for personal gains. One of the major problems this causes is conflicting of personal interests with the interest of the cooperatives now this affects the performance of the cooperatives in a negative way.

3) Lack of coordination:

Generally what happens in cooperatives is that different cooperatives at different level don’t coordinate this makes the work of cooperatives difficult. Coordination is the key to success of any organization. The best example for this is AMUL which works best because of coordination

4) The Internal Free Rider Problem:

This problem arises when:

a) New members who provide very little capital enjoy the same benefits as long-standing or founding members who have major investments in the cooperative in fixed assets (plant, machinery, equipment) and working capital;

b) When the patronage of new members does not make the cooperative much more efficient or competitive by producing significant economies of scale. New members get a “free ride” on the investments and other efforts of existing members, thereby diluting the returns to existing members.

In this situation, new members do not have much incentive to provide capital because it will not appreciate in value and existing members have little incentive to provide capital that will disproportionately benefit new members.

6) No Balanced Growth:

The cooperatives in northeast areas and in areas like West Bengal, Bihar, Orissa are not as well developed as the ones in Maharashtra and the ones in Gujarat. There is a lot of friction due to competition between different states, this friction affects the working of cooperatives.

7) Political Interference:

Now this is the biggest problem faced by Sugar cooperatives in Maharashtra. The Politicians use the sugar coops as if they are their personal property and also they use it to their political advantage. This is the biggest problem of cooperatives as they use them to increase their vote bank. They also get their own favorites on the boards of such boards so they are on control these cooperatives.
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