Regional Update (India) (1996)

This document has been made available in electronic format 
by the International Co-operative Alliance (ICA)
December, 1996
(Source: Asia-Pacific Co-op News, Vol.3, No.1
Sept-Dec.,1996, p.9-13)

Regional Update


NCDC Sphere to be widened

The fundamental changes in the socio-economic scenario due to
introduction of the new economic policy would affect the co-
operative sector in a large measure, since the co-operatives 
form an integral part of the Indian economy. In an era of 
competition, the co-operatives will have to realign their 
approach to enhance their competitive edge in areas where 
they have a comparative advantage. They have been playing 
a vital role specially in handling commodities and activities 
in which they have inherent strength such as milk, fish, fruit 
and vegetables etc. They will further have to develop inherent 
strength to function as self-sustaining entities. This was 
stated by the Union Agricultural Minister, Shri Chaturanan 
Mishra while presiding over the 43rd General Council Meeting 
f the National Co-operative Development Corporation, held 
recently at New Delhi.

The Minister appreciated the vital role of NCDC in co-operative 
development throughout the country by initiating programmes and 
schemes specially geared to enhance agricultural production and 
productivity creation of storage facility, supply of inputs to 
the farmers, marketing and processing of agricultural produce 
and its export.

Shri Mishra suggested that the Corporation should initiate steps 
to explore new avenues  to raise resources after its base of 
activities is broadened so as to undertake a programme of 
increased assistance.

During the meeting it was also suggested that National level
institutions like NCDC should be exempted from income tax, 
since they are funding activities related to weaker sections 
of society as well as backward areas.

Calling upon the co-operatives to up-grade their technological 
competence as well as to strengthen their financial base and 
management. Shri Mishra felt confident that with these corrective 
measures, the co-operatives have a bright future.

NCDC's programme of Integrated Co-operative Development is of
direct relevance in serving the interests of the small and
marginal farmers.  The Programme has evoked a good response 
from all the States and needs full encouragement, the Minister 
informed.  At present 62 districts have been covered including 
the 8th Plan Period and more projects are in the pipeline.

The Council approved the NCDC's Annual Report for the year
1995-96 for its programme of financial assistance of around 
Rs.363 crores towards development of co-operative sector.  
While deliberating on NCDC's core activities, Shri J.P. Singh, 
MD, NCDC, informed that the Corporation has provided a 
substantial sum of almost Rs. 3675 crores upto March 1996 
by way of assistance to marketing, storage, agro-processing, 
weaker sections activities etc. through primary co-operatives, 
state and national level federations throughout the country.  
Projects have been set up mainly in sectors like sugar, 
spinning, oilseeds, horticulture, sericulture, poultry, 
fishery as also sugar by-product projects for manufacture 
of particle board from cotton stalk which are environment 

Nabard to Boost Self Help Groups

The National Bank for Agriculture and Rural Development has
decided to respond the number of self-help farmers groups to
50,000 by the turn of this century. The scheme has been
introduced in 1992 as an alternative to the traditional co-
operatives system. In India there are 5000 self help group
functioning at present.

This scheme has facilitated the lowest income groups in the
farming sector to obtain credit facilities against marginal
saving. Women groups are specially encouraged to form these

SEWA Co-operative Bank Receives Best Practices Award

SEWA Co-operative Bank, Ahmedabad, India received 'the Best
Practices Award' during the UN Conference on Urban Housing in
June held at Istanbul. The UN Secretary General awarded the
price. SEWA Bank was selected from 640 case studies from 91
countries by an international body. The Best Practices represent 
positive solution to some of the world's most pressing social, 
economic and environmental problems. The SEWA Bank at present 
has 215,000 members.

ISO 9002 Certificate to IFFCO Unit

The Kalol unit of IFFCO has been awarded ISO 9002 certificate by 
the Bureau Veritus Quality International and became one of the 
very few in India to receive such credit for maintaining Veritus 
International Standards. This is issued by the International 
Organisation for standardisation as model for quality assurance 
in production, installation and serving.


Mr. R.L.Saha, finance director of co-operative sector fertiliser 
major KRIBHCO has taken over as acting managing director of the 

Mr. Saha has been given the new charge following the
superannuation of Mr. A. K. Mukhopadhyaya.

Shri S.N. Sharma Elected Chairman of NCHF

Shri S. N. Sharma, Minister of State (Independent Charge) for
Housing and Mining of Madhya Pradesh has been elected as the
Chairman of National Co-operative Housing Federation of India
(NCHF) by a newly constituted Board of Directors in their meeting 
held on 1st August, 1996 at New Delhi for the next term of three years. 
Shri S.N.Sharma represents the M.P.Sate Co-operative Housing Federation
 on its board. Sarvashri R.K.Pikale, Chairman Goa State Co-operative 
Housing Finance and Federation Limited and T.P.Pattnaik Chairman, 
Orissa Co-operative Housing Corporation Limited have been elected 
as the Vice Chairmen of NCHF in the same meeting.

The National Co-operative Housing Federation of India is a
national level organisation of the entire co-operative housing 
movement in the country and functions under the Government of India, 
Ministry of Urban Affairs and Employment. The NCHF, a promotional apex 
organisation for organised development of housing co-operatives, is 
promoting, developing, guiding and coordinating the co-operative 
housing movement in the country.

At grass root level 85,000 housing co-operatives with a
membership of 50 lakhs are functioning in the country. These 
co-operatives have constructed 14 lakhs housing units and similar 
number is under various stages of construction. About 72% of the 
dwelling units have gone to weaker sections of the society.

At state level 25 Apex Co-operative Housing Federations are
working in various states and union territories which are members 
of the NCHF. These apex federations advanced loans of Rs. 3,500 
crores to the housing co-operatives for construction of dwelling 
units for their members upto the end of March, 1996. During the 
year 1995-96, the apex federations advanced an amount of Rs. 400 
crores to the housing co-operatives, which were able to construct 
about 1,00,000 housing units.

IFFCO Pays Dividend to Government

Indian Farmers Fertilizer Co-operative Ltd., (IFFCO), the largest 
fertilizer manufacturer in India has paid Rs. 318.6 million as 
dividend for 1995-96 to the Indian Government.  The Government 
is a shareholder of the IFFCO.

It has also paid Rs. 9520 million for 1984-85 to 1995-96 as taxes 
to the government.

Co-operatives Demand Right to Access Capital Market

The debate over the Finance Ministry's recent decision permitting 
companies to float non-voting shares (NVS) up to 25% of their issued 
equity capital has acquired a new dimension with a section of co-operatives 
demanding that the same facility be extended to them.

The demand, raised by some of the larger co-operative entities whose 
operations span over several states such as the Gujarat Milk Marketing 
Federation Limited is being voiced in the light of the perceived need to 
"widen the sector's existing fund-raising options", to facilitate 
competition on an equal basis with multinationals and other private 
corporate processors.

It has been demanded that financially sound co-operatives be
given the freedom to access the capital market by floating
debentures and other credit-rated debt instruments.  Currently neither the 
Central Level Multi State Co-operative Societies Act (MSCS), 1984 nor 
the various State Co-operative Societies Acts permit co-operatives to 
access capital from non-members, other than Government or financial 

For instance, of the total equity of Rs. 433 crores in
Maharashtra's co-operative sugar factories in 1994-95, the
member's contribution amounts to 55% (Rs. 238 crores), with the State 
Government holding the remaining Rs. 195 crores.  Apart from these, 
the factories also hold refundable and non-refundable deposits from
 members aggregating Rs. 824 crores and long term loans of Rs. 582 
crores from FI's, the latter being guaranteed fully by the State Government.

Observers here feel that the demand for granting the NVS issue option 
to co-operatives is basically an extension of an earlier proposal 
seeking to allow these bodies to register themselves under the 
companies Act, 19565.  In fact, the proposal to insert a special 
clause under Section 3 of the Act, which would enable the formation 
of 'Co-operative Companies' was even approved by the Department of 
Company Affairs, though it is yet to obtain the Agricultural Ministry's assent.

Under the proposed amendment, co-operative companies are to be treated 
on par with private limited companies, with the
additional provision of their adhering to the accepted principles of 
co-operation, such as one man-one vote, unlike the usual company 
norm of linking voting rights to the number of shares held 
(one share-one vote).

-The Hindu, Aug. 27,1996

Indian Consumer Co-operatives in the Market Economy

The Annual Report for 1995/96 by the Ministry of Civil Supplies 
Consumer Affairs and Public Distributing Government of India, 
reveals a stagnation of consumer co-operatives at the primary
 level in many states. Although the number of stores has been 
increased from 22689 in 1990-91 to 25750 in 1994-95, there is 
a decrease of number of branches from 10801 to 9287 during the 
period. There is a reduction of working capital from Rs 2714.6
 million in 1993/94 to 1959.2 million in 1994-95. Government 
share capital in co-operatives remains as 10% steadily. In the 
wholesale stores the trend has been the same. This indicates 
the merging or closure of stores at the village level.

Although there had been a positive increase of working capital, 
the turnover has remain more or less as the same, hinting at the 
decline of market share and piling up inventories. 

The membership of state level consumer federations had a marginal 
reduction and out of 29 federations 13 have been incurring losses.
 Out of 25750 primary co-operative 7227 were running at losses, 
11824 were having profits. Others are under liquidation.

One significant factor is the growth of institutional consumer 
co-operative stores-specially in the workers sector.

The NCCF reviving from the losses in the past and was able to
break even during the year. The leading mega stores such as Super 
Bazar, Apna Bazar and Sahakari Bhandar have gained strength and 
have introduced open market strategies combined with improved 
display and layouts. One of the key factors is unchanged government 
support to the co-operative consumer stores.

IFFCO Bags National Promotion Award

The Phulpur unit of the Indian Farmers Co-operative Ltd. has been  
selected to receive second best Promotion award for the
manufacturing and serving in fertiliser industry by the National 
Productivity Council of India.

Hon'ble Deve Gowda presented the award at a ceremony held on 23 November, 1996.

Workers Co-op to run Navsari Mills

The Navsari Cotton and Silk Mills Ltd. in Gujarat will be handed 
over to the workers in an attempt to revive the 60 year old sick 
textile mill.

The Board for Industrial and Financial Reconstruction has already 
given its approval to the workers co-operative to run the textile 
mill at Navsari as part of its turn around strategy.

According the BIFR scheme, the existing shareholding of the mills
 would be transferred to the workers co-operative for a token 
amount of Re 1 and workers would bring in an additional Rs. 1 
crore as its contribution to the co-op. 

The Industrial Development Bank of India (IDBI) and Gujarat
Government  would also chip in with another  Rs. 3 crore as their 
equity stake in the company.

The workers scheme envisages closure of weaving and process
sections of the mill and modernisation of the spinning section 
to tone up the productivity and product-mix.

Ironically it also involves lay off of about 1,400 workers 
Of the total cost of the scheme estimated at Rs. 9.74 crore a
major portion about Rs. 5 crore, would come from the sale of
plant and machinery of the weaving section and the process house 
along with its building and surplus land while another Rs. 4 
crore would come in the form of equity subscription from the 
workers industrial co-operative, IDBI, and the Gujarat government.

After the takeover, Navsari board would be reconstituted with
three representatives from workers co-operatives in addition to 
representatives from BIFR, Gujarat government IDBI, Union Bank 
of India and outside professionals.
-Financial Express, July 29, 1996

30% Quota for Women in Co-operatives

Co-operation Minister S.S. Patil has said that there would 
be 30 per cent reservations for women in the Board of Directors 
of all co-operative banks.

Inaugurating the computerised section of Maratha Co-operative he 
said that women co-operative banks are doing well in the State. 
Now that some more women's bank would come up the state would 
stand first in the number of women's banks in the country.

Co-operative banks in urban areas were doing well and the rural
 banks should strive to emulate them.

Autonomy to Co-operatives in Rajasthan

After Andhra Pradesh, Rajasthan is the second state in the
country where autonomy has been provided to the co-operatives
which do not have direct or indirect financial participation of the 
state. Unlike Andhra Pradesh where separate co-operative societies Act, 
has been passed for such co-operatives, in Rajasthan this autonomy has
 been given through and order dated 11th October, 1995 issued by the
 State Government under section 139 of the present Rajasthan Co-op. 
Societies Act.

This step of autonomy to Co-operatives in Rajasthan state aims at:

1.   Increasing active participation of members in the Co-
     operative Movement.

2.   Making the co-operatives self reliant.
The purpose behind this decision is to enable members to shoulder their 
complete responsibility of managing their Co-operatives keeping their interest 
in view. The members would be free to take decision about the business to be 
undertaken, such as election of their office bearers, appointment of auditors, 
control on employees etc.


Only those co-operatives (already registered) would be eligible for autonomy 
which do not have:

1.   Government share capital
2.   Government Loan
3.   Government Guarantee on Loan

For the new Co-operatives to be covered under autonomy, it would be essential 
that they would not have government share
capital/loan and government guarantee on loan. The following
category of co-operatives are likely to come in the  purview of autonomy.

i.   Urban Co-operative Banks
ii.  Marketing Co-operatives
iii. Primary Consumer Stores
iv.  Thrift and Credit Co-operatives
v.   Industrial/Weavers Co-operatives
vi.  Forest Labour, Labour Contract & Women Co-operatives
vii. Sheep & Wool/Dairy Co-operatives
viii.Oilseeds Co-operatives
ix.  Other such societies

The Co-operatives eligible for autonomy would enjoy freedom in respect 
of various matters. A few important are as follows:

-    Membership
-    Freedom for Amalgamation and Division
-    Autonomy for Auditing
-    Election by the Co-operatives
-    Amendment in bye-laws without registrar imposition
-    Business decision with restrictions
-    Inspection and Inquiry only under special circumstances
-    Surcharge recovery of losses

These orders about autonomy also provide the procedure to be
followed by the co-operatives for getting the autonomy. The
society interested would pass a resolution in General Body by two third 
majority in this regard and apply to the  Registrar for Autonomy. The 
resolution so passed would clearly mention that there is no government 
share capital, loan or guarantee and society would not take such loan 
etc. in future. The Registrar after scrutiny of application and resolution 
would issue a certificate providing autonomy to the co-operative society 
and new bye laws would be registered.

Through this drastic step taken by the State Government, more
than 9,000 co-operatives out of around 20,000 would become
eligible to get autonomy and would be eligible to be free from among the 
regulatory provisions of the co-operative societies act.
-Vinod Zutshi

Indian Co-operatives Celebrate
43rd All India Co-operative Week

Co-operative Week for India falls from 14th November every year 
commemorating Late Prime Minister Pandit Jawahar Lal Nehru's 
contributions to co-operatives.

The Co-operative week for 1996 was celebrated with the
identification of each day with a special theme. Co-operative
Identity day, Social Justice and Allocation of Poverty day, 
Co-operative Marketing, Processing and Consumers day, Co-operative Credit, 
Savings and Rural Development Day, Co-operative Habitat day, Co-operatives 
for Gender Integration and Youth day and Co-operative Democracy Management 
and Leadership Day. The NCUI has declared that the main theme of the year 
as "Co-operatives Concern for Community."

A communique issued by the National Co-operative Union of India (NCUI) 
urged the state co-operative federation and co-operatives should organise 
symposia on the theme of Co-operative Identity and lobby for more liberal 
co-operative legislation.

Banana Co-operative

Mariapuram village industries co-operative society in
Thiruvananthapuram district was a novel range of products, mostly 
handicraft items made out of banana fibre and korapullu, a kind of a grass.

These offbeat doormats and table mats are fast becoming the rage of
 connoisseurs. More than 200 women are employed in this industry, 
both on full time and part time basis.

Started in 1978 in a rented shed, today the co-operative has 87 
cents of land three permanent buildings, two sub centres and a 
turnover of Rs. 5 lakh in 1995-96, they manufactured products 
worth over Rs. 7 lakh and the sales figure crossed Rs. 4 lakh.

Special scrappers are used to extract the fibre which is then
dried and dyed and transformed into beautiful bags, table mats 
and pen stands. The women process the fibre at their homes and 
make the handicrafts at the work site.

Their trainees get a stipend of Rs. 300 from the Kerala Khadi
Board and full time workers earn Rs. 500 a month.

The products are sold through Khadi Bhavan's outlets in Kerala and 
are also sent to Delhi, Mumbai and Hyderabad. Anil Kumar hopes that 
one day with little more fine-tuning in design they would be able 
to capture foreign markets.