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UNIT 3. A rural cooperative may be defined as a cohesive action by the group of people led by a leader that works towards the growth and development of.

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Presentation on theme: "UNIT 3. A rural cooperative may be defined as a cohesive action by the group of people led by a leader that works towards the growth and development of."— Presentation transcript:

1 UNIT 3

2 A rural cooperative may be defined as a cohesive action by the group of people led by a leader that works towards the growth and development of a rural area - MALHOTRA, 1989

3 A Type of Business Dependent On Who owns the business? Who controls the business? Who uses the business? Who gets the profits?

4 Individually Owned Business One Person Owns Controls Operates Benefits/profits

5 Partnership Two or more people Own Control Operate Share in risks and profit

6 Corporations Multiple owners Variety of goods and services Physical facilities Investors Profits shared among investors

7 Cooperatives Are a Type of Corporation Multiple owners who are user members Variety of goods and services Physical facilities Members are investors Owned and controlled by members who use its services

8 Cooperatives Are primarily controlled by a board of directors elected by and from members Derive equity from member owners Operate for the benefit of member owners Allocate earnings to members based on use Earnings from member business is taxed once Have perpetual existence

9 Cooperatives Have Unique Principles User - Owner User - Control User - Benefit

10 User-Owner Principle The people who own and finance the cooperative are those who use it.

11 User-Control Principle The people who use the cooperative are those who control the cooperative

12 Members Exercise Control By Voting at annual and membership meetings Electing Board of Directors Making decisions on major cooperative issues

13 User-Benefit Principle The cooperative’s sole purpose is to provide and distribute benefits to members on the basis of their use

14 Cooperatives follow seven internationally recognized principles Voluntary and Open Membership Democratic Member Control Member Economic Participation Autonomy and Independence Education, Training and Information Cooperation Among Cooperatives Concern for Community

15 Co-operatives are expected to build up an organised system for under-developed agricultural growth in rural development in general. The main aim of cooperatives was to get the farmers out of poverty with the help of a collective action They are important in providing opportunities for productive employment, as well as offering health care, potable water, education, improved sanitation, roads, and market access, while giving a stronger “VOICE” to rural groups.

16 Role They create opportunities for employment, income generation, and also increases the availability of goods and services. All of this further contributes towards economic growth. Co-operatives balance the need for profitability with the broader economic and social development needs of their members and the larger community, because members are both producers and beneficiaries. Co-operatives are a means to facilitate engaging in food processing, thereby allowing their members to access and benefit from higher value-added markets.

17 With the help of co-operatives, rural groups are guided by a set of underlying values & ethics and are schools of social dialogue and democracy. Co-operatives help address many social and economic concerns such as community identity and strengthen the social fabric, particularly important in post-crises.

18 Evolution of cooperatives (a) Beginning period of co-operative movement (1904-1912) - this stage has been termed as the primary stage in the development of co-operative societies because the promoters had no idea of co-operation and had very less experience about it. (b) Period of hurried expansion (1912-1918) - the shortcomings of 1904 Act were overcome by 1912 Act.Permission was granted to start co-operative societies in other fields and co-operative movement was shooted for expansion

19 (c) Unplanned rapid development (1919-1929) - due to passing of Co-operative Act in 1919 the movement boosted up and there was a tremendous development in the number of societies providing credit. Only quantitative growth would be seen, no proper attention was given to qualitative growth. (d) Period of re-organisation (1929-1939) - there was a blow to the Indian co-operative movement because of the worldwide financial depression in 1929 and so the development stopped and the existing societies have to face various problems.

20 (e) Period of recovery (1939-1947) - during this period, the financial depression of movement had been removed and this movement was again on path of its development

21 Post-Independence Period: (a) Period of 1947-1970 - after independence government felt that co-operatives should play an important role in development of rural areas and they were included in five year plans. (b) Period of 1970-2000 - the government laid more importance on development of rural banking sectors and co-operatives were asked to develop rural banks. The formation of NABARD as an apex bank was formed for monitoring the co-operative bank. (c) Period of 2000 onwards - the WTO restrictions and the threat from global cooperations have grown and the co-operatives have to face direct competition from multinationals.

22 ECONOMIC THEORY OF COOPERATIVES The economic theory of cooperatives is a set of related statements about how members, directors,employees would behave and what they would achieve –given assumptions about their objectives and resources.economic theory describe the impact of cost on economic agents.


24 AGENCY THEORY Agency theory : it is a supposition that explain the relationship between principles and agents in theory is concerned with resolving problems that can exist in agency relationship ;between principals(such as shareholders) and agents of principals (e.g company executives).

25 The two problems that agency theory solves 1. the problem that arise when the desire or goals of the principal and agent are in conflict,and the principles is unable to verify what agent is actually doing. 2. the problems that are arise when the principal and agent have different attitude toward risk due to which the principal and agent may each be inclined to take different actions.


27 THEORY OF CONTRACT the study of how individual and businesses construct and developed legal agreement.contract theory analyse how parties to a contract make decision under uncertain conditions. when there is asymmetric information. it draws upon principles of financial and economic behaviour as principles and agents often face different incentivise to perform or not perform actions. contract theory seeks to understand organisation,institutions and relationships between productive individual when there are differences in personal objectives.

28 GAME THEORY It is study of strategic decision making. it is the study of mathematical model of conflicts and cooperation between intelligent decision makers. It was initially developed in economics behaviour, including the behaviour of market firm and consumers. It helps in understanding of good or proper behaviour.

29 TWO TYPES OF STRAGEIES IN GAME THEORY PURE STRATEGY : When a player use same strategy again and again to win the game to maximum the profit and reducing the loss that is called pure strategy. MIXED STRATEGY : When a player use more than one strategy to win the game and maximum the profit and reduce the loss that is called mixed strategy

30 ADVANTAGES OF GAME THEORY It describe and explain the phenomena of bargaining and coalition formation. It develop frame work for analysis of decision making where interdependence of firm is there. It helps in making optimal strategy to reduce the loss.


32 TRANSACTION COST ECONOMICS THEORY It focuses on the organisation of transaction that occur whenever a good service transferred from provider to a user across a technologically separable interface.when transaction occur within an organisation, the transaction costs can include managing and monitoring personnel and procuring inputs and capital equipment. the transaction cost of buying the same good or service from external provider can include the costs of source selection,contract,management,performance measurement and dispute resolution.the organisation of transaction or governance structure affects transaction costs.

33 Anand Pattern of cooperative The Anand Pattern is essentially an economic organizational pattern to benefit small producers who join hands forming an integrated approach in order to economy of a large scale business. The whole operation is professionally managed so that the individual producers have the freedom to decide their own policies. The adoption of modern production and marketing techniques helps in providing those services that small producers individually can neither afford nor manage.

34 It has succeeded largely because Anand Model involves people in their own development and because their interests are safe in their own hands. Under Operation Flood the entire institutional infrastructure set up at the village level, the district level and the state level is owned and operated by the farmers themselves. The Anand Model co-operatives have progressively eliminated middlemen, bringing the producers in direct contact with consumers.

35 The Anand Pattern succeeded because it gave a fair price to the farmer and high - quality milk and milk products to the consumer. What would have been middlemen’s profits in the earlier system got absorbed into development projects for primary producer or lower cost for the consumer. In short, the Anand Pattern meant the utilization of resources in the most profitable manner at grass-root level.

36 The Three Tier structure The First Tier - Primary village Co-operative Society: An Anand Pattern village dairy cooperative society (DCS) is formed by milk producers. Any producer can become a DCS member by buying a share and committing to sell milk only to the society. Each DCS has a milk collection centre where members take milk every day. Each member's milk is tested for quality with payments based on the percentage of fat and SNF. At the end of each year, a portion of the DCS profits is used to pay each member a patronage bonus based on the quantity of milk poured. This also acts as a vital link for various productivity enhancement and development programmes of farmers programmes.

37 A District Cooperative Milk Producers' Union is owned by dairy cooperative societies. It is a Union of primary village co-operative societies within a district. The Union buys all the societies' milk, then processes and markets fluid milk and products. Union also provides a range of inputs and services to village co-operative societies and their members: feed, veterinary care, artificial insemination to sustain the growth of milk production and the cooperatives' business. Union staff train and provide consulting services to support village co-operative society leaders and staff.

38 The cooperative milk producers' unions in a state form a State Federation which is an apex marketing body responsible for marketing of milk and milk products of member unions. The Federation also plays a role in the overall development of the district unions federated to it. Maximizing farmer profit and productivity through cooperative effort is the hallmark of the Anand Pattern.

39 The spread of the co-operative movement in the villages is contributing to social changes. Some of the changes are: The democratic process – election of the village society’s office-bearers – is breaking down social and economic divisions. The society is being perceived as a means of livelihood – unlike, say, a panchayat. The feeling, therefore, is that it ought to be managed by those who are likely to run it most efficiently – not necessarily by the entrenched elite.

40 Modern concepts like organization, technology, and social concern are entering the rural areas. In their search for solutions in other compartments of life, farmers often used the expression, “something like the dairy “or “similar to what the dairy does.” Education in a non-school sense is also spreading. Veterinary care, the supply of balanced cattle feed, and artificial insemination centers are contributing to health education, nutrition education and sex education. There is a change in the status of women. Generally income from milk is considered to be earned by them. Men concede that those women should have a say in how this money is to be spent.

41 Unit 5

42 Need of Rural Development Development of rural masses Improve the standard of living Allocation of resources Eradication of poverty Women empowerment

43 Determinants of RD Changes in output Capital Efficient utilization of natural resources Production and employment Responsible leadership Literacy Availability of basic infrastructure

44 Approaches of RD Growth oriented approach Equity oriented approach Area based approach Group based approach Top down approach

45 Growth and Poverty alleviation Program Pradhan Mantri Gramodya Yojna – 2000 - Primary health, education, shelter, water, nutrition Swarnjayanti Gram Swarojgar Yojna – 1999 – Self employment Sampoorna Grameen Rozgar Yojna – 2001 – Wage employment to the rural people Rural Housing Schemes such as Indira Awas Yojna

46 Pradhan Mantri Gram Sadak Yojna – 2000 – connecting 1.6 lac villages Swarn Jayanti Shahri Rozgar Yojna - 1997 Valmiki Ambedkar Awas Yojna – 2001 – Upliftment of the situation of the rural slums

47 Role of NGO in RD In India, the scope of development is not narrow but very wide, as it includes not just the economic development but the growth on social front, quality of life, empowerment, women and child development, education and awareness of its citizens. The task of development is so huge and complicated that just implementing government plans is not sufficient to fix the problem. To achieve this, a holistic vision and collaborative efforts involving various departments, agencies and even NGOs is required. Owing to such a great need, the number of NGOs in India is increasing rapidly and, at present, there are about 25,000 to 30,000 active NGOs in India.

48 Superficially, rural development seems to be a simple task but, in reality, it is not. Post Independence era has seen many rural development programmes through different five-years plans. Alleviating poverty, employment generation, more opportunities for generating income, and infrastructure facilities are emphasized through the policies and programmes of the government. Along with this, the panchayat raj institutions have also been initiated by the government to strengthen the democracy at grass roots level. But in spite of all the efforts rural poverty, unemployment rate, low production still exists.

49 NGOs or Non Governmental Organizations have more benefits of working in rural areas as compared to governmental organizations because NGOs are more flexible, NGOs are specific to a particular locality and moreover these are committed towards serving the public and community as a whole. As the task of development is massive, many NGOs are playing vital role in the rural development of India in collaboration with the government.

50 Since ancient times, social service has been an integral part of Indian culture. Soon after Independence, a number of NGOs had emerged in India. Mahatma Gandhi even pleaded to dissolve the Indian National Congress and transform it to a Lok Seva Sangh (Public Service Organization). Though his plea was rejected, but the followers of Mahatma Gandhi started many voluntary agencies to work on various social as well as economic issues of the country. This was the first phase of NGOs in India.

51 The second phase of NGO development started in 1960 when it was felt that just the government programs were not sufficient to complete the task of development in rural areas. Many groups were formed whose role was to work at grass root levels. Moreover, favorable state policies had drastically affected the formation of NGOs and their roles at that time. Over the years, the role of NGOs in rural development of India increased. At present too, their role significantly changes with the change in the policies of the government through different plans.

52 In the sixth five-year plan (1980-1985), a new role for NGOs in the rural development had been identified by the government. In the seventh five- year plan (1985-1990), the Indian government envisaged an active role of NGOs in developing self- reliant communities. These groups were supposed to show how the village resources along with human resource, skill, local knowledge that is greatly underutilized could be used for their own development. As NGOs were working in close connection with local people so bringing such a change was not a tough task for them

53 Owing to this, in the eighth five-year plan, more importance to NGOs for rural development in India had been given. Under this scheme, a nation-wide NGO network had been created. The role of these agencies was the rural development at a low cost. In the ninth five-year plan, it has been proposed that NGOs would play a significant role in the development on the public-private partnership model. More scope has been provided to NGOs by the government for rural development through the agricultural development policies as well as their implementation mechanisms.

54 As with every five-year plan, the role of NGOs in the rural development of India is growing, so NGOs are now attracting professionals from different fields. NGOs act as planners and implementers of developmental plans. They help in mobilizing the local resources to be used for development. NGOs help in building a self-reliant and sustainable society. These agencies play the role of mediator between people and government. NGOs are actually the facilitator of development, education and professionalization.

55 A major problem that NGOs are facing in India is their dependency upon government funds or external donations. With this dependency, NGOs are less flexible in carrying out their task as most of the tasks depend upon funds. Moreover, the structures of NGOs have become bureaucratic in nature leading to a decreased effectiveness in the overall development.

56 Then the traditional thinking of rural people, their poor understanding, and low level of education for comprehending new technology and efforts, lack of awareness are people related hurdles that NGOs are facing. Villages also lack infrastructure facilities like water, electricity, educational institutes, communication facilities that leads to their slow development.

57 But in spite of all the hurdles, NGOs will keep on working for rural development in India. NGOs selectively utilized the local talent, train the individuals and use this for rural development. But the complete success of the rural development actually depends upon the willingness and active participation of rural people in the development processes and efforts.

58 Sanjeevani Vikas Evam Jan Kalyan Samiti is a nonprofit, rural development and voluntary organisation in India whose mission is to eliminate poverty, unemployment, poor health and illiteracy. Sanjeevani is an indigenous NGO based in Almora District in Northern India(Himalyan Rigion). It was formed in 2000 by 7 peoples group of social workers and is comprised of an energetic group of recently qualified.

59 Sanjeevani have been providing voluntary services to women empowerment & awareness, expansion of education, development science & technology awareness in common people, and create jobs in rural areas since its beginning.

60 PRIDE India (Planning Rural-Urban Integrated Development through Education) is a Non Governmental Organization, registered under Societies Registration Act 1860 in the year 1982. The vision of the pioneer, the Late Mrs Vipula Kadri, was to promote holistic development of marginalized rural people, considering the family as a unit, by adopting an integrated approach with the main emphasis on health, education and empowerment.

61 PRIDE has evolved over a long journey of 32 years, to its present high level position, with an excellent reputation as the best service organization in the areas of its reach. So far, PRIDE India covers the areas of Raigad, Osmanabad, Latur and Solapur districts of Maharashtra state.


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