{"id":95829,"date":"2026-03-31T18:09:48","date_gmt":"2026-03-31T12:39:48","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=95829"},"modified":"2026-03-31T18:09:48","modified_gmt":"2026-03-31T12:39:48","slug":"crisis-in-indias-cooperative-sector","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/crisis-in-indias-cooperative-sector\/","title":{"rendered":"Crisis in India\u2019s Cooperative Sector, 47.05% of India\u2019s Societies Defunct"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Cooperative societies are an important part of India\u2019s economic and social system, especially for rural development and financial inclusion. However, recent data presented in Parliament by Union Cooperatives Minister Amit Shah highlights serious concerns.\u00a0<\/span><\/p>\n<h2><b>Extent of Crisis in India\u2019s Cooperative Sector\u00a0<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">As per data presented by the Central government in Parliament <\/span><b><i>out of 8.48 lakh cooperative societies, only 3.49 lakh are in profit, while 2.11 lakh are in loss, 1.41 lakh are non-functional, and 47,688 are under liquidation.\u00a0<\/i><\/b><\/p>\n<h3><b>Defunct Cooperatives<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Uttar Pradesh has the highest percentage of defunct societies<\/b><span style=\"font-weight: 400;\"> at 41.8% (16,997), followed by Madhya Pradesh with 34.4%, Rajasthan with 31.8%, Andhra Pradesh with 30.1%, and West Bengal with 27.8%.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The condition of smaller States is even worse, Nagaland (72.7%), Delhi (67.1%), Sikkim (55.3%), Manipur (52%) and Chandigarh (46.4%).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Maharashtra, despite having the highest number of cooperatives (2.26 lakh), has the lowest share of defunct societies (1.21%).<\/b><span style=\"font-weight: 400;\"> Similarly, Gujarat (7.25%), Karnataka (7.54%), and Haryana (8.23%) also have relatively low levels of defunct societies.<\/span><\/li>\n<\/ul>\n<p><b>Although western and southern States have kept more cooperatives functional, many of them are still in loss, under liquidation, or lack proper financial data.<\/b><\/p>\n<h3><b>Loss Making Cooperatives\u00a0<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Even among functional societies, the situation remains concerning. <\/span><b><i>On average, around 31.75% of cooperatives in major States are running in loss<\/i><\/b><span style=\"font-weight: 400;\">. Telangana (47.22%), Haryana (41%), and Madhya Pradesh (38%) show particularly high levels of loss-making societies.<\/span><\/p>\n<h3><b>Cooperatives Under Liquidation\u00a0<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Apart from loss-making societies, <\/span><b><i>47,688 cooperatives are under liquidation.<\/i><\/b><span style=\"font-weight: 400;\"> Of these, about 93% (44,561) are concentrated in five States (Maharashtra, Gujarat, Telangana, Karnataka, and Madhya Pradesh)\u00a0<\/span><\/p>\n<h2><b>Sector-wise Challenges in Cooperative Societies<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">The crisis in India\u2019s cooperative sector is concentrated in a few key sectors, where structural and financial challenges have led to large-scale distress.<\/span><\/p>\n<h3><b>Issues in Dairy Cooperatives<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The dairy sector, which <\/span><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/national-bank-for-agriculture-and-rural-development-nabard\/\" target=\"_blank\"><b>NABARD<\/b><\/a><span style=\"font-weight: 400;\"> identifies as a <\/span><b>crucial financial buffer against agricultural shocks<\/b><span style=\"font-weight: 400;\">, has seen <\/span><b>14,251 societies become non-functional or enter liquidation <\/b><span style=\"font-weight: 400;\">across the top five States. Key reasons for poor performance are:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Post-COVID fall in milk prices failed to cover rising costs, reducing cooperative profitability.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Milk production increased by 25% (Oct 2024-Mar 2025), but higher procurement costs due to unseasonal rains, geopolitical disruptions, and strong demand reduced cooperative margins.<\/span><\/li>\n<\/ul>\n<h3><b>Issues in Housing Cooperatives<\/b><\/h3>\n<p><b>Maharashtra and Gujarat top the list of non-functional or under-liquidation housing cooperatives.\u00a0<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Housing cooperatives in Maharashtra, Gujarat, and Telangana are facing a financial crisis mainly because <\/span><b>depositors lost money in scam-hit cooperative banks <\/b><span style=\"font-weight: 400;\">like PMC, New India, and Mumbai Bank.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Other issues plaguing the housing cooperatives are <\/span><b>non-payment of maintenance charges by members, mismanagement of funds by committees and long-drawn redevelopment processes.<\/b><\/li>\n<\/ul>\n<h3><b>Issues in Credit and Thrift Societies<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Credit and Thrift societies are member-owned financial cooperatives which promote the savings, credit, and insurance needs of their voluntary members. The terms and conditions of mutual aid are decided by the members themselves.<\/span><\/p>\n<p><b>Gujarat, Telangana, and Madhya Pradesh have the highest number of non-functional Credit &amp; Thrift societies,<\/b> <b>while 1,452 in Maharashtra and 1,424 in Madhya Pradesh are under liquidation.<\/b><span style=\"font-weight: 400;\"> Key reasons for poor performance are:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Majority of the Credit and Thrift Societies <\/span><b>operate with very small capital (often below \u20b91 lakh)<\/b><span style=\"font-weight: 400;\">, making them financially weak.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">They are <\/span><b>not directly supervised by the <a href=\"https:\/\/vajiramandravi.com\/upsc-exam\/reserve-bank-of-india\/\" target=\"_blank\">Reserve Bank of India<\/a><\/b><span style=\"font-weight: 400;\">, leading to weak regulation.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Lending and interest rates<\/b><span style=\"font-weight: 400;\"> are self-determined and <\/span><b>often unsustainable<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>High-cost lending<\/b> <b>increases defaults<\/b><span style=\"font-weight: 400;\"> and pushes societies towards losses.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Poor management and lack of financial discipline<\/b><span style=\"font-weight: 400;\"> further worsen their performance.<\/span><\/li>\n<\/ul>\n<h3><b>Issues in Labour Cooperatives<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Labour cooperatives are worker-owned and democratically managed institutions that help workers in the unorganised sector secure fair wages, contracts, and income.\u00a0<\/span><\/p>\n<p><b>In most States, they form only a small share of non-functional societies,<\/b><span style=\"font-weight: 400;\"> but Telangana is an exception where weak financial capacity and inability to handle legal and tax requirements are key reasons for their poor performance.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Many construction-related cooperatives have gone bankrupt due to <\/span><b>poor contracts and low earnings.<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Heavy tax liabilities, such as high GST demands<\/b><span style=\"font-weight: 400;\">, have further increased their financial burden.<\/span><\/li>\n<\/ul>\n<h3><b>Women\u2019s Welfare Cooperatives<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Women\u2019s cooperatives are generally functioning well across most States, but they face serious distress in some regions.<\/span><b>Madhya Pradesh has the highest number of defunct women cooperatives (8,495), followed by Telangana (562 non-functional societies)<\/b><span style=\"font-weight: 400;\">. Key reasons for poor performance are:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Limited access to formal finance<\/b><span style=\"font-weight: 400;\"> forces women to depend on informal sources like self-help groups (SHGs), restricting growth.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Lack of exposure to business networks<\/b><span style=\"font-weight: 400;\"> reduces opportunities for expansion and market linkages.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Social barriers <\/b><span style=\"font-weight: 400;\">such as mobility restrictions and societal inhibitions limit active participation.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Although around 60% of women are aware of government schemes, <\/span><b>only about 25% actually benefit due to poor implementation and access issues.<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Lack of family support<\/b><span style=\"font-weight: 400;\"> creates additional pressure, with <\/span><b>nearly 80% of women struggling to balance work, household duties, and childcare.<\/b><\/li>\n<\/ul>\n<h2><b>Road Ahead for India\u2019s Cooperative Sector<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">The government has taken steps through the <\/span><b>National Cooperation Policy, 2025<\/b><span style=\"font-weight: 400;\"> to strengthen and expand the cooperative sector, with a focus on inclusion and diversification into new areas like transport, insurance, and green energy. However, further efforts are needed such as:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Ensuring professional management, transparency, and reducing political interference in cooperative functioning.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Stronger regulatory oversight, especially for smaller credit and thrift societies, is required to ensure financial discipline and prevent failures.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Provide better access to institutional finance and support for loss-making but viable cooperatives.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Simplify GST compliance for small labour cooperatives,<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Sector-specific reforms, particularly in dairy, housing, and labour cooperatives, are necessary to address their unique challenges.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Supporting women\u2019s cooperatives through easier access to finance, market linkages, and social support systems will improve inclusiveness.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Maintaining a balance between Centre and State roles is important to ensure both effective policy implementation and cooperative autonomy.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Overall, while the government has initiated reforms, sustained and targeted measures are required to ensure long-term viability and inclusiveness of the cooperative sector.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>India cooperative sector faces crisis with 47% societies defunct, in loss or liquidation. Know key challenges, state trends, sector issues, and reforms for revival and growth.<\/p>\n","protected":false},"author":11,"featured_media":95876,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[786],"tags":[6495],"class_list":{"0":"post-95829","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-general-studies","8":"tag-crisis-in-indias-cooperative-sector","9":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/95829","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=95829"}],"version-history":[{"count":4,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/95829\/revisions"}],"predecessor-version":[{"id":95877,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/95829\/revisions\/95877"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/95876"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=95829"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=95829"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=95829"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}