ENVIRONEMENT FOR COOPERATIVE

AND RURAL DEVELOPMENT AND

AGRICULTURE
 CHAPTER – 1
GENESIS & CONCEPT OF CO-OPERATION
“Non-cooperation with evil as much a duty as is co-operation with good”
-Mahatma Gandhi
Cooperation
Cooperation involves individuals or groups working together for the achievement
of their individual or collective goals.
Man can't associate without cooperating, without working together in the pursuit
of like to common interests. However, it can be divided into five principal types.
1. Direct Cooperation:
Those activities, in which people do like things together, play together, worship
together, labour together in myriad ways. The essential character is that people do in
company, the things which they can also do separately or in isolation. They do them
together because it brings social satisfaction.
2. Indirect Cooperation:
Those activities in which people do definitely unlike tasks toward a single end
wherein, the famous principle of the 'division of labour' is introduced. A principle that is
imbedded in the nature of social relationship wherein people combine their difference for
mutual satisfaction or for a common end.
3. Primary Cooperation:
It is found in primary groups such as family, neighbourhood, friends and so on
where there is an identity end. The rewards for which everyone works are shared or meant
to be shared, with every other member in the group. Means and goals become one, for
cooperation itself is a highly prized value.
4. Secondary Cooperation:
It is the characteristic feature of the modern civilized society and is found mainly
in social groups. It is highly formalized and specialized. Each performs his/her task, and
thus helps others to perform their tasks, so that he/she can separately enjoy the fruits of
his/her cooperation.
5. Tertiary Cooperation:
It may be found between two or more political parties, castes, tribes, religions
groups etc. It is often called accommodation. The two groups may cooperate and work
together for antagonistic goals.
Cooperation is important in the life of an individual as it is difficult for man to
survive without it. C.H. Cooley says that Cooperation arises only when men realize that

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they have a common interest. They have sufficient theme, intelligence and self control, to
seek this interest through united action.

MEANING AND DEFINITION OF COOPERATION

Professor P.H. Casselman defined the term cooperation as “an economic system
with social content”.
H. Calvert, defined cooperation as “a form of organization in which persons
voluntarily associate together as human beings on the basis of equality for the promotion
of the economic interests of themselves” which focuses :
1. A Cooperative society is a voluntary form of organization
2. It is an association of human beings and organized on the basis of equality. He
wants to emphasis the need for giving importance to man rather than capital
3. Its objective is to promote the economic interests of the members.
The Cooperative planning committee 1945 defines cooperation as follows (R. G.
Saraiya Committee):
“Cooperation is a form of organization in which persons voluntarily associate
together on a basis of equality for the promotion of their economic interest”.
This definition reveals the following characteristics of Cooperation:
1) Cooperation is a voluntary association of persons: No person is compelled to
join in a cooperative society. As Coady pointed out “in economic cooperation it is
man that counts and not money”
2) A cooperative Society is an Undertaking: Members invest their share capital
and run the society for their social and economic welfare by themselves.
3) It is Democratic organization: A Cooperative society is managed on democratic
basis. One man one vote is adopted or one member – one vote.
4) It has service motive: Reasonable profit is required to meet the cost of
establishment and other expenditure. Profit is not the motive of a cooperative
enterprise.
5) Equality and equity: All are equal irrespective of religion, caste and creed in
cooperatives. As Edgard Milhand said, “there can be no cooperation unless it is
between equals”. Justice is followed in a cooperative society. For instance, the
surplus is distributed according to their participation in the business of the society.
6) It helps for social and economic development of the members and has concern for
the community by bringing the development in the area of operation.

I.C.A. Definition of Cooperation: International cooperative Alliance(ICA) at

Manchester Cooperative congress in 1995 has defined cooperation as follows.”A
Cooperative is an autonomous association of persons united voluntarily to meet their

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common economic, social and cultural needs and aspirations through a jointly-owned and
democratically-controlled enterprise”.

Why Cooperatives?
In order to meet the needs of people whether they are consumers, workers or
producers for their social, economic and cultural needs., Co-operatives are the right
choice. The UN Global Data on Cooperatives; 2013-14 reveals that 2.6 million
Cooperatives are operating throughout the world. These Cooperatives have over 1 billion
members. Moreover, they employ about 12. 6 million employees in 7, 70.000
Cooperative Offices and outlets. (Source:2015 UN Social Dev. Network)
Helping People, Building Communities
Cooperative businesses are unique from other types of commercial businesses in
which they exist to meet the needs of people, not to maximize profit. Around the world,
people form cooperatives to better their lives and build more successful enterprises
and organizations. A commitment to community is one of the seven cooperative
principles and building stronger communities—for the good of all—is at the heart of why
people form cooperatives.
Pioneers in Economic and Social Development
The International Co-operative Alliance explains the core values of
cooperatives and why they are vital to economic and social development around the
globe:
• "Co-operatives are enterprises that put people at the centre of their business and not
capital.
• "Co-operatives are business enterprises and thus can be defined in terms of three basic
interests: ownership, control, and beneficiary. Only in the co-operative enterprise
are all three interests vested directly in the hands of the user.
• "Co-operatives put people at the heart of all their business. They follow a broader
set of values than those associated purely with making a profit.
• "Because co-operatives are owned and democratically-controlled by their members
(individuals or groups and even capital enterprises) the decisions taken by co-
operatives balance the need for profitability with the needs of their members and
the wider interests of the community."
Why Choose Cooperatives? (ICA-2015)
• Cooperatives bring resources under democratic control,
• They allow people to own a business.
• Cooperatives provide common people with a formal way of earning their lives to
benefit from legal protection and increase their negotiation power.
• Cooperatives reduce inequality by empowering people and by offering them a
dignified and sustainable way to make a living.
• The cooperative movement presents a unique combination of global reach and
needs –based business conduct
• Play an important role in poverty reduction by widening ownership and by giving
people and voice, both inside their organisations and in society as a whole.

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Nature of Co-operatives
Cooperation for economic purposes
The inherent principle of a cooperative goes back to the very old and rather simple
concept of cooperation: If an individual is too weak to achieve an economic or any other
goal, he/she associates with others. Common needs or interests bring about collaboration
in terms of organization.
Voluntariness
People unite voluntarily to form a cooperative; they can only confess to their
cooperative ties on an autonomous basis, i.e. the right to govern themselves. Besides the
idea of community, this principle of voluntariness is an essential feature of the
cooperative.
Open membership
The fundamental principle of “leaving the door open” to all possible cooperative
members can be recognized by their economic freedom; “open membership” is also an
expression of socio-political aspirations of the cooperative. Anyone who wants to act
cooperatively and considers his cooperation a contribution to the promotion and
dissemination of the cooperative idea should be allowed to join a cooperative; nobody of
good will can be denied membership.
The social component
Even though cooperatives should not only be a means of eliminating or easing
poverty and could basically include all social classes and status groups, they were and
still are economically weak elements to a large extent; industrial and rural workers and
the so-called SME circles, farmers, craftsmen and small traders have sought to overcome
economic weakness and strengthen their market position through the cooperative union
which emphasize the social dimension of the cooperative economy.
The personal element
Cooperatives have occasionally been called the “joint-stock companies of the
ordinary people” .The prevailing element of cooperatives is a personal one. The upholders
of a cooperative are the economically active people, not their deposited capital.
Equal votes and a membership which is linked to a person are the special features
of cooperative organization. They are based on the personal foundations of the
cooperative and guarantee that economically weaker members are not less involved in
decisions than stronger ones, and that the cooperation can never be ruled by other –
particularly capitalist – interests which are directed against members.
Democratic administration
Given the principles of voluntariness and equality it becomes clear that the
cooperative realizes the economic democracy. This is also reflected in the way members
are allowed to participate in the decision-making process, the cooperative’s
organizational structure and way of administration.
Not only can every member directly participate in steering the cooperative but
also decide on the future of their cooperative.

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 Self-governing and administration, i.e. the free and independent management of
communal affairs by their members, have been realized; they have become the
fundamental principle of cooperatives.
The Owenite Phase of the early Co-operative movement in England: - Of the
cooperators, the best renowned was Robert Owen, who was born in 1771.As a result of the
powerful pen which Robert Owen wield and his oratory, many co-operative societies were
founded no doubt, but his idea of cooperation were entirely different from what is meant
by co-operation, later and to-day. He advocated the establishment of colonies situated on
the land consisting of the producers of different commodities owning the means of
production and working together for the purpose of satisfying common needs. But these
were not to be democratically governed. It was Robert Owen who clearly perceived the
conflict implicit in the principle of self-interest and the principle which he was advocating,
Although the early attempts at forming, co-operative communities had failed, the seeds of
a new philosophy on which those organizations were founded did remain to grow again in
the more favourable soil at a later age. The principles which were handed down by Robert
Owen to the later co-operative movement are summarized by Carr Saunders and others in
their book entitled" Consumers Co-operation in Great Britain" and are given below:-

1. The elimination of private profit.

2. Production for use by consumers in their voluntary associations.
3. Common ownership of the means of production by accumulation of profits of
joint enterprise.
4. The utilization of the wealth of the community.
The Owenite movement lasted for a period of twenty years from 1820 to 1840 and the
doctrines and ideas preached by Robert-Owen and his disciples were unsuited to the
practical needs of the age and hence they were branded as Utopian. A number of
cooperative societies were started, a League was formed for propagation of the idea of co-
operation and conferences were also held, but by 1840, little was left of the Owenite
movement because of its philanthropic nature. The Owenite societies took their birth
because of a feeling of pity in order to relieve the misery of the working classes at that
time.

The Rochdale Pioneers: - Rochdale was in the heart of the Lancashire area. In the
Lancashire cotton mills the hours of work were long and the wages were short, and
something had to be done to remedy the situation. An incident in Rochdale early in 1844
was responsible for starting the cooperative movement. A small group of workers found
themselves without work and they sought the aid of their fellow-workers and of the shop-
keepers of the town with whom they were usually trading. Their lack of response roused
the weavers and their consciences to seek an alternative way of life. They were the men
who became the Co-operative Pioneers of Rochdale. They had also a vision of the
immense possibilities of the co-operative scheme. Thus the Rochdale Society of Equitable
Pioneers came into existence on August 15, in 1844 and the 28 flannel weavers found it as
members. Their initial share capital amounted to £ 28 sterling. The members were of
varied political and religious persuasion. Some of them were artists, some 'socialists and
some were Owenite cooperators. Further, some of those who joined were unemployed,
some were irregularly employed and all of them were poor. They started with a few
articles like butter, sugar, flour and oat-meal and opened their shop in the evenings and

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some of their members acted as salesmen. The Pioneers' made the beginning on a very
small scale, and the birth of the Society attracted but little attention at the time.

Co-operative Credit Raiffeisen, Schulz-Delitzsch, and Other Systems:- The story at

the origin and growth of Cooperative Credit as an organized system or as an institutional
credit in Germany is of particular importance. Germany took the lead in combating
usury by starting credit associations under the inspiration of two men-Raiffeisen and
Schulz -, the former is the man for poor peasants and the latter for artisans and small
tradesmen. Born in 1818, Raiffeisen first took a military career, but he had to retire from
service because of the weakness of his eye-sight. He entered civil service and became a
burgomaster of Westerwald in 1845. Here he came into direct contact with the sufferings
and miseries of the poor peasants. The District of Westerwald was ravaged by the famine
of 1846-47 and the peasants were mercilessly exploited by the moneylenders, Usuary
laws, police regulations and other -administrative measures had proved abortive in
improving the condition of the poor peasant. It did not take a long time for Raiffeisen to
discover that the main source of the poor man's helplessness was lack of credit on
reasonable terms and that this credit could be dispensed if he could organize himself
through self-help to get it, The first Society he started was a bakery, which was a boon to
the peasants in the Westerwald District. This was soon followed by the formation of
Cattle Purchase Association to supply cattle to the peasants on installment basis. It was
not until 1862 that the first regular loan society or the village bank was started with a
capital of £ 300, at Anheusen in which the fundamental co-operative idea of collective
liability of the borrowers themselves was first introduced. The later societies started by
him on this principle of unlimited liability came to be known as Village Banks or more
appropriately as "Raiffeisen Banks", Until 1879, these societies made very slow progress,
only 22 having been started during the period, but subsequently they made rapid progress.

The essential or fundamental features of the Raiffeisen Society or Village Bank.

(1) Unlimited liability of the members for all the debts of the society:-Raiffeisen
insisted that every village bank should adopt unlimited liability. When Raiffeisen founded
his societies there was no privilege of limited liability accorded by the law and Raiffeisen
was a convinced advocate of the principle of unlimited liability" It was 'open to the
societies to choose either of the two forms viz. unlimited liability and unlimited
contributory liability. More than 90 percent of the societies adopted the former. In a
society with unlimited liability members assume liability for the engagements of the
society to its creditor’s .directly to the extent of the whole of their property and this
'liability’ is individual and joint. In the event of winding up any deficit in assets to meet
the debts is recoverable by a per capita levy upon the members. Proceedings by creditors
against individual members were permitted under the law, when after the lapse of three
months from the date on which the contributory levy upon members is declared
executable; such claims have not been satisfied. If, however, judgment is obtained by a
creditor against the member, the latter steps into the shoes of the creditor and he has the
right to sue the society for reimbursement of the amount paid by him and on failure of the
society he may proceed against any other solvent member or members. The German Act
of 1889 introduced another form of unlimited liability known as unlimited contributory
liability. Under this form of liability, no direct proceedings against individual members
could be taken by creditors. This sort of unlimited liability is only recognized in India in
virtue of the decision of the Patna High Court. It can be enforced only during the
winding- up of a society, if there is a deficit in assets to meet the engagements of a

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society to its -creditors. "'First the deficit should be made good out of the share capital of
members and reserve fund and in cases where they are inadequate, the deficit may be
recoverable by a series of per capita levies upon members up to the full extent of their
property. There has been a divergence of opinion in India as to the best form of liability
suitable for a rural co-operative credit society, and the controversy has been set at rest by
giving discretion to the promoters to adopt either limited or unlimited liability for their
credit association, and to the management of societies to change their form of liability
under certain conditions and after compliance with certain formalities prescribed by the
law.

(2) Limitation of the Area of Operation of a Society:- The area of operation of a

Raiffeisen Society is strictly limited. Raiffeisen recommended that rural areas with a
minimum population of 400 and up to a maximum of 2000 should be chosen. This
limitation of area constitutes one of the essential principles underlying the co-operative
credit organization set up by Raiffeisen. It was purposely adopted as it ensures certain
benefits. Members are intimately acquainted with each other and know the means and
capacity also. A small area of operation is greatly helpful in the selection of proper -
members and in the proper assessment of credit of members by the management, and
ultimately it facilitates the exercise of vigilance over the use to which the amount of loan
is put. It is because of these factors that members of a Raiffeisen society become willing
to assume unlimited liability.
(3) How Funds are raised? As the Raiffeisen societies were mainly stinted among poor
people, they had no shares at all in the beginning. . Shares of small value were introduced
later, because of the need to comply with the requirements of the law. No dividend- was
also paid on the share capital held by members in the early stages, but when payment of
dividend began to be made, the maximum was fixed which could not exceed the rate of
interest charged on loans.
(4) Deposits:-Small savings on the part of members were encouraged and such savings
could be deposited with the society. Small amounts of deposits even from non-members
within the area of operation of the society were also welcome, but a slightly higher rate of
interest was paid on deposits of members.
(5) Loans:-Loans were raised also from central or provincial banks or any other
commercial banks or individuals who were non-members.

(6) Reserve Funds: - Two kinds of reserve funds were built -up one to cover the losses of
the society and the other to strengthen its financial position. The latter fund is generally
indivisible even if the society gets dissolved. In such a case it is held in trust for a time
until a new society with similar objects is started in the area. If however, no such society
is likely to be started the amount of the reserve fund is utilized for some work of public
utility. Such a reserve fund strengthens the financial stability of the society.
(7) Credit Policy: - Three kinds of financial accommodation can be granted to a member:
(1) Simple loans, (2) loans on current account and (3) loans on property. Loans falling in
category No. (2) are rare except in industrial areas. Simple loans on the security of
persons or mortgages on land or by way of deposit of collateral security were greatly
favoured. Raiffeisen placed great emphasis on character of a borrower his motto being
capitalization of honesty and industry of a man and he discouraged improvident
borrowing. A borrower was required to produce independent testimony as to his good

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character. A man may have very good security to pledge, but his application for a loan
might be rejected if the management were not satisfied about his industry, honesty and
sobriety. This is certainly in contrast to the system followed by Schulze, who was
prepared to grant loans on the strength of general business reputation, of a borrower. The
average size of individual loan was below R. M. 500. The rate of interest varied from 4 to
5%. The period of repayment of the loan was fixed from 1 to 10 years. Repayments were
allowed to be made either in lump or in installments. The amount of a loan was called in
if it was discovered later that the borrower had neglected the property which was offered
as security or had lived an extravagant life. The greatest triumph for Raiffeisen was that
utmost punctuality in the repayment of loans, was enforced in the Societies. Started
though it was a hard task for him. The third kind of credit allowed was really an
investment in immoveable property. If on account of some unavoidable circumstances, a
borrower wanted to sell his property, the society would undertake to pay a reasonable
value for such estate, charging a small commission for services thus rendered. If another
member of the society wanted to purchase such property, the Bank would grant him a
loan to enable him to purchase it, provided the society had surplus funds with it, the main
idea being to save the poor peasants in times of difficulty and to keep out the exploiters.
(8) Management: - Another feature of the Raiffeisen system is the simplicity and
democratic nature of the management of the society. Final authority of the society vests in
the general body of members which elects a small executive committee of five or six
persons for a period of four years. There is also a Council of Supervision consisting of
three members elected for a period of three years, as a sort of check upon the executive
committee. Neither the members of the executive committee nor those of the supervising
council get any remuneration for their service; the principle adopted being gratuitous
service. The only person who receives the salary is the cashier or the person who writes
up the accounts. A staff of inspectors was also appointed by the Central Office of the
Raiffesian Federation and they examined the accounts of banks at least once in two years.
To sum up, all Raiffeisen societies in Germany present the following features in their
working or follow the following, principles according to Cahill:
1. Limitation of the area to secure personal knowledge.
2. Low shares.
3. Permanent individual reserve fund.
4. Unlimited liability.
5. Loans only for productive and prudent purposes.
6. Loans only to members,
7. Credit for relatively long periods repayable in installments.
8. Determination every year by the members of each society of
(a) The maximum credit of individual members;
(b) The maximum total of savings deposits receivable;
(c) The maximum total of loans that may be taken up.
9. Absence of profit-seeking; dividends, if paid, limited as a maximum to the rate of
interest paid by borrowers on loans.
10. Gratuitous service on the committee.
11. Promotion of the moral as well as material advancement of members.

FEATURES OF COOPERATIVE ORGANISATION

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 The International Cooperative Alliance’s (ICA) Centennial Congress held at
Manchester in September 1995 approved the ‘Statement of Cooperative Identity’. This
statement includes definition, values and Principles of Cooperation.
STATEMENT OF IDENTITY:
1. A Cooperative Society is an autonomous body independent of government or any
other body. It has own bye-laws;
2. It is an association of persons and not of capital it gives importance to human
values.
3. It is an institution to meet common economic, social and cultural needs of its
members;
4. It is a voluntary organization, membership is open. It has democratic management
i.e. owned, managed and controlled by its members. General body (all members)
is the supreme authority.

DEFINITION: The International Cooperative Alliance (ICA) 1995

‘A cooperative is an autonomous association of persons united voluntarily to meet
their common economic, social, and cultural needs and aspirations through a jointly
owned and democratically controlled enterprise’.
VALUES (ICA-1995)
Cooperatives are based on the values of self-help, self responsibility, democracy,
equality and solidarity. In the tradition of their founders, cooperative members believe in
the ethical values of honesty, openness, social responsibility and caring for others.
1. Self-help
Self-help promotes mutual help. Self help and mutual help constitute the
foundation of cooperative enterprise at micro level. This value respects individuals’
capacity to solve their own and community problems individually and collectively. This
value makes and individual member to realize his/her inherent potential and strength.
Self-help is based on the belief that all people can and should strive to control
their own destiny. It emphasizes that first, each individual is responsible for his/her own
destiny and second, each individual must control his/her own destiny. However as an
individual one is limited in that one can try to do, what one can achieve, but through joint
action and mutual responsibility, one can achieve more. Cooperative also provides
opportunities to individuals to develop themselves – tone up their skills, improve their
understanding and continue their process of education.
2. Self responsibility It represents that members take the responsibility to develop and
run their enterprise. Members decide the objectives and pattern of their business. Hence
the success (or) failure of the cooperative rests with them. Members take the
responsibility to promote cooperation among their communities also. They need to
demonstrate that a cooperative enterprise is a counter-veiling force in the market to
balance the supply and demand. They are ultimately responsible for distinguishing their
enterprise from other organizations.
3. Democracy

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 It represents the democratic control and diffusion of power in the cooperative
enterprise. Democracy, says Paul Lambert, is the cardinal principle. It distinguishes
cooperative business most sharply from capitalist business, and it can be applied
uniformly to any type of cooperative business. It ensures one man one vote irrespective of
members stake in the capital.
Members are users of cooperative business. Therefore naturally, the affairs of
cooperatives should be controlled by members. This would mean that the affairs should
be administered by persons elected (or) appointed in manner agreed by the members.
Power has been place in the hands of member-users, who in turn actively participate in
farming of policies and taking decision. In short, equality among member-users is
possible, only when democracy is ensured.

4. Equality
A cooperative is based on equality-equality of members, who are its basic units.
This basis in human personality is one of the main features distinguishing a cooperative
from firm controlled primarily in the interest of capital. Members have right of
participation, a right to be informed, a right to heard and right to be involved in making
decisions. Members should be associated in a way that a equal as possible without any
discrimination on the basis of gender, religion, caste, creed, race, amount of capital
invested, political affiliation etc., The concern for achieving and maintaining equality by
adopting the principle of one man one vote will be a continuing challenge of all
cooperatives.
5. Equity
This is another never ending challenge before the cooperatives. This refers to how
the members are treated in cooperative business. They are treated on par with their
participation with the business of cooperative enterprise. In other words any surplus
arising out of revenue and expenditure of the transitions of the cooperative is treated in
two ways. First, priority is given for the capital formation to meet the future challenges.
Second, the remaining will be shared among the member-users on par with their
transaction with the business of cooperative enterprise. This is in fact an automatic will
go to the hands of few and finally money will dominate man. Further the patronage
refund lays the foundation for an expanding economy by rebuilding the buying power of
the consumers.
6. Solidarity It means that the cooperative and cooperatives stand together for the
collective interest. They stand for ‘economic’ distribution of goods and services’ by
integrating local, state, national and international cooperatives under a common umbrella.
They believe that though the cooperatives in different sectors and regions have different
interest, have certain commonalities for the betterment of member communities in
particular and human race in general. In fact solidarity is the very cause and consequence
of self-help and mutual help. This value demonstrates the strength of cooperative
movement to the individual members, the mass as well as other social organizations.
7. Ethical Values
Apart from the above, the cooperative members believe in the ethical values of
Cooperation such as honesty, openness, social responsibility, and caring for others.
Founders of the cooperative movement not only believed in these basic values but also
advocated that they are above the influence of time, place and people.

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 Values are not external. They are not static. They are dynamic. Values are likely
to change in accordance with the changing environment. Cooperatives to be real and true
they need to inculcate themselves certain basic values. These values will distinguish from
other forms of organizations. Further the basic values of Cooperation should be reflected
in day-to-day functioning of cooperatives which naturally requires imbibing these values
in the minds of members of cooperatives through education and training.
ROCHDALE’S PRINCIPLES OF COOPERATION
Principles of Cooperation, First Phase (1844-1937)
Principles of Co-operation followed by the Raiffeissien Pioneers:
1. Open Membership
2. Democratic Control – One member one Vote.
3. Division of Surplus in proportion to the members transaction
4. Limited interest on capital
5. Political and religious neutrality
6. Cash trading
7. Promotion of education
In 1937, ICA Committee regarded the above principles viz., open membership,
limited interest on Capital and payment of surplus in proportion to the transaction as
essential principles and others as non-essential principles.
ICA PRINCIPLES
First Reformulated Principles of Cooperation (ICA) – 1966 at Vienna under the
chairmanship of Prof. D. G. Karve recommended six Principles:
1. Voluntary and open membership
2. Democratic control
3. Limited interest on Share capital
4. Equitable Distribution of Surplus
5. Co-operative education and Training
6. Co-operation among Cooperatives

SECOND REFORMULATED PRINCIPLES OF COOPERATION OF ICA–

MANCHESTER – 1995 (SEVEN PRINCIPLES)
The co-operative Principles are guidelines by which co-operatives put their values into
practice.
1st Principle: Voluntary and Open Membership
Co-operatives are voluntary organizations, open to all persons able to use their services
and willing to accept the responsible of membership, without gender, social, racial,
political, or religious discrimination.
2nd Principle: Democratic Member Control
Co-operatives are democratic organisations controlled by their members, who actively
participate in setting their policies and making decisions. Men and women serving as
elected representatives are accountable to the membership. In primary co-operatives

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members have equal voting rights (one member, one vote), and co-operatives at other
levels are also organized in a democratic manner.
3rd Principle: Member Economic Participation
Members contribute equitably to, and democratically control, the capital of their co-
operative. They usually receive limited compensation, if any, on capital subscribed as a
condition of membership. Members allocate surpluses for any or all of the following
purposes: developing their co-operative; benefitting members in proportion to their
transactions with the co-operative; and supporting other activities approved by the
membership.

4th Principle: Autonomy and Independence

Co-operatives are autonomous, self -help organisations, controlled by their members. If
they enter into agreements with other organizations, including governments, or raise
capital from external sources, they do so on terms that ensure democratic control by their
members and maintain their co-operative autonomy.
5th Principle: Education, Training and Information
Co-operatives provide education and training to their members, elected representatives,
managers, and employees so that they can contribute effectively to the development of
their co-operatives. They inform the general public- particularly young people and
opinion leaders- about the nature and benefits of cooperation.
6th Principle: Co-operation among Co-operatives
Co-operatives serve their members most effectively and strength the co-operative
movement by working together through local, national, regional, and international
structures.
7th Principle: Concern for Community
Co-operatives work for the sustainable development of their communities through
policies approved by their members.
COOPERATIVES AT A NEW LEVEL:

Cooperative Enterprises Build a Better World (ICA-2012)

• Stable, quality employment
250 Million People worldwide earn their living as members or employees of a
co-operative.
• Economic growth
Sustainable growth means overcoming short termism and improving business
diversity.
• Sustainable businesses
Co-operatives operate from people's needs and a concern for community.
• Food security
Via a co-operative, farmers can own their land and ask better prices for their
produce.
• Giving people a voice
Voting business decisions together fosters democracy and empowers people.

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Blue Print for a Cooperative Decade-2020 Vision (ICA)

The “2020 vision”, embedded within the blue print strategy of ICA, aims for the co-
operative form of business by 2020- to become:
• The acknowledged leader in economic, social and environmental sustainability
• The model preferred by people
• The fastest growing form of enterprise
Blue Print Strategy (ICA): Five Fold
• Participation: Co-operatives are better because they give individuals participation
through ownership, which makes them inherently more engaging, more
productive, and both more useful and more relevant in the contemporary world.
The aim is to elevate participation within membership and governance to a new
level.
• Sustainability: Co-operatives are better because their business model creates
greater economic, social and environmental sustainability.
• Identity: Co-operatives are better because they are a business model that puts
people at the heart of economic decision-making and bring a greater sense of fair
play to the global economy. The objective is to develop our external identity.
• Legal framework: Co-operatives in every jurisdiction sit within a legal
framework. This framework plays a critical role for the viability and existence of
co-operatives. The Blueprint seeks to ensure supportive legal frameworks for co-
operative growth.
• Capital: Co-operatives need access to capital if they are to be established, grow
and flourish. The aim is to secure reliable co-operative capital while guaranteeing
member control.
Choose Cooperative, Choose Equality
ICA statement on the occasion of International Cooperative Day on 4th July 2015 is worth
quoting: “By building cooperatives, people all over the world have chosen a democratic
model of business that fosters equality”.
Conclusion
The genesis of cooperative movement has successfully depicted the long journey the co-
operatives have travelled so far. But since Cooperatives are fit for Yesterday, Today and
Tomorrow, the co-operative principles cumulatively are the life blood of the movement.
They are the guidelines through which co-operative strive to develop their co-operative
organisations. These critical factors make co-operative enterprises effective and valuable
for a better world.

References:
1. Review of International Co-operation; volume 88 No 3 ICA, 1995
2. Theory and practice of Cooperation in India and abroad by K. R. Kulkarni Vol – I, II
and III
3. Cooperation in India and abroad by H. G. P. Srivastva
4. Cooperation in India by B. S. Mathur
5. www.ica.coop
6. www.aciamericas.coop
7. www.wikipedia.com/org/wiki/ICA

13
Questions:
1. “Cooperative Enterprises Build a Better World”. Elucidate.
2. What do you mean by Cooperative Identity? Discuss about the reformulated
principles of Cooperation as suggested by ICA. 3. Discuss about the historical
evolution of cooperatives and the pioneers of co-operative movement.

CHAPTER – 2
EVOLUTION OF CO-OPERATIVE MOVEMENT IN INDIA AND ABROAD
Genesis:
Poverty with severe degree of rural indebtedness was a major concern in India in
the late 19th century. The poor were within the clutches of moneylenders – jamindars/
mahajans. Sir Daniel Hamilton expressed that the country was in the grip of mahajans.
Many of the farmers were literally born in debt lived in debt and died in debt, passing
debt burdens to next generation. Because of debt burden an average farmer was down to
the level of a serf. Pessimism and fatalism had killed hope in his heart and benumbed his
spirit. Further deterioration in the socio economic conditions of the farmers was observed
with the advent of British Rule in India.
For measuring rural indebtedness two subsequent acts were enacted – the Land
Improvement Act of 1883 and the Agriculturist’s Loans Act of 1884.
In spite of all possible efforts, relief measures could not mitigate the complex
problems of rural indebtedness.
As an alternative, the Government of India felt to take up cooperative approach to
ameliorate the heavy lot of rural masses. The officials of the Government of India, who
had studied the working of the Agriculture Banks of Egypt, were strongly of the view that
India must go in cooperative experiments in similar ways. Thus conceptualization of
cooperative approach for better economy of poor farmers was made.
Nicholson’s Report:
For finding the possible ways of introducing Land and Agricultural Banks, the
Government of Madras Province deputed Sir Frederick Nicholson in 1882. It was the
initial step for introducing cooperative movement in India during British Regime.
Sir Nicholson honestly studied the matter and he produced a monumental report
on the subject. In his report it was strongly recommended that India must find its own
Raiffeisens who could organize and effectively nurture a cooperative movement in his
country of Germany if the essential conditions were to be improved. He summed up his
report in two words “Find Raiffeisen”
On the other side, Mr. Dnpernex of Indian Civil Service started setting up village
banks in U.P. province. Based on his experiment on village banks he published a book
entitled, “People’s Bank for Northern India”. This book had given direction and
suggestions for operationalising village banks for solving the problems of poor
agriculturists in India.

14
 The Government of India have recognized the ideas and suggestions drawn out of
the experimental reports published by Sir Nicholson and Mr. Dupernex. Thus in 1900 the
Government of India constituted a strong committee under the Chairmanship of Sir
Edward Law to make a concrete proposal to the Government based on the works of these
two pioneers in Cooperative Approach for consideration.
They arrived to the conclusion that cooperative societies were worthy of
encouragement. They drew up model schemes of Management for both rural and urban
societies. They recommended essential elements of legislation to secure the privileges of
working and supervisions of cooperative societies. Their recommendations became bill
which was passed in parliament, as the Cooperative Credit Societies Act, 1904.
The First Stage of the Movement (1904-1911)
The introduction of the Cooperative Credit Societies Act in 1904 marked the beginning of
the cooperative movement in India. The laudable measure was hailed as “a turning point
in economic and history” by Henry W. Wolff, the great cooperator and “the way from
poverty to plenty” by Daniel Hamilton. The object of this Act, as stated in the preamble,
was to encourage thrift, self-help and cooperation amongst agriculturists, artisans and
persons of limited means.
The essential features of this Act:
1. A society could be formed by any ten persons living in the same village or
town.
2. The cooperative societies were classified as rural and urban.
3. The Act provided only for the formation of credit societies.
4. The area of operation within which societies could operate was closely
restricted.
5. The societies could advance loans to members only on personal or real
security.
6. The interest of member in the share capital of the society was strictly limited.
No members could hold shares for more than Rs. 1000.
7. The accounts of every society were to be audited by the Register or by a
member of his staff free of charge.
8. Societies were exempted from payment of income-tax, stamp duties and
registration fees.
9. Societies were of unlimited liability.
10. It provided for the appointment of Registrar of Co-operative Societies in each
province.
11. The societies were given a legal personality and were authorized to raise funds
and carry on their business in a corporate capacity.
The Co-operative Societies Act II of 1912 : - The Cooperative Societies Act, II 1912,
was drafted with great care after fully considering the large mass of material relating to
the working of societies. The defects found in the Act of 1904 were corrected but its main
features, viz., simplicity and elasticity, were retained in the new Act. The object of the
Act as mentioned in the preamble was to facilitate the formation of co-operative societies
for the promotion of thrift and self-help amongst agriculturists, artisans and persons of
limited means. The new Act contained provisions for the registration of all types of co-
operative society’s including-central financing agencies and supervising unions. The

15
classification of societies as rural and urban was done away with and the Act provided for
its substitution by making a distinction based on the nature of liability adopted.
The primary agricultural credit societies were to be registered with unlimited liability,
while central societies with limited liability. Shares or interest of a member in the capital
of a society was exempt from attachment. It legalized the registration of unions and
central financing agencies that had already come into existence. Finally, it gave wide
powers to local Governments regarding the working of societies and settlement of
disputes by arbitration. The Act permitted societies with unlimited liability to declare
dividend on Shares after 25 % of the net profit had been appropriated to the statutory
reserve fund with the permission of the Provincial Government. Provision was also made
for setting apart a portion of the profits for educational and charitable purposes. A number
of minor improvements with regard to registration, audit and other administrative details
were also introduced, but the Act made no provision for fluid resources to meet
depositors' liabilities.
The Effect of the Act II of 1912: The immediate effect of the new Act was to infuse
fresh energy into the movement. There was an increase in the number of societies,
membership and working capital. New types of societies for the sale of produce, milk-
supply, manure purchase and cattle insurance as also societies for the purchase of
common necessaries of life came into existence. The number of central institutions was
growing rapidly and the confidence of the public was being won in greater measure every
year. In the circumstances, the Government of India thought that the time had come to
take stock of the position and on 17th June 1914 they issued a comprehensive resolution,
reviewing the progress that had been made and clearly, setting forth the practical lessons
that could be drawn from the experience so far gained. The Government of India also felt
at the same time that it was not in a position to foster the growth of the movement unless
it was satisfied that the movement was progressing on economically and financially sound
lines. Further, the financial management of central societies was becoming more intricate
and large sums were involved.
The Imperial Committee on Co-operation in India otherwise known as 'Maclagan
'Committee ': It was with a view to investigating and getting the financial aspect of the
growth of the movement examined that the Government of India appointed a seven man
Committee under Sir Edward Maclagan in October 1914, and Mr. R. B. Ewbank,
Registrar of Co-operative Societies Bombay, was appointed as its Secretary. The
Committee was directed to suggest measures of financial improvement. The Committee
issued a comprehensive Report in 1915, which was regarded as the Bible of Co-operation
for a considerable length of time. It made many constructive proposals of a far-reaching
nature for the development of the co-operative movement, particularly in its- financial
aspects. While recording their findings and making recommendations the Committee
observed that under the Co-operative Societies Act II of 1912 all registered co-operative
societies, whether they were primary units or federations of such units, were mentioned as
societies. In actual practice, however, the Committee found that primary units dealing
with individuals, though generally known as societies, were in some provinces also
designated as banks. Similarly, the institutions to which such primary utilities were
affiliated were in some provinces called central banks, while in others they were known
as town banks, urban banks, district banks, central banking unions etc. It was also found
that in certain provinces, Provincial Banks had been organized. The Committee, there-
fore, decided to classify the societies for the purpose of their Report as (a) primary
societies,-those meant for individuals; (b) unions-federation of societies for purposes of
supervision, and which did not undertake any banking business; (c) central banks-federal

16
institutions doing banking business and (d) Provincial Banks. The Committee further
recommended that the terminology indicated should in future be adhered to by all local
Governments.
The main recommendations of the Committee regarding the constitution, financial
arrangements, audit and supervision of societies were as follows:
(a) Primary Societies: - A society should be registered only when it is organized on
sound lines. Its area should, as a rule, be restricted to one village. It should aim at
building its own capital and strive to be co-operative in spirit and businesslike in its
activities. It should compel every member to subscribe to shares and raise as much local
capital by way of deposits as possible. Installments for the repayment of loans should be
strictly in accordance with the object for which the loans are granted. Payments of
installments on fixed dates should be insisted on. The accounts of societies should be
regularly audited and the management supervised by the Registrar's staff and the staff of
Co-operative Organization to which the societies are affiliated. Besides checking the
accounts and assisting the Committee in the management of the affairs of a society, the
duties of supervisors maintained by unions of societies or central banks should include
the education of members in the principles of co-operation. The Statutory audit conducted
by the staff under the Registrar should also include an examination of the general
condition of the society.
(b) Non-Credit Societies: - Non-credit societies should be encouraged, but they should
be organized only if the move came from the promoters spontaneously, and if sufficient
and competent staff both for running such societies and for supervising and guiding their
affairs was available. Societies for sale and production and for cattle and health insurance
should also be encouraged, but those for trading purposes in urban areas should be
organized with caution. Central co-operative banks may finance non- credit societies
provided they were in a sound position.
(c) Unions: - Guaranteeing Unions for the purpose of mutual supervision, assessment of
credit and for forming a link between societies and central banks should be established in
each province.
(d) Central Financing Agencies: -
(i) District Central Banks : - Of the three types of central banks, viz., (I) those
consisting entirely of individual share holders, (2) those entirely consisting of society
shareholders and (3) those consisting partly of individual shareholders and partly of
society-shareholders, the first type should gradually disappear and the ultimate aim
should be to have only the second type. A central bank should have a definite area and all
primary agricultural credit societies operating within that area should be its shareholders,
and should not ordinarily borrow funds from any other source. All shares in a central
bank should preferably be on one basis, but if it was absolutely necessary to attract local
capital, the shares allotted' to individuals might carry preference as regards dividends.
Central banks should make every effort to obtain deposits sufficient to meet their
requirements and might raise money by debentures in special cases only. The formal audit
of central banks might be done either by a professional Auditor or by Government
agency, but detailed examination of the financial condition of banks and their supervision
should be entrusted to Government staff only. In addition to annual returns, central banks
should be required to submit quarterly statements showing in some detail the state of their
finances, especially with reference to their outside liabilities.
(ii) Provincial Banks: - A provincial or apex bank should be started in every province
and all central banks in the province should be affiliated to it. The chief function of such a

17
bank should be to co-ordinate and control the finances of central banks. The bank should
also have individuals as shareholders. The shares of such a bank should ordinarily be of
one class only. It should secure fixed deposits for the longest possible term and should
accumulate good reserves and should not merely rely on cash credits or other borrowings
from the banking system. The audit of the bank might preferably be done by a Chartered
or Incorporated Accountant and it should be required to submit, the same returns as
central banks.
(e) Miscellaneous Recommendations: - The Committee also made recommendations of
a general character. The coordination of Co-operative, Agriculture and Industrial Depart-
ments under an experienced officer in each province, closer control over the objects of
co-operative societies and over their financial arrangements by Government was among
the important recommendations.
Effect of the Recommendations of the Committee: - The recommendations made by
the Maclagan Committee had a far-reaching effect on the further development of the
movement and they were adopted by co-operative departments in all the provinces. With
Co-operation becoming a transferred subject under the Government of India Act of 1919
(Montagu-Chelmsford Reforms), further impetus was given for the development of the
movement by the Provincial Ministers in charge of Co-operation, and the period from
1915-29 was marked by large expansion of the movement in almost all the provinces.
This period may be characterized as a period of unplanned expansion and was also
marked by conditions of boom after the termination of the World War I in 1918-19.
Owing to the spurt in prices up to 1924-25, buoyant conditions prevailed and all conceiv-
able types of societies were launched during the period, with the result that many
societies came to be organized without proper preliminary investigation and certainty as
to their success. Numerous co-operative societies for supply and distribution and for
providing long-term and intermediate-term credit sprang up in the provinces and states,
though not on a uniform basis. Some of the provinces found it necessary to take stock and
re-examine the position of the co-operative movement and felt impelled to enact special
legislation, for regulating the working of co-operative societies. It was not, however, until
1925 that the first Provincial Co-operative Societies Act was passed in the Bombay
Presidency. Madras and Bihar followed next the example of Bombay in 1932 and 1935
respectively. The Bombay Act was adopted with some modifications in Sind. The Bihar
Act was adopted for the areas transferred from Bihar and C. P. and the Madras Act was
applied to the rest of the Province. In other provinces and states the All-India Act was
applied with suitable modifications. Most of the Provincial Acts were based on the
models of Bombay and Madras Acts.
Salient Features of these Provincial Acts:
The Bombay Act VII of 1925: - In November 1925 an Act to consolidate and amend the
law relating to co-operative societies was passed and it widened the scope of the co-
operative movement. Its preamble made it clear that societies could be formed for the
promotion of thrift, self-help and mutual aid among agriculturists and other persons with
common economic needs, so as to bring about better living, better business and better
methods of production. It classified societies according to their main objects on a
scientific basis and included definite provisions for the arbitration of disputes, instead of
being relegated to the rules as in the old Act, and provision was also made for the
recovery of the dues to societies as arrears of land revenue. Government was empowered
to make rules for ordering payment of arbitration fees and costs of execution in certain
cases. The Act introduced the principle of “one man, one votes" for the first time and
provided for the amalgamation of two societies subject to certain conditions. It also

18
prescribed certain penalties for specified offences committed by the office-bearers of
societies. The Act also permitted the establishment of a provident fund by societies for
the benefit of their members. It also laid down the limits of individual share-holding to
Rs. 10,000 in the case of housing societies and to Rs. 3000 in the case of other societies,
subject to an overall limit of one-fifth of his total share capital of the society. It also
provided for the making of loans to societies by the Local Governments or for
guaranteeing the payment of interest on principal or debentures, or both, issued by the
societies catering for the long-term needs of the agriculturists. The Registrar was
empowered to assess damages against delinquent promoters, and office-bearers of
liquidated societies on the application of the liquidator or a creditor. The Act has, how-
ever, undergone several further amendments, and the nature and content of these
amendments will be known when the new bill is passed into 'law.
The Madras Co-operative Societies Act VI of 1932: - In 1927, the Madras
Government appointed a seven-man Committee with Mr. Townsend as President,
otherwise known as the" Townsend Committee ", to examine the progress made in the co-
operative movement in the Presidency since the Maclagan Committee's Report and to
investigate the financial system and to make recommendations in regard to propaganda,
supervision and control of societies and finance. The Committee was also directed to
examine the position in regard to co-operative distribution, production and sale and to
make appropriate recommendations in regard thereto. The Committee submitted its
Report in 1928, recommending, inter alia, that suitable provincial legislation should be
undertaken to remedy the defects found in the actual working of the Imperial Act of 1912.
A Bill was drafted giving effect to the various suggestions of the Committee and
incorporating the results of experience so far gained of the working of the movement. The
Bill was passed into law in 1932.
Salient Features:
The Act widened the scope of the movement by laying down the object of co-operative
societies as the promotion of thrift, self help and mutual aid among agriculturists and
other persons with common economic needs so as to bring about better living, better
business, and better methods of production. The preamble of the Bombay Act was
practically repeated. The Act defined unlimited liability and contained drastic provisions
for the' recovery of over dues. It further provided for arbitration of disputes and
conditional attachment of the property involved; it laid down the procedure of liquidation
giving larger powers to the Liquidator to wind up the affairs of societies expeditiously,
under the guidance of the Registrar. In order to promote business methods in co-
operatives, the Act penalized certain acts or omissions on the part of office-bearers of
societies. Provision was made in the Act for the Registrar to supersede the Committees of
societies which were not functioning properly and to appoint suitable persons to manage
the affairs of such societies for a limited period. The Act empowered the Registrar to
enquire into the conduct of any person who had taken part in the organization or
management of a society and was found to have misappropriated or fraudulently retained
any property of the society or had been guilty of breach of trust in relation to the society,
and make an order requiring him to repay or restore the money with interest or otherwise
compensate the society for the loss.
The Madras Land Mortgage Banks Act X of 1934: - The Townsend Committee on
Co-operation in Madras also made several recommendations in regard to the working of
land mortgage banks. The chief recommendation was for the establishment of a central
organization for financing the land mortgage banks. Other important recommendations of
the Committee were the amendment of the Transfer of Property Act for conferring on the

19
land mortgage banks the power of sale of the mortgaged property without resort to courts,
and the recognition of debentures of the land mortgage banks as Trustee Securities. The
Committee further suggested that the Local Government should guarantee the interest on
debentures for a specified period. The Committee concluded its Report with a
recommendation that a separate legal enactment was necessary to deal with the problem
of land mortgage banks, as the latter differed materially from co-operative credit
organizations. A separate Act known as the Madras Co-operative Land Mortgage Banks
Act was accordingly passed by the Madras Legislative Council in 1934. The main
provisions of the Act are briefly mentioned below: -
The object of the Act is to facilitate the working of co-operative land mortgage banks in
the Province and to provide for the grant of long-term loans to the owners of land and
other immovable property in order to enable them to discharge their debts and to carry out
agricultural and other similar improvements. It provides for the issue of debentures and
the appointment of Trustees for the purpose of securing the fulfillment of obligations to
the debenture-holders. It enables the Local Government to guarantee the principal of and
interest on the, debentures issued by the Central Land Mortgage Bank. The Act empowers
the Registrar to distain and sells the produce of the mortgaged land including the standing
crops thereon in order to recover arrears of insta1ments of loans due to a land mortgage
bank. The Act enables the land mortgage bank to bring to sale the property mortgaged
for, loan without' the 'intervention of the Civil Courts. The Sale Officer appointed by the
Registrar can put up the mortgaged property for public sale. The Act also contains
various, miscellaneous provision for the successful working of the Land Mortgage Banks.
It may be noted that the Madras Central Land Mortgage Banks Act is only a supplement
to the Madras Co-operative Societies Act of 1932 in so far as co-operative land mortgage
banks are concerned. Land mortgage banks are governed by both the Acts.
The Bihar and Orissa Co-operative Societies Act VI of 1935. : - The Local
Government appointed in 1931 a Committee under Dewan Bahadur Devsikhamani
Mudaliar to review the condition of co-operative societies in Bihar and Orissa and. to
suggest ways and means for their improvement. The Committee recommended the
replacement of the All-India Act II of 1912 by a Provincial Act and as a r esu1t the Bihar
and Orissa Co-operative Societies Act was passed in 1935. Under the Act 3; society need
not have as its object the promotion of common economic interest of members, but it can
be formed for the purpose of promoting other common interests of members in
accordance with co-operative principles. The Act defines limited liability and contains
specific provisions for the arbitration of disputes and lays down the procedure for
liquidation. The Registrar is given wide powers. He is empowered to enquire any society
to amend its bye-laws and he can also dissolve the committee and may disqualify all or
any of its members from being elected to the Managing Committee. The Act also gave
powers to the Registrar to enquire into the conduct of any person who has taken part in
the organization or management of a society, if such a person has made any payment
which is contrary to the law or by reason of his gross negligence and misconduct has
involved the society in any loss or has misappropriated or fraudulently retained any
property. When the Registrar is satisfied that any person is guilty of such conduct, he can
make an order requiring him to contribute such sums to the assets of the society as he
thinks fit. The Act also contains provisions whereby some of the powers of the Registrar
can also be conferred on any co-operative federation by the Local Government who may
direct all or any registered societies to get themselves affiliated to it cooperative
federation.
The Bengal Co-operative Societies Act XXI of 1940: - The Act is a comprehensive

20
measure designed-to rehabilitate the co-operative movement in the Province. It provides
for the registration 'of any society having for its object the promotion of the common
interests of its members in accordance with cooperative principles and it enables such a
society to call for a statement of claims from creditors, of a member or a prospective
member. The debts due to such a society are to be treated as a first charge. The Act
confers wide powers on the Registrar, who is empowered to direct the conditional
attachment of property of debtor-members. The Registrar is empowered to dissolve or
reconstitute the managing committee of a society, if- he is satisfied that it is mismanaging
its affairs. The Act further places restrictions on borrowings by a society and prohibits the
making of loans by a society to any person other than a member in excess of a prescribed
limit or on the security of moveable property. There are special provisions also in the Act
to ensure the satisfactory working of land mortgage banks.

A Brief History
The formal cooperative movement in India started with the passing of the Credit
Cooperative Societies Act, 1904. Cooperative movement experienced various ups and
downs. In the first stage (1904-11) both rural and urban credit cooperatives were set up.
The movement was meant for credit cooperatives only. Various shortfalls were
experienced. Attention to non-credit cooperative societies was not given. The need of
incorporation of non-credit cooperatives to have comprehensive movement was felt by
the policy planners of cooperative movement.
The second stage (1912-29) experienced rapid growth of cooperative movement.
Various societies came up like producers and distributive societies, central cooperative
banks, cooperative unions and provincial banks. Various other new societies like societies
of sale of produce, purchase of manure and implements, retailing of common necessaries,
housing and insurance were registered.
The Government of India wanted to ensure cooperative movement in the right
track. For this purpose the Maclagan Committee was constituted in 1914. The major
recommendations of the committee were:
1. Every member of cooperative societies should understand principles of
cooperation to become successful.
2. Honest members should be selected at the time of formation of cooperative
societies.
3. Dealings of the society should be lending to its members.
4. Loans should be given for productive purposes or for essentials of daily life, they
should be classified fairly.
5. The express object of the society should be the development of thrift among its
members.
The Third Stage (1919 – 1947) Pre-independence
In the third stage a landmark in the history of cooperative movement was made.
With the introduction of CHEMFORD Reforms Act of 1919, cooperation became a
provincial subject and was placed under the charge of a Minister.
The post World War boom and rising prices further provided advantage to the
cooperative development.

21
 During the period of Fifth Stage (1929-39) cooperative movement suffered
downfall due to great depression in thirties. Fall in prices of agricultural commodities
occurred which severely affected the economic conditions of the farmers. Their
repayment capacity dwindled considerably.
A significant achievement during this period was the establishment of the Reserve
Bank of India in 1935 under Reserve Bank of India Act – 1934 and its Agricultural Credit
Department which was charged with the duty of studying various problems relating to
agricultural credit .In 1939,the RBI stressed the importance of organizing multipurpose
cooperative societies in the field of agriculture.
In 1935, Bihar and Orissa Cooperative Societies Act was passed for Bihar and
Orissa.
➢ Agricultural Finance Sub Committee – 1944-45 (Gadgil Committee)
➢ Reserve Bank of India made public for bank in 1949.
➢ Cooperative planning committee – 1945 (R. G. Saranga Committee)

97TH CONSTITUTIONAL AMENDMENT ACT, 2011

The co-operative movement in India got a new leaf due to the 97th Constitutional
Amendment Act, 2011 which got the assent of President of India on 12th January, 2012
and subsequent Gazette notification as on 15th February 2012 as the date on which the Act
came into force. In consistence to the provisions contained in the Constitutional
Amendment act, the Multi State Cooperative Societies Act 2002 and all the State
Cooperative Societies Acts are required to amend within one year i.e.by 14th February
2013. The Amendment aims at bringing about uniformity across the Indian States/Union
territories and with a spread to all levels of cooperative sector. The basic objective is to
ensure democratic, autonomous and professional functioning of the cooperatives in the
country.
Amendment of Article 19(1)
This Article 19(1) is amended as all citizens shall have the right

a) To freedom of speech and expression

b) To assemble peaceable and without arms
c) To form association or union or Cooperative Societies
d) To move freely throughout the territory of India
e) To reside and settle in any part of India.
Hence the Act has provided in the constitution for formation of Cooperative a
fundamental right of the citizen of India.

Insertion Article 43-B

This new Article 43-B is inserted which is read as “The State shall endeavour to promote
voluntary formation, autonomous functioning, democratic control and professional
management of cooperatives”. Hence, these four vital aspects of cooperatives shall be
taken into consideration while making or amending the Law for the cooperatives.
This Act provide for

i) Incorporation, regulation and winding up of cooperative societies based on the

principles of voluntary association, democratic member control, member economic
participation and autonomous functioning;

22
ii) Specifying the maximum number of directors of a co-operative society to be not
exceeding twenty one members;
iii) A fixed term of five years from the date of election in respect of the elected members
of the board and its office bearer; and an authority or body for the conduct of elections
to a cooperative society;
iv) A maximum time limit of six months during which board of directors of a co-
operative society could be kept under supersession or suspension;
v) Independent professional audit;
vi) The right of information to the members of the co-operative societies;
vii) Empowering the State Governments to obtain reports of activities and accounts of co-
operative societies;
viii) Reservation of one seat for the Scheduled Castes or the Scheduled Tribes and two
seats for women on the board of every cooperative society, which have individuals as
members from such categories; and
ix) Penalties in respect of offences relating to co-operative societies.

IMPLICATIONS:
The Co-operative Legislation has a pivotal role in extending all supportive and conducive
environments to co-operatives for their survival, growth, success and prosperity. Unless
the co-operative develop their internal strength in the form of professional management,
enlightened and active membership, inspiring leadership and innovative vision, it will be
difficult to protect and maintain their identity, particularly in the fast changing economic
scenario. Hence, it is imperative to bring about reforms in cooperative legislation in order
to ensure functional autonomy to cooperative and to strengthen their competitiveness and
entrepreneurship. In fine, the 97th Constitutional Amendment Act 2011 is a new leaf for
the success of co-operatives.

Source: Gazette Notification No. 235 dated 13 Feb. 2012 Government of India.

References:
1. Theory and practice of Cooperation in India and abroad by K. R. Kulkarni Vol – I,
II and III
2. Cooperation in India and abroad by H. G. P. Srivastva
3. Report of the all Indian Rural Credit Survey Vo. I – Summary – Reserve Bank of
India
4. Cooperation in India by B. S. Mathur
5. Report of the study team on cooperative training (1958)
6. Report of the committee on cooperation in India (1915)
Questions:
1. Discuss in brief the development of co-operative movement in India during post
independence period
2. Discuss the contribution of Fredric Nicholson to the co-operative movement
3. Discuss the main features of 97th amendment of constitution of India

23
4. Short Notes
a. Co-operative legislation-1904
b. Co-operative legislation-1912

CHAPTER – 3

PROGRESS OF CO-OPERATIVE MOVEMENT UNDER 5 YEAR PLANS

Integration of Cooperation with Planning

Since the attainment of Independence, the cooperative movement has been

making rapid progress in various directions. The circumstances which promoted its rapid
growth during the Second World War persisted even afterwards, there by accelerating the
spread of cooperative institutions. Along with, the government has from time to time
taken important steps to reorganize and develop the cooperative movement in terms of the
recommendations of various committees like the Cooperative Planning Committee
(1946), The All India Rural Credit Committee ( 1954) etc. Further, the cooperation has
been assigned an important role in the country’s plans. In fact, it is considered as the basis
of planned growth and social development. The cooperative society has an important role
to play as the most suitable medium for the demonetization of economic planning. It
provides the local unit which can fulfill the dual function of educating Public opinion in
favour of a plan and of executing. Accordingly, Cooperation had been integrated
explicitly in the Five Year Plans.

FIRST FIVE YEAR PLAN (1951-56)

The First Plan projected Cooperation as a vital form of organization to implement

Plan concepts and programmes as below:-
"In the pattern of development we envisage for India to lay more stress on
cooperative rather than corporate savings. The Cooperative form of organization is
capable of yielding the advantages of corporate enterprise without some of its
disadvantages. It is a form of organization capable of attracting the small man, and
members of cooperatives are likely to see easily the benefits that would accrue to them by
devoting a substantial part of their surplus to investment. The encouragement of the

24
cooperative form of enterprise in all fields of activities in agriculture, trading, finance ,
marketing and in industry must, therefore, become a prime objective of Government
policy."
“In India, as in many countries, co-operation started as a means of ensuring for the
poorly equipped citizens advantages which better placed persons were able to command
by their own individual resources. The principle of mutual aid, which is the basis of co-
operative organization, and the practice of thrift and self-help which sustain it, generate a
sturdy feeling of self-reliance which is of basic importance in a democratic way of life.
By pooling their experience and knowledge and by helping one another, members of co-
operative societies can not only find the solutions of individual problems but also become
better citizens. In an unregulated economy, the terms of frequently weighted in favour of
persons of large means. Those who have the command of scarce resources are left free to
drive a bargain with those who need such resources but are ill-equipped to compete for
their possession. In a relatively stagnant agriculture economy of small holders,
undergoing a transition from barter to money economy and from local to national and
international exchange, the possession of capital naturally confers a strategic advantage.
The evils of usury, indebtedness and widespread indulgence which were rampant in the
rural areas at the turn of the century were the inevitable outcome of the economic
transition that was then taking place”.

“After the experience of the limited success of merely regulatory laws like the
several anti-usury measures, an effort at building up by the mutual association the
people's own credit institutions was sponsored by government. In the then prevailing
atmosphere of economic passivity on the part of the State this official sponsoring of a
special form of organization was considered to be a great event. The first piece of co-
operative legislation was the Cooperative Credit Societies Act of 1904, which was
amended in 1912 to permit the formation of societies for purposes other than credit. As a
result, societies for a variety of purpose began to be organized. This process of
diversification was, however, slow in its pace, until the special needs of the period of the
Second World War, and the subsequent years of reconstruction invested cooperative
organizations with a special importance and significance. When individualism was the
order of the day, co-operation represented a defensive act of association on the part of
individual citizens. But with the adoption of the principle of social regulation, the co-
operative societies, which from their commencement in this country have been socially
sponsored and supported, came to occupy a more positive role. In a regime of planned
development, cooperation is an instrument, which while retaining some of the advantages
of decentralization and local initiative will yet serve willingly and readily the overall
purposes and directives of the Plan. This has been amply proved by the recent experience
of India, as also of other countries, like the U.K. which have entered upon an era of
democratic planning. The cooperative form of organization can no longer be treated as
only a species within the private sector. It is an indispensable instrument of planned
economic action in a democracy.”

“Cooperation is in fact being transformed steadily, yet surely, from a tolerated

exception into a general rule. In industry, commerce, transport and retail distribution
cooperatives are gaining experience and strength. Different state Governments some
times emphasis different fields of cooperative activities in keeping with local conditions.
There can be no doubt, however, that a new awareness of an opportunity to build up a
form of business organization more suited to the conditions and needs of the times than

25
the joint-stock company has come over the people of small means everywhere. The joint
stock company is too cumbersome as an organization for the small producer, agricultural
or industrial. What is needed and what the cooperative society has provided is a simpler
form of organization more suited to the needs of the people to be served and therefore
likely to be more acceptable.”

“As an instrument of democratic planning, combining initiative, mutual benefit

and social purpose, cooperation must be an essential feature of the programme for the
implementation of the First Five Year Plan. As it is the purpose of the plan to change the
economy of the country from the individualistic to a socially regulated and cooperative
basis, its success should be judged, among other things, by the extent to which it is
implemented through cooperative organizations. The Planning Commission in
consultation with the State Governments, cooperative organizations, and Reserve Bank
intends to formulate a more specific programme for the expansion of the movement in all
the sectors in respect of which cooperative organization has been considered suitable.”

The Plan emphasized the following activities to be undertaken for the cooperative
development during Plan period.
• Formation of multi-purpose cooperative credit societies.
• Organization of purchase and sale cooperatives.
• Organization of cooperative farming societies.
• Implementation of all round development of cooperation on project basis in each
community development project areas.
• Establishment of industrial cooperatives for artisans and other trades.
• Setting up of urban cooperative banks.
• Building up of consumer cooperatives over as wide an area as possible.
• Formation of housing cooperatives.
• Improvement of the personnel working in cooperatives.
• Training and education of every cooperator/worker.
• Every department to follow the policy of building up cooperatives which may
eventually replace the contractors or other middlemen.
• Change in the attitudes of Government officials to provide guidance and knowledge to
people.
Observations
The statement speaks volumes about the importance and role of Co- operation
envisaged by the planners in the process of economic development and contemplated
changes in the economic system in the country. The programmes in the First Five Year
Plan were envisaged at national level itself, keeping in view the overall socio-economic
scenario in the country. Agricultural development was given highest priority. A blue-print
for cooperative development was outlined. Reasons for adoption of Cooperation in
planning were given, and the Plan laid down the foundations of a healthy cooperative
movement for future. Specific areas for cooperative activities were identified.

In order to execute and to give a practical shape to the concept and vision of
cooperation, certain important steps were taken by the RBI and the Government, the most

26
significant was setting up of a Committee of Direction of All India Rural Credit Survey,
which had given historical report. It had become largely, basis for cooperative
development in India. As per its recommendations: a statuary National Cooperative
Development and Warehousing Board under the Produce (Development and
Warehousing) Corporation Act 1956, was constituted as per the recommendations of the
All India Rural Credit Survey Committee and of the conference of State Ministers of
Cooperation held at New Delhi in April 1955. It was inaugurated by Jawaharlal Nehru as
a great historical event. Two funds were instituted under the Board.

ii. National Cooperative Development Fund

iii. National Warehousing Development Fund

The Board was to extend financial support to develop cooperative marketing,

processing, consumer cooperatives etc. During the period multi-purpose cooperative
societies were organized.
The Plan also encouraged and motivated non-official efforts and aspirations. An
important national level cooperative platform had been evolved in the form of a triennial
Indian Cooperative Congress under the aegis of NCUI to build cooperative opinion
relating to various aspects of cooperative movement. The first and second Congresses
were held during the First Plan period. A large number of cooperative leaders from
village and higher levels turned up to participate. One very valuable development was
that publicity given to Plan provisions by different ways and means aroused great
enthusiasm in the people towards cooperative programmes.

A Central Committee for Cooperative Training was set up jointly by the GOI and
RBI in 1953 to make arrangement for the training of cooperative personnel at all levels,
both institutional and governmental.

A conference on Cooperative Marketing and Cooperation was held at Hyderabad,

which made important recommendations and demanded Government of India and RBI to
re-orient their policies to facilitate functioning of primary cooperative societies.
Conference suggested that the loans to farmers should be made available at 5 per cent
interest. A Committee on Cooperative Law was set-up.

It is important to refer to the Mid-term Appraisal of the ...First Five Year Plan, as
it was India's first experience of planned development approach. V. T. Krishnamachari,
Deputy Chairman of the Planning Commission, observed in his introduction to the Report
as follows:

“The completion of the third year of the Plan has brought out a number of new
problems which need to be looked into carefully and promptly. These problems only
illustrate the essential nature of planning, which presupposes continuous adjustment to
changing circumstances and a watch to correct undesirable developments in parts of the
system. The weaknesses or lacunae discovered in the Plan or its implementation are
important. Nevertheless it will be noted that in these three years a great deal of work has
been initiated and there is now a general appreciation of the need for and advantages of a
planned approach to economic and social problems. The Plan is more than a programme

27
of expenditure, and it is even more than a statement of physical targets. The ultimate test
is: to what extent have the people responded, and, on this, evidence shows unmistakably
that the approach to development problems indicated in the Plan is being well received.
What is needed now is to build more firmly on the basis of the gains already recorded,
and to press ahead with the further task of economic development and social advance."

NINTH FIVE YEAR PLAN (1997-2002)

Cooperatives are an integral part of a country's agricultural system. The

cooperatives aim at strengthening of people- who have limited resources, particularly
rural poor, agricultural labourers, marginal and small farmers etc. Cooperatives have
played a major role in disbursement of credit. Nearly 60% of the disbursement of short-
term loans and 35% of investment credit were provided by the cooperatives”

Without a comprehensive chapter on Cooperation, the Plan mentioned the

following in the Chapter on Agriculture:
• Cooperatives will be strengthened
• Efforts will be made to change the legal and administrative system to revitalise the
cooperative credit structure and enable the system to respond adequately and
effectively to the emerging needs of the users.
• Cooperative sector to be encouraged to take up commercial horticulture with the
assistance for production and post-harvest management including setting up of
grading, packing houses, pre cooling units, cold storage, green houses, processing
units, tissue culture and quality production units.
• Due to increased irrecoverable outstanding amount, DCCBs had become ineligible for
NABARD financing. This affected credit flow to the PACs. Rectification of the
balance sheet of the cooperative sector will be attempted with one time assistance to
the cooperative banks.
Observations
The Ninth Five Year Plan had a limited view of Cooperation, limiting it mainly to
the field of agriculture. It is a vast economic sector with diversified cooperatives. The
Plan, like the previous Plans, expressed concern about the weak cooperative credit
structure and suggested to strengthen it. Its suggestion to extend one time assistance to
cooperative banks to clear off their balance sheets was important. It has been accepted for
implementation by the Government.

The Mid-term Appraisal of the Ninth Five Year Plan pointed out a major
bottleneck in the smooth flow of credit in the worsening recovery position of cooperative
credit institutions. It observed the need to suitably amend the Multi-State Cooperative
Societies Act, of 1984 to inject professionalism and autonomy in the functioning of these
societies (PACS) and free them from Government control has long been felt.

TENTH FIVE YEAR PLAN (2002-2007)

28
 Without a preceding statement, giving significance of the cooperation and its role
in economic development of the country, the Tenth Plan expressed certain views and
indicated action points, scattered over in various pages of the Plan as below:
Views
• The share of cooperative banks at the ground-level credit for agriculture and allied
activities declined to 41 per cent in 2000-2001 from 45 per cent in 1996-97. A major
bottleneck in the smooth flow of credit is the worsening recovery position of the
cooperative credit institutions and persistence of chronic over dues.
• The Kisan Credit Card Scheme was introduced in 1998-99. Cooperative banks issued
63.84 pc. KCC by 30th June 2002.
• The functioning of the cooperative banks with serious financial weaknesses are
inconsistent with the objective of transforming them into strong, viable and self-
sustaining institutions capable of channeling enhanced credit flow as envisaged for
the Tenth Plan.

Action Points
• The Multi-State Cooperatives Act 2002 has been passed. States will be persuaded to
also take up follow up action to amend their Acts.
• States would not be eligible for funding by cooperative sector/NCDC till they adopt
the Multi-State Cooperative Societies Act for providing more functional and financial
autonomy.
• Recommendations received for revamping of cooperative credit structure would be
examined and appropriate policy formulated.
• Reforms in the sector will be made a condition for getting assistance from
departments and National Cooperative Development Corporations.
• Efforts would be made to involve PRIs, Primary Agriculture Cooperative Societies
and consumer cooperative societies in agricultural marketing outside the purview of
the Government sphere.
• Cooperatives will have to be freed from the control of politicians and bureaucrats.
• Mega markets involving private, public, cooperative or joint ventures may be
promoted for efficient marketing of perishable and other agricultural products.
• Cooperative banks will be strengthened through recapitalization.
• Micro financing would be encouraged through self-help groups and women groups.
• Integrated agricultural markets in private and cooperative sectors to be developed.

Observations
The Centurian (Hundredth) year of Cooperation in India completed in March
2004, as Cooperation in its present form was introduced by the British Government with
the enactment of the first Agricultural Cooperative Credit Societies Act on March, 23,
1904. That way the Tenth Plan has a significant landmark.
During the Plan period the NDA Government formulated a new National
Cooperative Policy, coupled with exhaustive Plan of Action. The Government at least
enacted a new Multi-State Cooperative Societies Act 2002, which was lying pending
since 1991. But, the NDA Government was voted out in 2004. The policy as such was not

29
followed up by the successive Governments, notwithstanding the merits and promises of
the policy. The new Act does not also incorporate in full the recommendations of the
Brahma Prakash Committee. It partially met the aspirations and demands of cooperative
community.
The cooperatives continued working with all ailments odds and distortions during
Plan as before. They could not be eased from Government control, politicisation and
bureaucratic clutches.
The Mid-Term Appraisal of the Tenth-Five Year Plan mentioned that the
reasons for the inability of the institutional services to meet fully the credit needs of the
farm sector were fairly well known. Despite reports and recommendations of numerous
high level committees over the years, the country has not been able to make a dent in the
problem. The Government envisaged to double the credit flow to agriculture during the
remaining period of the Plan.
The Appraisal report, further mentioned that increased credit alone does not
address the problem of existing farm debt. One of the reasons for credit related distress of
the farmers is that share of cooperative banks in the institutional credit for agriculture and
allied activities have declined. There is need to revitalize the cooperative structure, which
still continues the largest network of rural credit outlets, through infusion of capital and
increased quantum of refinance. More importantly, there is a need to amend the
Cooperative Laws of the States with a view to injecting professionalism, autonomy and
transparency in the functioning of cooperative societies. The Appraisal Report suggested
that recommendations of Vaidyanathan Task Force on Revival of Cooperative Credit
Institutions should be implemented at the earliest.

Eleventh Five Year Plan (2007-12)

The Eleventh Five Year Plan has not given any significance place to cooperatives
in various fields. It included the following:
I. The eleventh plan will encourage cooperative management of ground water by the
community, as it is most likely to work as visualize under National Forest
Resolution 1998, tribal association with forestry will be maximized through tribal
cooperatives and SHG of tribal women.
II. In order to revamp the cooperative credit structure, on the state must act urgently
to implement the Vaidyanathan committee recommendations. Early reports are
promising, but monitorable deadlines must be set to meet the required
commitment
III. Women cooperatives and other forms of group efforts should be promoted for the
dissemination of agricultural technology and other inputs as well as marketing
produce - as the market is shrinking, weavers are becoming manual laborers or in
extreme cases committing suicide. This has led many to level this industry as a
sunset factor. Hence women have used international demand and have the
potential to generate domestic demand as well.
IV. Though NABARD provides refinance facilities to the State Cooperative Banks for
financing requirements of primary and apex weavers cooperative society, the
service is levied by the institutions result in the doubling of interest for the artisans
and societies. Further most of state cooperative societies lift stock and reimburse
weaver only on sale of products, this blocks the working capital of weavers.

30
V. Despite the setting up of cooperatives spinning mills and the hankyarn obligation;
yarn shortages and steep prices are continuous problems. The use of hankyarn by
mills and power-looms also diverts yams meant for handlooms.
VI. Credit growth by cooperatives' to the agricultural sector has gradually picked up
dealing the codes of Tenth Five Year Plan. The number of loan accounts has,
however, declined from 224.61 lakh in 2004 - GOI to 192.81 lakh in 2005-06. The
most potent means for widening and deepening access to institutional credit to
innumerable small and marginal farmers are the cooperative credit societies that
are autonomous and democratic. The revitalization of cooperative credit structure
in order to transform them into vibrant and viable democratic financial institutions
is, therefore, vital. It is therefore extremely important that the restructuring of
cooperative societies now in progress on the lines of Vaidyanathan committee are
implemented speedily and vigorously..

Observations
The adoption of Cooperation as an essential instrument of social and economic
change in the first four FYPs had given new dimensions to developmental pattern.
Cooperation was viewed as essential method to ensure "growth with social justice". It
evoked lot of thinking and motivated economic theorists to make analytical analysis of its
applicability to various fields and its limitations. As a result of target achievement
approach in the Five Year Plans, cooperatives have made phenomenal progress in various
fields. Numerically, it has become and being recognized as one of the most diversified
and largest cooperative sector in the world. Its perceptible contribution to economic
development, especially in the agricultural and allied fields, as well as in social
transformation cannot be overlooked and ignored..

Reference:
1. Indian Economy – Datta & Sundharam
2. Cooperative Development in Independent India by Balram Jakhar and R. C.
Dwivedi
Question:
Discuss the progress of co-operative movement in five year plans with special
reference to 10th & 11th Plans in India.

31
 CHAPTER – 4

MAJOR RECOMMENDATIONS OF VARIOUS COMMITTEES / COMMISSIONS

ALL INDIA RURAL CREDIT SURVEY COMMITTEE (AIRCSC) 1954

INTRODUCTION:
The first comprehensive investigation of Rural Credit in India pertains to 1951-52
and is known as the “All India Rural Credit Survey Committee”. It was conducted by a
Committee of Direction appointed by the Governor of the Reserve Bank of India under
the Chairmanship of Shri. A. D. Gorwala. This Committee submitted its report in the year
1954. The Integrated Scheme of Rural Credit recommended by the Committee was
accepted by the very wide range of interests concerned and provided the basis for the
planned reorganization of cooperative credit in association with Cooperative Processing,
Marketing and Storage. The establishment of State Bank of India (SBI) and through it’s
the extension of commercial banking facilities to rural and semi-urban centers were
among the other results of the committee’s recommendations.

RECOMMENDATIONS:

1. Cooperation has failed, but it must succeed.

2. National Cooperative Development Board and the All India Warehousing
Corporation should be established.
3. Two funds should be constituted
a) National Cooperative Development Fund
b) National Warehousing Development Fund.
4. Credit stabilization Fund should be established at the level of RBI, SCB, DCCBs.
5. There should be States’ Financial participation in the form of contribution in the
share capital of cooperatives at all levels.

32
6. There should be integrated development credit, marketing, processing etc.
7. State partnership not to be for “Interference and Control”.
8. Cooperative Credit Structure should be reorganized.
9. Linking of Credit with marketing activities should be created.
10. State Cooperative Agricultural Marketing Federation should be organized in each
State.
11. Professional Audit should be setup.
12. Training Arrangements should be made for all categories of personnel.

All India Rural Credit Review Committee (1969)

The All India Rural Credit Review Committee was appointed by the Governor of
the Reserve Bank of India for reviewing the supply of rural credit in the context of the
Fourth Plan in general and the Intensive Agricultural programme in particular. The
Committee was headed by Shri. B. Venkatappiah, Member, Planning Commission. The
Committee has stated that “a large number of Primary Agricultural Credit Societies are
neither viable nor even potentially viable and must be regarded as inadequate and
unsatisfactory agencies for dispensing production oriented credit”.

The Committee has recommended the following recommendations.

i) Re-organisation of Rural Credit in the Reserve Bank
ii) Setting up of a Small Farmers Development Agency in each of a number of
selected districts throughout the country.
iii) Formulation of a more active and much bigger role for the Agricultural Refinance
Corporation.
iv) In tackling over dues, an important aspect is that of educating the borrowers, the
extension staff, the administrators and the political chief, in the discipline which
must underline institutional credit, if its flow is not to be interrupted.
v) A Climate of recovery mindedness should be created by all the functionaries as
well as those elements in the administration and Government who are interested in
increased production.
vi) The drive for recoveries should be organized efficiently and in advance of the due
dates with all the authorities concerned being involved such as the non-officials at
the primary level as also the Directors of Central Banks and the affiliated
Marketing Societies.
vii) A provision enabling the staff of cooperative Department to execute decrees
without having to depend upon the revenue machinery may be made in the
Cooperative Societies Act of States.
viii) The Cooperation Department and the Cooperative Financing Banks should
exercise utmost vigilance to see that book adjustments to show the non-genuine
recoveries do not occur on a large scale.
ix) Provisions for disqualifying defaulters and representatives of defaulting societies
from continuing on the board of directors should be incurred in the Acts and
Rules.
x) Rural Electrification Fund should be created and Rural Electrification Corporation
should be set up.

33
xi) Small Farmers Development Agency to be set up.
xii) Emphasis should be laid on member education.

The Committee on Arrangement for Institutional Credit for Agriculture and Rural
Development (CRAFICARD-1981)

A High Level Committee appointed by the RBI at the instance of the Government
of India in March, 1979, under the Chairmanship of Sri. B. Sivaraman to review the
arrangements for Institutional Credit for Agricultural and Rural Development. One of the
important recommendations of the Committee is to establish National Bank for
Agriculture and Rural Development (NABARD) by interacting certain functions of RBI
(Agricultural Credit Department – ACD). The other recommendations are given below:
Recommendations (1981)
❖ RBI should be taken up on a priority basis with a view to creating and sustaining a
congenial atmosphere for prompt recovery of loan advanced by the societies.
❖ For improving recovery performance, the rate of interest should be initially fixed at a
somewhat higher level and rebate two or three per cent allowed to the borrowers on
payment of dues on Schedule without default.
❖ Publicize list of defaulters, particularly the names of big land lords, who deliberately
refrain from paying their dues to cooperatives.
❖ The willful default in repayment of cooperative loans is not merely a Civil
misdemeanor, but criminal offence.
❖ Govt. of India should consider amending the Indian Penal Code and other relevant
statutes, to provide for deterrent punishment to willful defaulters.
❖ State Government should made vigorous efforts to develop FSS and LAMPS.
❖ NABARD should be established
❖ Willful defaults should be treated as a Criminal offence.

Agricultural Credit Review Committee (1989 – Prof. A.M. Khusro)

The Agricultural Credit Review Committee (1989) was appointed by Government
of India under the Chairmanship of Prof. A.M. Khusro. This Committee stated the
importance of encouraging member’s thrift and savings for better business planning at the
local level and for strategies to enable cooperatives to be self-sustaining. The major
recommendations of the committee are as follows:
➢ Elimination of supersession and interference, a very early conduct of elections,
legislative prohibitions for future supersession and interferences and the establishment
of an autonomous cooperative movement.
➢ Strengthening of the base of the Cooperative Movement by various structural and
operational measures recommended in the report and by suggesting better higher
qualification, improved training and enhanced pay and incentives for PACS
employees.
➢ The provision of National Cooperative Bank of India through an Act of Parliament to
surpluses and deficits, to assist in retaining and securing cooperative business in
profitable field and to provide national representation to the cooperative movement.

34
Prof. A. Vaidyanathan Committee Recommendations (Task Force-2004)
The Government of India has been concerned that Cooperative Credit Structure (CCS)
reform is critical to rural transformation given its all India membership base of 135
Million and links to the broader Cooperative Structure comprising processing, marketing,
input distribution, dairy and weaving. Government also realized that legal, regulatory;
governance and institutional reforms are required to enable the CCS (Credit Cooperative
Institutions) institutions to provide more efficient and affordable finance to the rural poor.
Consequently, the Government appointed a “Task Force” on the revival of short-term
cooperative credit structure, under the Chairmanship of Prof. A. Vaidyanathan in August,
2004 to analyze the problems of the STCCS and suggest an action plan for revival. The
major recommendations of the committee are as follows:

a). Nature and Extent of Impairment and Remedial Measures:

The package (inter-related, integrated package) needs to be implemented in a way
that it may have a synergetic impact in improving the health and vitality of the
cooperative credit structure.

B). Financial Restructuring:

The recommendations of ‘The Task Force’ on the sharing of the accumulated
losses are not based on artificially fixed proportions, but the origin of such losses within a
flexible matrix.
c). Institutional, Legal and Regulatory Reforms:
All thrift and credit cooperatives including primaries and their federal structures
be required to increase owned capital, so as to ensure a minimum CRAR of seven per
cent to begin with, and to raise it to 12 per cent with in another five years.
Ensure, full voting membership rights to all users of financial services (including
deposits).
Remove state intervention in administration and financial matters. Ensure timely
elections and audits. Professionalism is necessary in the governance and management of
financial cooperatives.
States which do not pass the model law should include a special chapter for
Agricultural and Credit Societies Act incorporating the provisions of the Model law.

The major recommendations of the Vaidyanathan Committee are as under:

❖ The Co-operative Credit Structure (CCS) is impaired in governance, managerial
and financial fronts and hence needs to be revived and restructured.
❖ The financial restructuring shall be contingent on commitment to and
implementation of legal and institutional reforms by the State Governments.
❖ Financial assistance be made available for
(i) wiping out accumulated losses;
(ii) covering invoked but unpaid guarantees given by the State Governments;
(iii) increasing the capital to a specified minimum level;
(iv) retiring Government share capital; and

35
 (v) technical assistance.
❖ Availability of financial assistance from the Government of India shall be strictly
subject to legal and institutional reforms in the cooperative sector to ensure that
the cooperatives become truly democratic and member driven.

These reforms shall include:

(i) ensuring full voting membership rights on all users of financial services including
depositors;
(ii) removing state intervention in administrative and financial matters in
cooperatives;
(iii) removing provision for Government equity and participation in the Boards of
cooperatives;
(iv) withdrawing restrictive orders on financial matters;
(v) permitting cooperatives the freedom to take loans from any financial institution
and not necessarily from only the upper tier and similarly place their deposits with
any financial institution of their choice;
(vi) permitting cooperatives under the parallel Acts to be members of upper tiers and
the existing cooperative societies Acts and vice versa;
(vii) limiting powers of the State Governments to supersede Boards;
(viii) ensuring timely elections before the expiry of the term of the existing Boards;
(ix) facilitating full regulatory powers for the Reserve Bank in case of cooperative
banks; and
(x) introducing prudential norms including CRAR for all financial cooperatives
including PACS.
❖ The Task Force has also recommended certain major amendments to the
provisions of the B.R. Act, 1949 enabling removal of dual control and bringing
the cooperatives under the regulatory control of the Reserve Bank. These include:
(i) all cooperative banks would be on par with the commercial banks as far as
regulatory norms are concerned;
(ii) the Reserve Bank will prescribe ‘fit and proper’ criteria for election to the
Boards of cooperative banks;
(iii) the Reserve Bank will prescribe certain criteria for professionals to be on
the Boards of cooperative banks;
(iv) the CEOs of the cooperative banks would be appointed by the respective
banks themselves; and
(v) cooperatives, other than cooperative banks as approved by the Reserve
Bank, would not accept non-voting member deposits. Such cooperatives
would also not use words such as ‘bank’, ‘banking’, ‘banker’ or any other
derivative of the word ‘bank’ in their registered name.
❖ Total financial assistance has been estimated tentatively at Rs. 14,839 crore. The
Task Force, however, has recommended a special audit to ascertain the exact
requirement of assistance. The financial assistance be shared by the Government
of India, State Governments and the CCS based on the origin of losses within a
flexible matrix.
❖ NABARD be designated as the Nodal Implementing and Pass through Agency to
coordinate and monitor the progress of the programme representing the

36
 Government of India. NABARD will prepare model MoUs, model balance sheet
proforma for PACS and CCBs.
❖ The Scheme be kept open for a period of two years for the State Governments to
decide on their participation.
❖ The Scheme is operationalized through National Guidance and Monitoring
Committee, State Level Implementation and Monitoring Committees and District
Level Planning and Implementation Committees at national, state and district
levels, respectively.
The Vaidyanathan Task Force has laid particular emphasis on eliminating state
interference in the functioning of cooperative system. It has gone to the extent of making
arrangements for retiring the share capital contributed to cooperative societies by State
Governments. Special plan has been suggested for implementing financial package of Rs.
15,000 crores. The Task Force has suggested the enactment of a new model Cooperative
Societies Bill which would meet the objective of reducing State intervention. It is
expected that a faithful implementation of suggestions of this Task Force shall ensure
long term sustainability of the cooperative structure.

Report of the High Powered Committee on Cooperatives (Shri. Shivajirao G. Patil

2009)

INTRODUCTION:
The State Cooperative Ministers’ Conference was held in December, 2004, that
Conference suggested that a High Powered Committee be constituted by the Government
of India for preparing a road map for Cooperatives over the coming years. The
Committee, duly constituted in 2005 under the Chairmanship of Shri. Shivajirao G. Patil)
to study the functioning of cooperatives in different sectors and facing diverse problems.
The committee concluded that cooperatives have not been given due importance, despite
the emphasis laid by the planning commission and the first Prime Minister of India,
Jawaharlal Nehru on developing cooperatives as a third important sector of the economy.
The committee is convinced of the need for uniformity in cooperative registration that
would respect the autonomous and democratic nature of cooperatives. The major
recommendations of the Committee are summarized below.
i) A progressive and enabling Legislation
ii) Constitution Amendment – It is a need for a higher authority to ensure that State
Cooperative Societies Acts follow the Model Cooperative Act and any
transgression is judiciable.
iii) Role of Governments: - (a) Designing a policy framework for facilitating the
functioning of cooperatives with free and fair means (b) Conversion of equity held
in cooperatives into grant or soft loan (c) Ensure that the Officers if deputed to
hold key positions are given a minimum tenure of three years.
iv) Developmental Orientation to Planning for Cooperatives: It is necessary that the
functions of regulation, registration, legal arbitration etc., are distinguished from
the developmental role: - required for planning of cooperatives.
v) Enhancing competitiveness: - To enhance competitiveness professionalize the
Management of cooperatives.

37
vi) Human Resource Development and the need for professionalizing:- Cooperatives
should undertake member awareness and education programmes on a continuing
basis in order to sensitize members regarding their rights, responsibilities /
obligations.
vii) Capital Formation and Financial Sustainability
viii) Access to Credit / Finance
ix) Rehabilitation of Sick and Weak cooperatives.

References:
1. Theory and practice of Cooperation in India and abroad by K. R. Kulkarni Vol – I,
II and III
2. Cooperative Development in Independent India by Balram Jakhar and R. C.
Dwivedi
Questions:
1. Discuss the important recommendation of Vaidyanathan Committe2004
2. Discuss the salient features of all India Rural credit survey committee,1954
3. Write short note on India rural credit Review committee (AIRCRC1969)
ACRC (A. M. Khushro committee) 1989

CHAPTER – 5
SUCCESSFUL CO-OPERATIVE MODELS IN ABROAD

INTRODUCTION
Co-operation is destined to play a decisive and effective role in the world
economy. Even the co-operative development all over the world has not been one
straight line, and at various times the co-operative movement has cleared the
dynamic character of co-operative activities suiting the local and regional
environment and economic and social situation. All this is the indicative of one
basic fact that cooperation has been alive to the changes of time and basically concept is
dynamic and an ever-absorbing one.
Co-operation is an activity of the people. It is a self-generated, voluntary and self-
sufficient activity. Cooperation has always been a feature of human kind. Essentially co-
operation is an activity of the people for mutual help and collective progress.
As a modern phenomenon, the co-operative form of business organization
originated in England amongst the industrial workers in the mid-nineteenth century.
Cooperatives started as an urban consumer stores but soon spread to rural areas
amongst farmers. Workers had nothing to sell but their labor, as it was a buyers'
market. Those who failed to find work in the factories were forced either to rely on
insufficient rural assistance, or to starve. By the early 1800s, food prices were artificially
high and wages were being reduced, while much of the population suffered extreme
poverty and scarcity.
During the latter part of the nineteenth century, the concept enhanced several
parts of Europe and North America. The earliest co-operative were established among
the weavers, workers in cottage industries, who were suffered by moneylenders and
mercantile economy during the industrial revolution. The real co-operative movement
can be credited to Rochdale Pioneers who established the co-operative consumer store in
North England, which can be called as the first in the co-operative consumer movement.

38
Around this time the cooperative movement was more at a practical level. In Great
Britain, Robert Owen (1771-1858) established self-contained semi-agricultural, semi-
industrial communities. Owen was sure that working-class people, given the right
environment, possibly will form cooperative communities. He put this into practice in
New Lanark, Scotland, where his own business was based. Dr. William King (1757-1865)
helped to spread Owen’s doctrine; his ideas were more reasonable than Owen’s and
achieved more results.
In France Charles Fourier (1722-1837) published a Treatise on Domestic
Agricultural Association in 1822, first time on co-operation and Saint –Simon (1760-
1865) worked on various theories of associations. Schulze-Delitzsch (1808-1865) was the
promoter of urban co-operatives and co-operatives in handicrafts, while F. W. Raiffeisen
(1818-1888) did the same for rural credit co-operatives. Early in the twentieth century,
the cooperative movement spread to India and gradually to other Asian and African
countries; mainly courtesy of the colonial administrators. The co-operative
movement became a form of business organization recognized as an international
movement. Although some associate it with socialist or communist countries, the
cooperative movement also operates in capitalist countries such as the United States of
America, Canada, Israel and Australia.
An Indian Registrar of Co-operatives appropriately described the co-operative
movement as representing: A happy mean between the forces of extreme individualism
on the one hand and socialism and communism on the other. It stands for individual rights
tempered by considerations of justice, equity and fair dealing as between man and man,
and its one great aim is to prevent the exploitation of the weaker by the stronger party.

CO-OPERATIVE MOVEMENT IN ENGLAND

In England, the beginning of co-operation goes back to the middle of the

eighteenth century. Cole (1944), London, P.14 writes in „A Century of Co-operation that
the originators of co-operation, “as far as we know, were the workmen employed by the
government in the dockyard of Woolwich and Chatham, who, as early as 1760, had found
corn mills on a co-operative basis as a move against the high prices charged by the corn-
millers who held the local monopoly. The dockyard shipwrights, then, were the pioneers;
and co-operation, as far as we know, began with flour milling and baking”.
As published in 1659 a pamphlet by P.C.Plockbly, a scheme for the formation of
economic association of agriculturists, artisans, seamen and professional men, who would
all contributed capital and work to the undertaking, while retaining the right to withdraw
a member of the religious society of friends, John Bellers, published a proposals
for „Raising a College of Industry of all useful Trades and Husbandry. Many good
cooperative ideas are to be found in schemes; the combination of self-help and mutual
aid; a voluntary, democratic and equalitarian association for economic purposes; direct
relation between producers and consumers and the elimination of the middleman. As
early as 1760, there were groups of worker in the naval dockyard of Woolwick and
th
Chathom had set up the first co-operative flour mill. In 19 century, new inventions in
industrial field were introduced whose quality and cheapness of products ousted
those of the cottage industries. Working class, thus thrown out of work, was left entirely
at the mercy of the factory owners. Their condition was extremely miserable, their hours
of work were long and wages small. Their living conditions were wretched.
Robert Owen (1771-1858), is generally regarded as the founder of the

39
modern co-operative movement with the workers of Bellers. His ideas put together
have been named “doctrine of circumstances. Owen started his practice work by
introducing reforms in his own factory as a measure to improve the conditions of
workers. He reduced the hours of work, increase wages, abolished child labour,
provide housing colonies and aid many other things in order to improve the conditions of
workers. These reforms although increased the production and profit of the factory. He
wrote that “the competitions must be replaced by co-operation”.
William King (1786-1865) was another pioneer who helped a lot in building up
co-operative ideology. He was the publisher of a monthly paper „co-operative in which he
made an education campaign to popularize the co-operative ideology. He advocated
smaller institutions to be organized on the co-operative basis. Most of the co-operative
societies were founded under Kings influence.
The modern movement is generally dated from the foundation of the
Rochdale Equitable Pioneers at the end of 1844. In spite of the efforts, the
condition of workers remained nearly unchanged. They formed trade unions to settle
terms with the employers and tried various methods including strikes but could not meet
with the desired success. In 1843, out of 28 weavers decided that, wherein (Rochdale
stores) all sales would be admitted as may pledge their loyalty to the store, with the
efforts and loyalty of members the store made a speedy progress.

In 1850, the Christian Socialists organized the „Society for Promote Workmen’s
Association. Its objective was to promote workmen’s association by spreading the ideals
of Co-operation. The main and practical contribution of them to the co-operative
movement was their efforts for getting passed a separate Act for the Co-operatives. A bill
was drafted by John Malcolm Ludlow which was moved in the parliament by Mr. Robert
Slarey and was passed in 1852.
The British Consumer Co-operative Society began business in December 1844, in
Toad lane. Consumer retail societies are the most important in the British co-operative
movement, judge by public support, financial strength and continuity. The isolated
cooperative stores soon felt the need of forming their federation in order to help one
another and deal collectively with outside world. The Provident and Industrial Societies
Act of 1862, allowed the organization of secondary societies. In 1863, Co-operative
Wholesale Society (CSW) came into existence. Co-operative Union Ltd. the central
organization of co-operative societies in England and Ireland set up in 1869. It has retail
societies, local federations, production societies, CWS etc. the important functions of the
union are, to promote the interest of its members, defuse knowledge of co-operative
principles and practices and to conduct co-operative education.
Agricultural co-operation in England is of a comparatively recent growth. Unlike
most countries, the British farmers have never been in debt, nor did they have any
difficulty in the marketing of their produce. They, however, felt some difficulty in
producing farming requirement such as fertilizers, seeds and foodstuffs. Co-operation
among farmers thus started with what is called „Requirement Societies. The first society
„The Agricultural and Horticultural Association, was organized in 1867 with the
objective of purchasing supplies in bulk and selling them to the members at reasonable
terms after testing their quality and suitability. They also started selling agricultural
machinery, petroleum and veterinary supplies. The agricultural societies organized their
federations called the “Agricultural Central Co-operative Association” in 1956. The
ACCA has taken an important part in the preparation of the agricultural and horticultural
legislation of 1964, which extends the scope of government grants and loans available to

40
the farmers.
th
Though the 20 century, smaller societies merged with CWS (Co-operative
Wholesale Society), such as the Scottish Co-operative Wholesale Society (1973) and the
South Suburban Co-operative Society (1984). By the 1990s, CWS share of the market
had declined considerably and many came to doubt the viability of co-operative model.
CWS sold its factories to Andrew Regan in 1994. Regan return in 1997 with a 1.2 billion
pounds bid for CWS. But due to fraud, Tony Blair’s Co-operative Commission, chaired
by John Monks, made recommendations for the co-operative movement, including
the organization and marketing of the retail societies. In 2000, CWS merged with
the England’s second largest society, Co-operative Retail Services. In many
European countries, co-operative institutions have a predominant market share in the
retail, banking & insurance business.
In 2005, annual general meeting of Retail Co-operatives in England have taken a
th
major decision that Co-operatives formed the co-operative party in the early 20 century
to represent members of co-operatives in parliament. The co-operative party now has
permanent electoral agreement with the Labor Party.

CO-OPERATIVE MOVEMENT IN GERMANY

Germany is the birth place of co-operative credit movement in the World. In
India, the inspiration for the co-operative movement comes largely from Germany. Mr.
Fredrick Nicholson studied the working of agricultural banks and suggested measures for
the introduction of co-operative movement in India. He advised to Indian co-operators
find Raiffeisen explains for itself the importance he gave to the Raiffeisen system of
credit as a means of solving problems of indebtedness in India.
th
In the middle of the 19 century the circumstances like-famine, poverty,
exploitation and indebtedness necessitated the introduction of a new idea in
Germany. The poor farmers and laborers were heavily under debt and exploited by
the money lenders. Mostly the trade was also in the hands of the Jews and the farmers
bought their requirements as well as sold their produce through this class. The result was
an extreme poverty among the laborers and farmers. It is reported that almost every house
and farm land was encumbered with debt. To add to this misery, famines occurred too
frequently and broke the backbone of the poor. When such condition was around, two
pioneers, Herr F.W.Raiffeisen and Herr Franz Schulze, both well known personalities
in the cooperative field, moved by the miserable condition of farmers and laborers,
started making experiments with various methods of relief.
Herr Franz Schulze (1808-1883), judge and the mayor of Delitzsch, started his
efforts after studying the conditions of famine stricken people as a chairman of the
„Famine Commission. With contributions from his friends he started a charitable bakery
to distribute bread to the poor peoples. Co-operative efforts, however, started with a
realization by him of the superiority of self-help and mutual-help over charity. In 1849, he
established his first friendly society of shoemakers with the object of making
purchases of raw material in bulk and supplying it to the members. In 1850, Schulze
established his first credit society in his native town. Its function was to raise funds to be
lent to its members. With the experience gained by his first co-operative society,
Schulze formulated some principles and published them in book written in 1856.

41
 The number of his banks grew rapidly and in 1859, he called a congress of his
banks which resolved to set-up „The General Union of German Industrial Societies. He
remained its Director till death. He also secured the „First Co-operative Law from
Prussia in 1867, which was made applicable to the whole Germany in 1889.
Raiffeisen is one person to whom the co-operative movement owes the
maximum. As a Mayer of Wyerbusch, he came across with the poverty-stricken peasants
and greedy moneylenders. There were near famine conditions, he got some grain on loan
from the government, but he met the difficulties of transport and he motivated the people
to harness the grain sledges to their villages. He constituted a poor peoples committee
which distributed food on credit to the really deserving people. The committee also made
recoveries of loans after a specific period. After his transfer to Flammersfeld commune,
he organized the “Union in Aid of Impoverished Farmers” in 1849, in which the needy
farmers joined as members.
At Heddesderf, Raiffeisen orgainsed the “Heddesderf Beneficient Society”,
this society joined by well to do persons and each of them deposited some money on
interest. He made the beneficiaries also as members of the society and gave it a
new name- “Hedderdorf Credit Union”. The phrase “each for all- all for each” was
coined. Principles of honorary service and unlimited liability were also worked out. The
seed thus sown by Raiffeisen began to take root and in a short time new credit unions
were formed. In 1877, The General Union of Rural Co-operative Societies which
was known as the “Raiffeisen Union” was also set up.
Raiffeisen laid the maximum stress on the moral aspects of the working of
societies and the concept of self-help, mutual-help, social equality, non-profit motive and
joint liability. He believed in the capitalization of character and wanted members to help
one another and increase their borrowing power by pooling their resources in present and
in future. He believed that societies were not business concerns in themselves but were
meant to help the members to improve their financial condition. On the other side,
Schulze believed that co-operative institutions should be run on business lines. He
believed less in sentiments and more in realities of life and made his societies
viable units, able to stand with competition and difficulties.
After the national collapse and German defeat in 1945, the country was divided
into the German Democratic Republic and the Federal Republic of Germany, the formal
agricultural production co-operatives have been formed on the pattern of collective farms
as Russia. In the later, the co-operative movement developed in four distinct
groups: Rural Societies- the most important group of co-operative organization is the
rural multipurpose societies, organized on Raiffeisen model. These societies combine in
themselves the work of providing credit, supplying agricultural requirements, marketing
of crops and processing of produce.
Urban Co-operative Societies formed in urban areas, Schulze type of
cooperatives have developed with the membership composing of retailers, restaurant
owners, doctors, druggists and others. The organization of retail shop keepers into
cooperative serving as wholesalers was a feature of West Germany. Such societies
had a centre all their supplies through these societies. Other societies in the group
provided credit mainly to non-farming people. Both Raiffeisen and Schulze type societies
provided all services offered by commercial banks. Thrift is encouraged among
members by offering various types of deposits such as long range savings, lottery
savings, thrift messenger and club savings.
Housing Co-operative Societies formed the third group in the movement. These
societies constructed houses for their members with the finances collected from the

42
members as well as from the government. A very large number of co-operative housing
societies have been working in Berlin.
Consumers Co-operative Societies was the last group of consumers
cooperatives. These societies were also running with a very large number of shops
and million members. As well as the four groups of co-operatives had their own
federal organizations. Although the co-operative movement in Germany can be divided
into four major groups, there are several common features between them e.g. all
co-operatives observed the same fundamental principles namely self help, self
responsibility and self management. All types of societies were governed by the
same co-operative law, and were affiliated to the German Co-operative Bank and
obtained the required finances from it.
In Germany, the rural cooperative movement, which started merely for the
elimination of financial debility of members, covered the whole economic field in rural
areas. They not only provided credit but also helped members in cutting down cost
of production by providing them their farm and house-hold requirements and
marketing their crops at reasonable rates. The co-operatives also undertook joint
production in order to increase the units of production in agricultural and industrial
fields and thus cutting down the overheads. The societies adopted a policy of
rationalization by increasing their membership and turnover. Similar types of societies
amalgamated into reasonably large institutions and vertical integration of the societies
into central organizations strengthened.
As the Germany did half a century back, India was passing through the
similar conditions. Indian movement has much to learn from the way the
movement that in Germany has developed into a national force.
Since the beginning of the Credit Union movement in Germany, there are national
leagues, regional confederations and the global organization- World Council of
Credit Unions (WCCU). The main task of WCCU was to provide the necessary
assistance to members for sustaining the credit unions development well. For connecting
with the co-operative movement WCCU joined International Co-operative Alliance (ICA)
in March 1977 to provide the services to 97 countries with 46,377 credit unions and
17,20,10,203 members at the end of 2006.
In Germany there are 17 million members spread across around 5,300
cooperatives. Each one out of four is the member of co-operative. The co-operative
network is the largest economic organization in Germany. German Co-operative and
Raiffeisen Confederation Registered Association (DGRV- Deutschev Genossenschafts
and Raiffeisen Verband) is the apex and the auditing association as defined by German
Cooperative Act. Today co-operatives are also present in growth sectors such as the
service industry, in data processing and new media industries and in the education
and health sectors. This shows that co-operatives are not only engaged in current
development but also that their foundation concept can be flexibly applied to the
most varied industry structures.

CO-OPERATIVE MOVEMENT IN IRELAND-

Co-operative movement in Ireland was developed mainly among the farmers. In

this country farmers held the status of mere tenants who were generally exploited by big
landlords. In Ireland, Gombeenman was a multipurpose man catering to the various needs
of the farmers, combined in him the functions of a moneylender, trader and

43
merchant. The farmers, thus, victims of the landlords and the Gombeenman they got
exploited to the maximum level. Thus, the condition of the farmers was so worsened that
the government had to take measures to remedy it.
In 1881, the first Land Act was passed which gave security of tenure to the
tenants and fixed the maximum rent which could be obtained from them. In 1903,
the Land Purchase Act converted all the tenancies into peasant proprietorships.
In Ireland, the main occupation of the farmers was selling the milk and butter in
open market and England was the main market for their butter. But very soon, they faced
with the problem of competition with Danish and Swedish butter. Since the invention of a
mechanical cream separated in 1880 by Danish engineer and set up a strong co-operative
system of creameries on the basis of the strong organization and quality products to
capture the British market. Thus, the condition of the Irish farmers became worse than
ever before.
Horace Plunkett an extremely popular leader of the masses, elected as a member
of the Parliament in 1892, inspired by the consumers co-operative movement of
England. He introduced the co-operative method of work to the Irish people, as measure
to remove their poverty. He developed his philosophy into the application of co-operative
to business, living as well as farming. His slogan of “Better farming, Better business and
Better living” soon became a motto for the co-operative movement all over the world. He
organized a number of co-operative stores which met with varying degrees of
success. His main work, however, was on the agricultural side and he established
the Irish Agricultural Organization Society (I.A.O.S.) in 1894, of which he became
the first president. He also presided over the Recess Committee on whose
recommendation in 1896, the agricultural department was set up in Ireland. His co-
operative thoughts represented in “Ireland in the New Century” and “Noblesse Oblige”.
Horace Plunkett and his friends organized the co-op. creamery in 1889. As well as, new
type of societies viz. agricultural manure, co-op. stores and credit societies also grew up
during this period.
Co-operative Wholesale Society of England (C.W.S.) - In 1891, the Co-
operative Wholesale Society of England (C.W.S.) decided to acquire the Castle-Mohan
Co-op. Creamery of Ireland. Due to this issue the relationship of the Irish creameries with
the Co-op. Union of England was broken. Ireland therefore, felt the need for organizing
its own union. In 1894, with the efforts of Plunkett a union named „Irish
Agricultural Organization Society was established. Its object was to undertake co-
operative education and propaganda; to act as a mouthpiece of a movement, and
protect the interest of agricultural societies from internal and external dangers. It also
organized new societies and guided them properly on business and technical issues.
This body continued the struggle with C.S.W. over their policy of establishing
dairies in Ireland: As a result C.W.S. incurred heavy losses and was compelled to
sell its creameries to co-operative societies organized by the farmers.
In 1921 Ireland, which was so far under the British rule, was declared
independent. Ireland itself was partitioned into parts i.e. Ulster and Irish Free State. With
this division the I.A.O.S. confined its activities in the Southern Ireland i.e. Irish
Free State. For Ulster, a separate society named “The Ulster Agricultural
Organization Society” was organized.
Ireland remained neutral during both the wars, but it could not remain away from
their efforts. During war period prices of everything bounded sky-high and the pockets of
farmers bulled with money. However, in 1921 the post-war slump did come and its
effects on societies were disastrous. In 1927, the Irish Agricultural Credit

44
Corporation was set up which was supplied credit to the creameries. But the
business of societies which produced for the special needs for war days closed down.
Their stocks depreciated in value and loans could not be recovered. As well as, during
the second war the Irish industry again got set back. After war, however, steps were
taken to re-organize the industry.
Committee of Enquiry on Post-Emergency Agricultural Policy - In 1956 a
Committee of Enquiry on Post-Emergency Agricultural Policy was appointed. On
its recommendation a five-year plan for the reorganization of the dairy industry
was prepared. The plan was greatly successful and increased the efficiency of the
industry. In Ireland the State has been instrumental in the development of the co-operative
movement of Agricultural and Technical Instruction which was established on the
report of the Recess Committee in 1896. This department has been giving grants-in aid
to the I.A.O.S. the most outstanding contribution of the department to the co-operative
movement was made on the passing of the P. Hogans Creamery Act, 1928. In
accordance with the provisions of the act of 1928, private creameries owned by the
Condensed Milk Company these two companies were acquired by the department. A
separate Dairy Disposal Company Ltd. was set up to operate the acquired
creameries. These creameries were transferred to co-operative dairy societies
organized by the I.A.O.S. big units like the condenser at Lansdowne are still being
operated by Dairy Disposal Company. In this way the Government of Ireland gets the
credit for a planned action in favor of the co-operative movement. The I.A.O.S.
continues to be the apex organization making the entire cooperative movement a
well organized structure. It is playing a major role in creamery rationalizing
programme I.A.O.S. to prorogate that the Government owned Dairy Disposal Company
should hand over business to co-operative dairies as was envisaged when the company
was established.
The I.A.O.S. has an engineering section which provides technical advice on
all matters relating to planning, construction and equipment installation in co-
operative enterprises. I.A.O.S. also sponsors application of co-operative societies for
Government grants and loans. The economic section of I.A.O.S. deals with
industrial relations, taxation, collection of statistics and studies related to new projects.
I.A.O.S. also conducts training courses and member education programme through
advisory committees.
Ireland’s economy has undergone vast change over the past decade. The Irish
cooperative movement was based on agricultural processing and marketing. The
cooperative form of organization involves the pooling of small capitals to create
new enterprises which were democratically owned and controlled by the shareholder
farmers.
Recently, co-operatives took three major forms of societies i.e. co-operative
producing butter, which were located in the traditional dairying areas of Munster
and Ulster. There were agricultural societies which achieved economics through the
bulk purchasing of farm inputs. Finally, there were the co-operative credit societies
which extended credit to the poorer sections of rural society, and which were
particularly numerous in the west of Ireland. In this new century Ireland has a
different challenges. Ireland policymakers are reforming Irelands new „enterprise
culture that Plunkett called for in his work. Indeed, initiative, risk taking,
entrepreneurship, education, practicality, a global perspective and self confidence are
hallmarks of both. Today, in 2008, there are 2.9 million members engaged with the
co-operatives in Ireland.

45
CO-OPERATIVE MOVEMENT IN ISRAEL

The co-operative movement in Israel is in many ways unique in character. Unlike

most co-operative movements, it is not engaged in transforming an existing economy, but
in creating an economy and society from the beginning. The principle of co-operation had
already played a decisive role in Jewish agriculture even before the Jewish State
was established. The important of various forms of co-operative agricultural settlement is
that the co-operative sector is 70 per cent of the country’s entire agricultural output,
whereas that of the private sector is only 30 per cent. In the agricultural sector, there are
various types of co-operatives are functioning i.e. marketing, credit, consumers, etc.
Jewish families which scattered all over the world were driven to Palestine where
th
they established a State of Israel on 15 May, 1948. The diversity of the co-
operative movement is the direct result of the specific conditions of the country. It is also
a result of the history of the Jewish people and the Zionist movement in a agrarian
reform. The Jewish immigrants who became agriculturists had no experience in this
field. They had to adopt themselves to rural life and manual labor, the agricultural co-
operative movement was the first step into this direction. The most important
contribution towards the cooperative movement was made by the foundation in
1908 of the first agricultural collective settlement at Dagania in the Jordan Valley.
In Israel, arrangements to receive and settle the immigrants were made by Zionist
organization. In 1901, this organization set up the Jewish National Fund (J.N.F.). In 1920,
Zionist organization created another fund, called the Jewish Foundation Fund, with the
object of providing working capital loans to Jewish settlers for running the farms.
In 1920, a Jewish Federation of Labor (Histadrut) was founded. It is a trade union
organization at the national level, and its membership is open to all individual,
agricultural or industrial workers. It gives all facilities to the immigrants to settle
on agricultural land. It also supervises the working settlements and arranges for
them technical as well as financial assistance. In 1923, a society was registered under the
Co-operative Societies Act, under the name of Hevrat Ovdim. Membership of this
organization is the same as that of the Histadrut and this factor, among others, establishes
an organic link between the co-operative movement and the labor movement.
Hevrat Ovdim is said to be the „roof organization under which about 80 per cent of the
societies in the country work. The Hevrat Ovdim has various functions to perform. It
assists the members in setting on land, develops fishing, industries and transport
system, founds banks and credit associations and generally engages in business, trade
and industry for the benefit of members.
Since 1920, the agriculture co-operative movement, linked with other
cooperative branches (producers co-ops in industry, transport and services, credit
cooperative in town and country, consumers and other branches of the co-op. movement)
has made rapid progress and now plays an important part in the economic life of the
country.
Israel has adopted the principle of the universal co-operative movement, as
the circumstances under which it operates are unique, and so are the objectives which
these circumstances have impelled it to pursue. Co-operative farming and living was
adopted in Israel because of a desire of mutual aid actuated by national affinity,
pioneering zeal in the immigrants to uplift their homeland, lack of technical and farming
knowledge in the immigrants, lack of resources and experience necessary to reclaim large

46
areas of barren land and mutual protection from hostile Arabs. For these reasons, the local
co-operative movement was bound to start by creating not consumer co-operatives, as
was the case in the majority of European countries, but rather producers co-
operatives in the rural as well as in the urban areas. Moreover, the co-operative form in
agricultural and industrial enterprises was most suited to create sources of subsistence for
those large numbers who, for ideological or other reasons, preferred to be integrated in
country. In this process, as a result of the interplay of national, social and economic
factors, quite new forms of agricultural and other co-operative enterprises spring up
in the country e.g. Kibbutz (collective village), Moshav Ovdim (workers settlement),
Moshav Shitufi (collective small holders settlement) and Moshav Olim (new immigrants
settlement).
Kibbutz has been defined as „a voluntary commune, established on national land,
whose members practice self-labor and where all means of production,
consumption, education, health and municipal activities are owned and maintained
collectively, and on a basis of equality, by the society.
Moshav Ovdim, the first Moshav Ovdim was founded in 1921 at Nahalal. It
supplied to members various production requirements such as fertilizers, seeds,
implements and household commodities, if necessary, on credit. Their way of life is
governed by specific social principles. Among the most important of these are;
cooperative marketing of produce and purchase of supplies and equipment. The
Mashav Ovdim also carries on some municipal functionals such as sanitation,
education and health within the settlement. Taxes are collected from the members on
equal basis. The Moshav also serves as a bank wherein members can keep their surplus
funds. A Moshav Shitufi has been defined as „an agricultural settlement in which
members conduct farm and allied operations jointly with pooling of land, equipment etc.
while the individual members have separate homes and live separately, their own private
lives. This form of a co-operative represents a via media between the Kibbutz and the
Moshav Ovdim. In this type of settlement also land is obtain from the government or the
Jewish National Fund Members work on the farm and in return get an equal share in the
income of the society for domestic consumption. The settlement provides to each
member a house and some general amenities. Management pattern is the same as in
other co-operatives. In agricultural field - marketing and cultivation, irrigation, general
agricultural societies and mutual agricultural insurance these co-operatives are working.
In term of increase in agricultural production, the settlements have shown
remarkable results. The experience of co-operation in Israel, especially in agricultural co-
operation is unique and could serve as a useful source of inspiration for developing
countries.
Co-operative marketing of most of the agricultural produce (75%) has an
important place within the co-operative set up in Israel. In fact, the condition that all the
co-op. settlements are under obligation to market their entire produce through the co-op.
channel is of crucial importance. In regard to certain commodities, such as citrus fruit the
main export produce of the country, almost the entire produce is marketed by co-op. The
main marketing society, called „Tnuva, deals with almost all agricultural produce except
grain. „Tnuva is playing a very significant role in the marketing and agricultural
production and has considerable achievements to its credit, particularly in ensuring that
the producer gets as large a price as possible, and also to reduce the middleman’s profit in
the interest of the consumer. Hundreds of Israeli experts are working on special missions,
particularly in the field of land settlement, planning of projects and agro co-operation. It
is happened not only in agriculture, but also in other branches which the co-

47
operative movement covers.
Today, on the eve of a new millennium, the Kibbutz Artzi is working as a unique
part of co-operative movement (in the past there were several other organizations;
the Kibbutz movement was formed by a merger of the United Kibbutz movement
and Kibbutz Artzi in 1999). Kibbutz Artzi carrying out far reaching changes in the
structure and activities of its economy, in its organizations and administration, in
developing culture and education; and in readjusting the democratic structure of its
society. Recently, rapid progress of centralizing Israel’s capital market and financial
institutions, almost all credit associations were absorbed into Israels central bank
and dissolved. Today, Israels two largest banks (Leumi and Hapolim) control over 63%
of credit provision, and 90% of credit provided to less than 1% borrowers.

CO-OPERATIVE MOVEMENT ITALY

Italy, in olden days was a well advanced and their workmanship and craft
occupied a foremost place in the world. Romans were the first to give up the concept of
citizenship and frame laws for governing the mutual relationship between citizens. But
they failed to keep pace with the advancing world, because in agriculture as well as
industry they kept to their old methods and were cut off form new experiments and
techniques. People everywhere in the country thus became victims of poverty and
backwardness.
The farmers, laborers and workers remained at a discount in their dealing with the
comparatively well to do classes. Their need for money by and by drove them into the
hands of the moneylenders and soon put them at mercy. The rate of interest charged by
them was high beyond proportion and mostly varied between 50 and 200 percent. Apart
from it various malpractices were connected with the usury which made it all the more
disgraceful. The landlords were also no less exacting. The rents charged by them were
high and the farmers position was reduced to mere serfs. Mostly the landlords lent grains
to the farmers for growing and consumption purposes on a promise of getting back
hundred and fifty percent of it in next harvest. They very often took advantage of
the difficulties of the farmers.
In 1880, things became more worst when a big depression came, which led to low
prices and unemployment. Poor people could not return their loans. Whatever little assets
they possessed began to pass quietly into the hands of the landlords and moneylenders.In
Italy, one was Luigi Luzzati and second was Dr.Leone Wollemburg Pioneer in co-
operative movement. They began to think of ways and means to improve the
conditions of the people who were suffering in poverty. Luzzati was a professor of
economics in an educational institute at Milan. He studied the literature on co-
operation and impressed by its theory. He went to Germany to study the practical aspects
of the co-operative movement. He was particularly interested in the Schulze system of
co-operative credit, by that time the Schulze had become 15 years old. He became
fully convinced that co-operation could go a long way in relieving the poor classes of the
unhealthy influences of the money lenders. On coming back from Germany, he started
his work among the industrial workers in urban areas and on the basis of his
experience he stated a number of principles to suit local conditions.
Luzzati started his work by organizing a friendly society at Lodi in 1864-65. Later
it became a regular co-operative bank and still continues. In 1866, he started his first
coop. bank at Milan. His friends and he himself was the major contributor of funds.

48
Luzzati called his bank Banca Popular, the success spread its reputation and soon the
members of it began to increase. At present these banks are very strong and they
represent one third of the total banking business of the country. Their area of
operation was whole district. These banks preferred small loans for short period.
These banks gave loans to non-members also. The main source of funds of
societies was deposits. There was not central financing institution. The chief
channel of credit was the bills of exchange, advance bills or trade bills. Luzzati
insisted on honorary management to reduce the rate of interest on loans. He pleaded only
limited liability. He kept smaller shares which were payable in ten months.
Leone Wollemburg was the second pioneer in co-operative movement in
Italy, who was highly educated and belong to a well-to-do family. He also studied
cooperative literature thoroughly and was specially influenced by the Raiffeisen system
of co-operative credit as it came to be developed in German villages. He worked among
the farmers of Italy and on account of his outstanding public service; he was later selected
as member of the national cabinet. He also served as a Finance Minister for some years.
Rural Credit - There was complete harmony between the Luzzati urban
cooperative movement and the Wollemburg rural co-operative movement. When
Luzzati was working among the middle-class urban people, Wollemburg started co-
operative activities in the rural areas. It was in 1883 that he started a bank in his
home village Loreggia with 32 members. Wollemburg was himself the biggest depositor
in the bank. In the beginning the bank had no share capital but after sometime it
introduced with small share capital amounting 10 dollar each. The rate of interest on
loans was kept as low as one and half percent. This was responsible for the reputation
which this bank gained and soon the number of rural societies rose.
However, Luzzati and Wollemburg were in favor of political neutrality in
cooperatives. Some political and religious came into the field of co-operation.
Catholics were first who organized their first co-operative bank in 1890. The number of
these banks increased rapidly and in 1922 there were about 3500 Catholic societies.
During 1922 to 1945, when the Fascists came to power, the co-operative
movement became a State regulated organization meant to carry out State policy.
The spirit of co-operation and self-help was destroyed. The Fascists had kept the coop
movement under their subjugation and used it against its will for their own ends.
The movement suffered a great set back. In an effort to use co-operatives, as seats of
Fascists political power, the movement was faced to liquidate itself. The central bodies of
the cooperative movement were dissolved and its leaders were forced to exile.
Government concessions were also withdrawn. As soon as the Fascist power was
smashed in 1944, the movement threw off its shackles and began to revive itself. The
Italian Co-operative Federation and the National League of Co-operatives which had
been declared illegal in 1924 were revived in 1945 and 1947 respectively.
General Directorate to Co-operation was set up in 1946 to remove bad effects and
innumerable difficulties faced by the co-operative movement. It was authorized to carry
out rigorous inspections in order to increase efficiency. In 1947, an Act was passed
to regulate the activities of co-operatives. Co-operation was placed under the
Ministry of Labor. A Central Co-operative Commission had been set up under the Act.
Annual audit and inspection had been made compulsory for every society and every
society had to affiliate itself with co-operative audit and inspection unions.
The movement is still facing some difficulties i.e. it is divided into two factions,
National League of Co-operation and the Italian Co-operative Confederation. A lack
of understanding between these two bodies made the movement weak. Another

49
serious difficulty was that the societies were unable to arrange sufficient funds to meet
their demands. Lack of loyalty of members is also sometimes felt. Training facilities
are lacking. However, much has been done in this direction by the State as well as
private bodies.
Labor Societies in Italy- Italy is known as the pioneer of Co-operative
th
Labor Societies. In the middle of the 19 century, the trade cycle in Italy was inclined
towards a major slump and consequently unemployment. The condition of the labor class
was worst of all. Their earning was small and they were exploited fully by the
contractors. Mr. Mazzini who worked among the laborers, encouraged them to form
co-operatives as a measure to eliminate the middlemen. The first society of laborer
named “General Association of Workers” was organized in 1883 by the Braceianti of
Ravenna. Mosons and Laborers Co-operative of Milan were established in 1886.
Opposition from private contractors, shortage of funds and lack of loyalty of
members all stood in their way. However, success achieved by the association mostly
due to the patronage given by the government which during the relevant period included
brilliant and zealous co-operators like Luzzati and Wollemburg in the cabinet. By 1900,
the number of labor societies in Italy had risen to 600 and in 1903 they organized
their Federation of Labor Societies in Milan with the object of understanding publicity
and giving help in accountancy, legal and financial problems.

st
During the 1 World War, activities of workers co-operative societies slowed
down but after this the societies resumed their progress. In 1921, the total number
of labor societies had reached up to 8830. But during the Fascist Regime (1921-44),
nd
the movement suffered a great set back. However, after 2 World War, the
worker's cooperatives in spite of various difficulties they rehabilitated themselves.
The development of the „Social Co-operative is a particular impressive example,
beginning in 1980s, in response to the decline in government sponsored health care,
educational services and employment services, people began to form co-operative to offer
such services themselves. In 1991, the national government passed a law that formulized
the model which contributed to a dramatic expansion of these co-operatives into areas
such as job training. By 2001, Italy had about 6,000 social co-operatives, which
employed 1,60,000 people of whom were disadvantaged workers.

CO-OPERATIVE MOVEMENT IN SWEDEN

Sweden is also a small country like other West European countries. In the
th
first half of the 19 century, Sweden was mainly an agricultural country and about 75
percent of its population depended upon agriculture and subsidiary industries. The
industrial revolution which raised its head in England, soon had its effect on this country
also and by 1870, large scale industries began to be set up. Industrial development was
take place so rapidly that the agricultural economy of the country soon gave place to the
supremacy of industries. This change over naturally had its effects on the employment
position also. Burden of population on land decreased greatly and more and more
people drifted to industries. Sweden today is such an advanced industrial country that
only 5 percent of its people are engaged in agriculture. A large class of wage earners in
urban and semi-urban areas came into existence. However, so many difficulties were
faced by them as there was the problem of making purchases for consumption. The

50
private traders and factory owners had organized their cartels and other price fixing
associations in order to earn high profits. Through these pools they fixed very high
prices for their goods. The margin of wholesalers and retailers was no less high and the
greatest sufferer was the wage-earner.
These conditions provoked the workers to think of methods of saving themselves
form this organized exploitation. The news of the achievement of Rochdale Pioneers had
already reached them and the workers were decided to follow the example set by
the Pioneers in England. The first known co-operative enterprise in Sweden named
the District Commodity Buying Company was established in 1850. The oldest co-
operative society town still exists and is a member of the K.F. was established in
the town of Trollhattan in 1863. Like England, the tendency in Sweden is also to reduce
the number of societies by amalgamation and increase size to employ experts.
In Sweden, above 75 percent of households are now members of the consumers
co-operatives. The main bulk of membership of the societies comes from the
salaried workers and professional classes which constitute movement in Sweden. It
is predominantly associations of households anxious to obtain the necessaries of life at
the lowest possible cost.
In the initial years, consumers co-operative movement in Sweden, faced the
opposition of private enterprises which did everything possible to sabotage its progress.
The movement, however, successfully overcome these initial problems. Today the
consumer co-operative movement is a very strong force in the Swedish economy and a
bulk work of protection to the Swedish consumer. It has played a notable part as an
antimonopoly force and has successfully prevented the occurrence of monopoly gains.
The consumer co-op. movement played a pioneering role in introducing self-service
shops in a big way. The self-service system prevails in the super markets as well
as in the department stores. Both these shops deals with the distribution of consumer
goods on a large scale. But the greatest innovation of the Swedish consumer co-operative
movement is the discount houses. The discount house has twenty thousand different types
of articles. Due to large scale of operations the prices are below 10 to 15 % to the market
prices.
Co-operative Farbundet (K.F.) - The Swedish co-operative Union and
Wholesale Society known as K.F. was founded in 1899 to act as an advisory body
to primary co-operative stores and to act as a medium for publicity. In 1904, K.F. began
to act as a supplier of goods to the primary co-operative stores. For this purpose
it got agencies from a number of private companies. By and by the K.F. became a full
fledged wholesale society. The headquarters of the K.F. are at Stockholm. K.F.
undertook its production programme in order to break the monopolies and
combinations so that the consumers may be able to obtain consumable articles at
reasonable rates. Apart from the distribution and production programmes, the K.F. under
takes insurance work on quite a high scale. In 1908, the first insurance society called
the „Samarbet Pire Insurance Society was established and in 1914 followed the
organization of the “Folket Life Insurance Society”. In 1949 another society
namely “The Marine and Transport Insurance Society” was established. Although these
societies are separated entities, they have got one and the same management.
K.F. carries out its programme of education for the members of the co-operative
societies with great zeal. The K.F. has established its own college called “Var
Gard” outside Stockholm. K.F. has its own research organization which includes
Food Test Laboratory, a Textile Laboratory and a Test Kitchen. Here the various
commodities are put to a thorough test before they are offered for sale to the retail

51
societies. To help the cooperative movement in the under-developed countries of
South East Asia, K.F. established in 1960 an Educational Centre in New Delhi and a
Regional office for South-East Asia by the International Co-operative Alliance in New
Delhi.
Just as K.F. is the apex organization of the Swedish Consumer co-op. movement,
S.L. is the confederation of the agricultural co-op. movement. The federal organization of
the different branches of the agricultural co-operative movement are attached to
S.L. Agricultural in Sweden is not the main industry. It gives employment only to 5
percent of the population. The population of farmers in Sweden is declining, though
the total agricultural production is rising. They are able to produce more because
of successful plants and animal breeding, intensive use of fertilizers, vigorous
mechanization and rationalization of farm structure. The agricultural co-operatives have
provided services of a very high order to its members. Hired labor accounts for only 15 %
of the total labor employed in the agriculture. About 40 % of the agricultural income is
derived form milk and about an equal percentage from animal slaughter. Hence fodder is
the main crop. Co-operative movement in the country was started by the farmers in order
to take advantage of large scale operations. The first agricultural society to be organized
was the co-operative Dairy which was established in 1870. Soon, the co-operative
movement spread in the field of supplying agricultural requirement to the farmers. Just
after the first world war,, agricultural co-operatives expanded their sphere of work and
societies were established in almost every sphere of agricultural activity. The agricultural
co-operatives in Sweden can be grouped into 13 categories or organizations, such as-
Swedish Dairies Association (S.M.R.), Swedish Farmer’s Meat Marketing
Association, Swedish Eggs and Poultry Marketing Association, Association of Swedish
Rural Credit Societies, General Mortgage Bank of Sweden, Association for Swedish
Live-stock Breeding and Production, Swedish Oil Seeds Growers Association, Swedish
Farmers Selling and Purchasing Association, Swedish Forest Owners Association,
Swedish Distillers Association, Swedish Fur Breeders Association, Swedish Starch
Producers Association, Swedish Flax and Hemp Growers Association. These 13
associations are further federated into the Federation of Swedish Farmers Association
(S.L.). The Federation owns, along with Swedish Farmers Union, the Agricultural
Economics Research Institute. It carries out research and conducts investigations in
agricultural and forestry problems.
st th
Co-operatives expanded rapidly in the 1 half of the 20 century. This
development also accompanied by the creation of national federations. New areas of
activities arose, i.e. banking, craft, fisheries, horticulture, recreation and transport.
Cooperative structures for travel and services and the provision of petroleum products
also emerged. In the insurance sector, Folksam was established and has since
become the world-renowned co-operative. The dominance position of Sweden in co-
operative development is well known. Co-operative has become one of the most
important alternatives to the public provision of social services in the transformation of
the welfare State and privatization of public sector. More that 66% of private day care
centers are co-operative, there is much of the privatization is really co-operatization.
Recently, both the agricultural co-operatives and the consumer co-operatives went
through a consolidation process which was reflected in the reduction of their
members and new larger and more complex units. Both sectors internationalized their
activities.
The Swedish Agricultural Co-operatives have been investing in productive
facilities abroad. KF, the Consumer Co-operative Federation, created together with

52
their Danish and Norwegian counter parts co-operatives, Norden dissolved in 2003.
However, co-operation in purchasing between the three countries remain.

CO-OPERATIVE MOVEMENT IN CANADA

Canada is the world’s second largest country in size and three times as big
as India. Canada occupies almost all the whole northern part of the North
American continent. It has a total area of about 4 million sq. miles. The population of the
country is, however, proportionately small. The area what is called the „Canadian shield
th
consists of rugged mountains and thick forests, only 1/6 of land is suitable for
agriculture.
th
Agriculture in Canada employs about 1/6 the total population and produces
rd
nearly 1/3 of all exported commodities. Wheat has since long been the most important
crop, though live-stock products have recently begun to challenge the first position
occupied by wheat. Canada is one of the world’s largest exporters of wheat. It also
exports beef, bacon, fruit, cheese and eggs. Traditional market of Canada is Europe and
the United States. The co-operative movement in Canada plays an important part in the
agricultural economy and has particularly helped the farmers in the Prairie province in
marketing their wheat and other agricultural products as well as in the procurement
of essential agricultural requirements. The movement serves about 40 percent of
Canada’s rural population. Marketing and purchasing co-operatives were the most
important groups, followed by service and fishing co-operative societies. In addition, the
credit union movement, which is generally regarded as distinct from the co-operative
movement in Canada, helps both the farmers and the urban workers in meeting their
credit requirements.
Because of the community life of the pioneers, instances of co-operative activity
could be found in the very early period of Canadian history, but formal efforts in
this direction began to be made about 1870. Since agriculture has remained always the
most important occupation of the people, the first co-operative institution developed
among the farmers. First of such organization was the Dominion Grange which was
organized in 1873. It established many co-operative enterprises in Ontario. In 1861,
the coalminers had started a co-operative store in Novascotia. Some other stores
also came up but by 1900 all but one had failed. Successful organization was
developed on the marketing side. In the beginning 1900 the marketing of agricultural
produce was entirely in the hands of private companies. They purchased grain from
the agriculturists, arranged its transport and exported it to other countries. They owned
grain storing elevators and held monopoly for the use of platforms for loading rail-cars
and ships. In the year 1900, the growers got a right to the use of platforms for loading. To
make available of minimum quantity of grain acceptable for transport, a number of
growers joined hands and pooled together sufficient quantity of grains for loading
purposes. These groups soon assumed the form of regular co-operative institutions. The
first growers association was registered in 1906, under the name of “Grain Growers
Association”. In 1911, the Saskatchewan Elevator Co. was organized with the active
support of the Government. In 1919, the Government set up a Wheat Board which
took over the whole export work of food grains. When the Board was discontinued with
its work next year, the growers began to think of setting up co-operative institution to
work on lines similar to those of the Wheat Board. After having experienced the
Government Wheat Board Marketing, the farmers realized the value of stable prices
and orderly selling methods. In 1923, in the province of Alberta, first wheat pool was

53
organized. The wheat pool is a farm organization dedicated to the improvement of
the social and economic conditions of the farm families. Its principal objective is
to promote and provide co-operative and other services required by farmers in the
production and marketing of agricultural products, thereby reducing speculation,
manipulation and waste. The pools and their central selling agency worked with great
success till the depression of thirties. During this unprecedented emergency, the price
of wheat touched its bottom and the pools were unable to sell their stocks, the Canadian
Government came to their rescue and in 1935, the Canadian Wheat Board was set up.
The Board replaced the Canadian Co-operative Wheat Producers Ltd. and took up its
work as a central selling agency. Since 1943 the Board is the sole selling agency of
wheat, both for export and for internal consumption. The wheat pool and few private
companies act as agencies of the Wheat Board for procurement of wheat from the
growers. Apart from the marketing of grains, the pools handle rape seeds, rye, barley, oats
and flax. The pools also help the members in selling their live-stock, supply of cattle feed
and fertilizers. Farmers in Canada have built up strong co-operatives in all provinces
for obtaining supplies for production, such as feed, fertilizers, seeds, farm
machinery and various consumer goods. Unlike the service co-operatives in India,
societies bearing this name in Canada offer services such as generation and distribution of
electricity, provision of medical assistance to the members and also the provision of
societies like housing, transport, telephone exchanges, seed cleaning, cold storages,
skiing rinks & water works. Fishing is also an important occupation of the people in
the coastal areas. Fishermen in early years caught fish and sold it to private owned
processing and preserving plant. In this transaction they suffered heavily because of
the exploitation indulged in by the factory owners. They were paid at the minimum price.
The fishermen soon resolved to improve their lot by organizing themselves into co-
operative societies were reported with a membership of 16,306. In 1955, the wholesale
societies of Manitoba and Saskatchewan combined into a large organization called the
„Federated Co-operative Limited. It is engaged in manufacturing operations in a
variety of farm requirements and serves the three Pairie provinces. It has set up a
fertilizer plant. It also set up number of feed plants, oil refinery, factories for forest
product, warehouse and also deals with food and other business, i.e. food articles, meat,
drugs, dry goods, hardware etc. There is a continued trend in Canada also for
amalgamations and other forms of vertical as well as horizontal integration of co-
operative movement. Co-operative movement in Canada, as in the rest of capitalist
America, is looked upon by private business interest. The credit unions thus developed
as separate institutions from the co-operatives, even though they absorb all the co-
operative principles and ideals in them. The credit unions were introduced in Canada
by Alphonse Desjardins of Quebec. He studied the credit movement in Europe and
suggested it as a remedy against the usury practiced in Montreal. The first “Caisse
Population” was established at Levis in 1900. The province of Quebec was the first in
Canada to pass a credit union law in 1903. Similar laws were passed in other provinces
and about 136 all provinces had such special laws. Quite a portion of the success of
the co-operative movement in Canada can be attributed to the extension work in co-
operation started and carried on in the St.Frances Xavier University at Antigorrish,
Novascotia. The work was started in 1930 when small groups were organized in the
University under local economic problems. The movement has now developed into a
full-fledged education programme for economic and social group action. A still
greater contribution of the scheme has been its educational programme and the
advancement of co-operative thought.
In Canada, the most important co-operatives were wheat pools, by the

54
1990s most had privatized and several mergers occurred. Now all farmer wheat pools are
part of the Viterra Corporation.
Financial Co-ops & the Desjardins Movement, Quebec, Canada. Paper presented
at Institute of Rural Management, Anand (IRMA), India. Dec. 13-14,1999.
On October 24, 2001, legislation reforming the financial institutions statutes was
proclaimed in Canada, new flexibility provided by Bill-C8, and co-operative credit
unions are allowed to own banks. In April 2002, the federal government released
its constitution paper on Co-operative Banks in order to determine whether to allow
provincial centrals and federals. However, in April 10, 2003, Department of Finance of
Canada submitted its “Co-operative Bank Assessment Report”, concluding that-“the
Government is of the view that there is not only a lack of broad consensus on which co-
operative bank model would be preferable, but there is also a lack of agreement of
whether a co-operative bank option is even desirable. In fact, a representation of
stakeholders seems to suggest that a federal solution may not be best strategy for
resolving many of the key challenges faced by the credit union movement. Instead,
greater benefits may be achieved by focusing efforts on changes that would give credit
unions greater flexibility to expand and operate inter-provincially.” In Canada, co-
operatives and credit unions employ over 1,60,000 people.
The Desjardins movement (saving and credit co-operatives) is the largest
nd
employer in the province of Quebec. In the 2 quarter of the 2008, 516 Credit
Unions and Caisses Populaires outside of Quebec saw a six month increase in assets.
CO-OPERATIVE MOVEMENT IN DENMARK-
Denmark is a very small kingdom. However, it is having a good fertile soil.
Agriculture plays an important role in the economy of the country about 50% of
the Danish export consists of agricultural products. However, agriculture occupies only
one quarter of the population and remaining three fourth earns its overall structure
of economy, the co-operative movement is playing an important role. The co-
operative movement has developed agricultural working techniques which have their own
special characteristics.
In Denmark, the farmers had their own difficulties arising out of the socio-
economic structure, most of the land though cultivated by farmers, belongs to the barons.
The farmers had thus neither the incentive nor the opportunity to improve agriculture.
1. Lowe James, “Challenges & Opportunities for Canadian Co-ops in the New
Millenium”. Paper presented on Agricultural Legislation & Technical Co-operation,
Beijing, China. June 9-10, 2005.
Under benevolent rules, land reforms spread over a long period between 1769 and
1850, and converted most of the tenancies into freeholds. There were some
improvements in agriculture, but as the holdings were small and scattered the
farmers were destined to remain poor for sometime more to come. Other reasons of their
poverty included lack of finance, necessary to develop the land.
The problem of credit was solved by the credit associations under the supervision
of the Government in 1850 by a special law. The main source of their funds is the money
received by the sale of debentures. Saving Banks are second important which are
self-governing institutions owned by the depositors. Most of the money is advanced on
the mortgage of property preferably to the agricultural sector and interest rates
charged comparatively less. These banks have become very strong organizations
with huge reserves.
In 1925, a co-operative bank called “Andelsbanken” was established. The bulk of

55
its share holders come from within the co-operative sector and in its voting system,
it follows the principle of “one man-one vote”. It advances loans to co-operative societies,
traders for any purpose and there is no supervision on the application of loans, defaults in
payments are negligible. Loans are advanced only in the shape of overdrafts to depositors.
No loans are given to those who do not have their deposit account with the bank. The
bonus of democratic control, limited rate of dividend and bonus payments to customers
are the other features which distinguish it from commercial banks, though it is registered
under Companies Act. The co-operative movement in Denmark grew spontaneously
and naturally. Although there were pioneers, the credit of success goes mainly to the
efforts of the members in general.
Co-operative movement in Denmark was introduced by H.C.Sonne, a special
worker. He was impressed by the successful example of consumer’s co-operative
societies of England by Rochdale pioneers. He convinced a number of persons to form
1886, „Thisted Workers Society was established. Mr.Sonne worked so hard to make this
society a success that soon he came to be known as “Provisions Person”. The work of the
society was carried with the principles formulated by Rochdale pioneers. In 1871,
the number of such societies rose to 86 and in 1874 to 119. It was an important feature of
the Danish co-operation that, the consumers movement is largely rural in nature
and it is closely connected with the agricultural movement. The rural in nature and
is closely connected with the agricultural movement. The rural stores have got a
majority in the wholesale society. The general trend of amalgamations, which is
witnessed all over the World, is also found in the Danish Consumers Co-operative
Movement. In September 1966, the Congress of Consumers Co-operatives held at
Copenhegan decided to carry on the process of amalgamation, till all the
Consumers Societies are amalgamated into Denmarks Consumer Society. Most of the
societies are comparatively small and each society have generally only one shop.
As early as 1896, the retail societies had organized their wholesale society named
F.D.B. and all the primary societies are affiliated to it. The object of the society is
to purchase, produce and distribute goods to the co-operative societies. Over one fourth of
F.D.B. turn-over is made up by the goods produced, coffee is the largest processing item
along with other production chocolate, sweets, rope, soap, edible oils, spices,
tobacco, furniture, clothing, wine, biscuits, etc. Its architectural department gives
technical advice in the construction of new shops along with financial support.
th
At the end of the 19 century dairy business became an important industry. In the
earlier years, pattern of farming in Denmark comprised of food grain production.
The immense increase in the supply of cheap foreign grain made it profitable for the
Danes toimport corn. On the other hand, demand for Danish butter increased in England.
Thus, the Danish farmers took to growing fodder and raising live-stock on an increasing
scale, the production of milk, butter and cheese has played its important part in the
economy of Denmark. The changeover was stimulated by the invention in 1878 by a
Danish engineer, L.C.Nielsen.
The first co-operative dairy established in Hjedding with the efforts of a
young dairyman named Stilling Andersen in 1882. Since then the co-operative dairy
industry had made continues progress. England being the major buyer, 70% of the dairy
products including butter, cheese, cream and milk powder is exported and the remaining
30% is sold in the home market. In 1964, „Dairy Society Denmark established, it is an
overall federation to which co-operative dairies as well as export organization are
affiliated, which co-ordinate the production and marketing activities in the whole co-
operative dairy business in the country.

56
 The Danish farmers who started with dairies, had soon to take to piggeries as an
additional job. The milk produce was much above the local needs and after
churning butter out of it, the separated milk went waste. As pigs are best fattened with
this milk, farmers started rearing them. In 187, the first bacon factory was set up on co-
operative basis at Horsens in Jutland.
In 1895, the Co-operative Egg Export Association was established. It introduced
the system of grading and stamping of eggs to ensure that only eggs of good
quality reached to British Market as most of the eggs were exported to England.
In Denmark, co-operation also spread in other spheres of economic activity in
country. Some of the important types of societies developed in Denmark are: Co-
operative Poultry Killing Stations, Co-operative Cattle Sale Societies, Co-operative Seed
Supply Societies, Fruit Growers Co-operative Association, Co-operative Feeding Stuff
Societies and Co-operative Fertilizer Purchase Society. With a view to securing its
continuity, promotion of member education has always been considered as one of the
important jobs of the co-operative movement. The folk high schools have been since long
instrumental in promoting co-operative education, co-operative conferences and
gatherings often held at these high-schools. In 1932, the Danish Co-operative
College was established by the Danish Co-operative Wholesale Society at
Middelfort. It was in Denmark that the full potential of this type (Agricultural Marketing
th
and Processing Co-operatives) was realized, there, by the beginning of the 20
century virtually all the needs of the rural communities were met by co-operatives.
In 1990s the Danish Consumer Co-operatives represent a market share of
roughly 33% of the national foodstuff and beverage consumption. In every town
rural community found a co-operative supermarket or smaller shop and in many rural
areas the only retail show at all was a co-operative. Assessed on 2008.
The co-operative movement also resulted in a series of co-operative stores known
as Brugsen, under the administration of the Danish Consumer Co-op. Society. The stores
kept a large share of the Danish Consumer goods market. It merged with the similar retail
chains in Norway and Sweden in January 2002 to form co-operative Norden.

CO-OPERATIVE MOVEMENT IN RUSSIA

The co-operative movement in Russia began in the later half of the

nineteenth century, when the news of Rochdale pioneers spread all over the world.
First attempts were made in 1864 when some co-operative stores and credit societies
were organized. The imperial Government, however, did not have much faith in co-
operation because of its democratic principles, and the movement remained suppressed
till 1905 when some concessions were allowed. By 1914, the movement had become
strong enough and the consumers stores in the country handled more than half the
country’s supplies. Russia also has made good progress in the field of co-operation, like
other European countries. Progress was maintained till the Great Revolution of 1913.
During this revolution, the workers seized co-operative premises like other private
concerns but in 1918, Lenin called a half and declared that, “The co-operatives are the
only organization in capitalist system which is good. It must be preserved in its entirety at
any cost.”
The earliest form of co-operative movement in Russia was Labor Artels.
According to the Russian Law Artel is defined as “an association formed to carry on
certain industries or render personal services on the joint responsibility of the members of

57
the Artel and their joint account”. Such Artels were organized by carpenters, masons,
th
handicrafts-men and other artisans. The workmen, in the first half of the 19
century were less bargaining power when dealing with the employers. They thought
of joining hands and organizing bargaining power. Anybody could hire the services of an
Artel by fixing wages with the leaders thereof. The Artels were financed through
deposits obtained from the members and non-members. These Artels flourished for some
time but when large-scale industry came into being, their importance declined. Russian
th
farmers organized their own association in the last decade of the 19 century. These
associations purchase agricultural requirements and important consumer goods in bulk
and supply them to members as well as market the produce of members.
An important association of this nature was organized in1895 by the butter
producers in Siberia. These societies soon multiplied and in 1908, they organized their
federation called “The Union of Siberian Creameries Association”. The primary
units set up creameries and sold their butter through the union. The union still exists and
very strong.
In Russia Credit Co-operative Societies were set up to fight the evil of
money-lenders. Their object was to create the habit of thrift among members and grant
loans to them for agricultural requirements. To begin with some loan and saving
societies were organized. They secured their initial funds from the members in the
shape of share capital. On the contrary there was second type of co-operative
organization came to be favored, called „Credit Associations. These societies were
fully supported by the Government especially after 1905. They provided the credit
needs of their members who were mostly cultivators.
Early attempts at consumers societies were made in the second half of the
th
19 century when the news of Rochdale pioneers reached to Russia. These societies
however, succumbed to the cold treatment of the Government. A fresh start was
taken by the movement during the famine of 1891 when prices rose very high,
profiteering increased and commodities went into the black market. During the Japanese
war (1906-1911) these societies got a further fillip because of the conditions of
scarcity prevailing in the country. Most of the societies were in rural areas and they
succeeded to a great extent in stabilizing prices at the time of the revolution of 1913.
These societies had also organized their federation called Centrosoyus. After the
revolution, the Government ordered the co-operative stores to be kept intact. They,
however, began to be used by the Government as instrument for the execution of State
policy. Their autonomy and independence of action was seized and instead came a strict
control from the State. In view of a realization by the Government that the co-operative
societies could not make much headway unless they were given a free hand to mould
their policies, the State relaxed its control in 1928 but in 1932 when private trade was
completely abolished, the Government again tagged the stores to its policy of state
trading. Side by side the movement got encouragement because the Government
decided to entrust them with the entire supply of controlled commodities in rural
areas. In towns also a similar encouragement was given in 1946. As a result of all this, the
number of stores increased rapidly. These societies have also make purchases of main
types of agricultural produce from collective farms on behalf of the Government. They
also purchase surplus products from the collective farmers to relieve them of the
expenditure on trips to markets for selling them.
At the base the retail stores whose area of operation extends to one village. All
retail stores in a district are linked to the District Union. The Republic Unions are
federations of all the Regional Unions are represented on the Centrosyus, which is

58
the apex body for the entire consumers societies in the country.
The system of collective farms, which now covers the entire USSR, was evolved
over a number of years of experimentation and arose out of the political situation which
emerged from the great revolution of 1913. Before the Revolution of about 30,000
peasants constituting only 0.35% of the total farming families owned about 50% of the
land, their average holding being about 8000 acres. The remaining farming
population consisting of the medium and the small cultivators was cultivating the land in
a primitive way. After the Revolution the Government issued a decree on land
which abolished landlords property rights without compensation.
Most of the confiscated land was to begin with seized by the kulaks (well-to-do
middle class farmers). Even the properties of the Kulaks were confiscated and the entire
fund of nationalized land was reallocated among the stale farms, the communes and the
co-operative. Reallocation of land alone could not solve the problem, because except for a
few State Farms the rest of the land continued to be cultivated on primitive lines.
The farmers neither had any machinery nor capital to bring efficiency into their
profession. The Government therefore decided to provide assistance to those who
agreed to pool their lands into collective or co-operative farms. A special fund of 1000
million Roubles was set up to give grants and loans to the communes. Machinery was
also made available to the communes. Encourage by the Government assistance and also
realizing that their salvation lay in taking advantage of large scale farming. The surplus
income of the farm, after paying taxes in kind to the State, is sold either directly to the
consumers or to the consumers co-operatives. The surplus production of each farm again
1
distributed among the members, in the proportion of their work done by each of them.
North Caucasus Rural Credit Co-operatives and Agriculture Business
Development Programme (NC-RCC&AD) started activities in October 2005, when only
two-tier co-operatives existed in the region. By February 2008, the number of two-
tier co-operatives doubled, with one RCC in the Republic of Adygeya, two in Krashodar
Krai and in the Republic of Kabordino-Balkaria. Since 2005, USAID funded $5 million
NC-RCC&AD programme has supported credit co-operatives in the North Caucasus
Region, focusing on multifaceted approach with training programmes, technical
assistance, and enhance access to credit.

CO-OPERATIVE MOVEMENT IN JAPAN

th
At the end of 19 century, Japanese capitalism had almost achieved its
present development form, while the traditional peasant economy was stagnant. The
traditional peasant economy did not adapt itself to the new money economy. The socio-
economic condition of Japan is similar to Indian economy in many respects. Quite
a large proportion of population depended upon agriculture. Cultivated area per
household was very small. By the very nature of the climate of the country,
agricultural production depended upon the vagaries of nature. Heavy floods,
earthquakes, typhoons and other natural calamities often destroyed the agricultural
production. Farmers suffered from a heavy burden of the high-interest debts incurred
by the money-lenders. Indebtedness among the farmers thus, presented a major
problem.
Co-operative movement in Japan was introduced in the form of consumers co-
operatives, the first of which was established in 1879 with the object of cheep the soaring
th
prices. During the Sino-Japanese war at the end of the 19 century, prices again rise up

59
and a number of consumers co-operatives were established by the trade unions among
workers. As well as, credit co-operatives were established on Raiffeisen model by Home
Ministry of Japan, who had studied co-operation in Germany. In 1900, the Industrial Co-
operative Law was passed on the lines of the German Law. The Law was modeled after
the Schultze-Delizch type co-operative of Germany and established on the traditional
principles of co-operation. It contained enabling provisions for the registration of
co-operative societies. It was significant that the Industrial Associations were utilized as
an instrument of cheap money policy, i.e. as a channel to let governments low
interest money flow into rural areas. The functions of industrial association included
marketing, purchasing and utilization of common facilities, as well as credit. The
provision of credit, however, was the main function of these associations in the early
days. Five years after the Act was passed, there were only 872 societies.
In 1905, a non-official body named “Co-operative Union” was established. This
body made extensive propaganda for the promotion of co-operative societies and
by 1909, the number of societies had risen to 5690 with about 3.8 lack members. The
primary societies soon felt the need for organizing their secondary societies and in 1923
the “National Purchase Co-operative Federation” and the “Central Co-operative
Bank” were established.
The world economic crisis, beginning in 1929, dealt a blow to the Japanese
economy, throwing farm areas into depression. The income of the farmers decreased and
the co-operative movement came to their rescue by advancing loans to overcome on their
financial difficulties. The government’s agricultural policy was oriented to provide relief.
Particular emphasis was placed on the reconstruction of rural economy by the farmers
own efforts. Government also advanced distress loans to the farmers through the
co-operative societies.
After the World War II, in the middle of dissolving war-time structures and
stabilizing democratic systems a co-operative system based on the farmers free will was
taken up as one of the most important agricultural reform, side by side with land reforms.
As a result, in 1947, the Agricultural Co-operatives Law was enacted. This provides the
basis of the present organization of agricultural co-operatives. The law is consistent
in observing the traditional principles of co-operation, emphasis being placed on
exclusion of domination by outside influences and management by farmers
themselves. The former agricultural corporations were dissolved by official order and the
agricultural co-operatives were formed a new. Such a situation helped the speedy
formation of the “Agricultural Co-operatives” a new democratic organization. As well as
a most immediate reason was that government wanted to quicken the pace of
development of co-operatives in order to tackle the tasks of post-war rehabilitation
and recovery, to increase agricultural output through supplying producer’s good such as
fertilizers and to distribute the food produced. The government, therefore, had an
immediate need of a feasible control system to replace the corporations which was used
during the war-time. For all these reasons, a network of Agricultural Co-operatives was
established in only two years or so throughout the country.
Agricultural co-operatives, thus, provide a fully integrated service comprising of
credit, marketing and supplies with emphasis no linkage of loans to actual needs of
production as well as liking of credit with marketing. The Japanese co-operative
movement has developed on a foundation provided by agricultural co-operatives.
Although under the system of Industrial Association, prior to World War II, city credit
co-operatives had been formed, these were now separated in according with the city
Credit Association Law on the occasion of the setting up of the Agricultural Corporations

60
in 1943. It was only after the War that the co-operatives of smaller enterprisers
and consumers were generally organized. In 1949, The Law of Co-operatives for
Smaller Enterprises and Certain Other Categories was enacted. However, due to the
variety present in small business, it is more difficult for such co-operatives to
undertake to protect the position of members than it is in the case of agricultural co-
operatives. The “livelihood co-operatives” were made independent organizations by the
Law of Consumer Livelihood Co-operatives of 1948.
The Japanese co-operative movement the so called general co-operatives are
fundamental “Agricultural Co-operative” is usually taken to denote “General Co-
operative”. The general co-operatives have their federation in each prefecture. The
federation at the prefecture level consists of an economic federation for marketing and
purchasing business, a credit federation for finance, a mutual insurance federation
for non-life and life insurance, in addition to these, there is a General Union whose main
task is connecting and co-coordinating the co-operatives. In contrast to the general
co-operatives, the specialized co-operatives work in their respective special field such
as- sericulture, livestock breeding, dairying, and horticulture and land cultivation.
As compared to the advanced countries where co-operatives are usually divided
by specialties general co-operatives has a special feature of Japanese co-operative
movement. In Japan, the formation of co-operatives that handle various businesses had
been necessary and expected in order to adopt the small farmers development of
the capitalist economy. Undertaking various businesses is also important because in
Japan, from management it is not yet specialized, not being separated from house
holding. Japanese agriculture co-operatives cover 91% farmers as members, and they
provide an integrated system of marketing, supply, credit and insurance for the
whole rural economy.
Recently, Japan has experienced drastic changes in social and economic
areas. Japan’s economy has been seriously setback and the negative view that the
economy will further weaken i.e. the number of scandals including profiteering and
mismanagement in the co-operative movement that has largely damaging the trust
and reliability of co-operatives among its members and the society at large.
Although with relatively more funds are made available for the development of
financial conditions of the co-operatives. Japan is conducting various in-depth studies
on how to improve management and governance for better services to members,
working environment which can fulfilled and provide the best services and promote
members participation in decision, etc.
JA (Japan Agricultural Co-operative Association) expanded its reach and
influenced by capitalizing, ever since the passage of the Agricultural Basic Law in 1961,
of opposing all reforms aimed at nurturing a corporate model of farming and increasing
the scale of farms. In addition, it excludes organic farms that dispense with the chemical
pesticides and fertilizers. In fiscal 2007, ministry of Japan considered the system of direct
payment subsidies under the farm income stabilization policy, JA opposed it to
restrict the subsidies to farm at least 4 hectares in scale, arguing part time farmers
important role in community farming. As a result, the government decided to include
community farming collectively of more than 20 hectares, even if they consisted
primarily to part-time farmers. Moreover, at the end of 2007, after its defeat in the
House of Councilors elections the preceding summer, the ruling Liberal Democratic
Party dramatically relaxed the 4 hectares minimum by allowing each municipality to
approve exceptions.

61
CO-OPERATIVE MOVEMENT IN CHINA

The history of co-operative movement in China belongs to famines, floods,

mutual quarrels and the Japanese war. These are some immediate causes of the
introduction and the development of the movement in the country. Since very old times
mutual benefit and loan societies had existed in China but they did not cover any
significant field.
In 1912, Dr.Sun Yet Sen, the founder of Chinese Republic, gave a lead to the co-
operative movement. After reigns the government job immediately he gave preference to
set out to eradicate poverty of the people by organizing the co-operative movement. In
199, with his efforts he established “Shanghai National Co-operative Savings Bank”. In
the three years that followed a number of credit societies were set up in rural areas.
The movement, however, got an incentive from the severe drought of 1922 which
led to a general failure of crops and famine. In 1922 the International Famine Relief
Commission was set up in China and it submitted its report in 1924, in which it
recommended the introduction of the co-operative movement as a measure of
improving the economic conditions of the people. Thereafter, the provincial governments
also began to take interest in the movement and appointed the necessary staff for
organizing and supervising societies. These societies received financial assistance
from the Farmers Bank or Commercial Banks. In 1927, a co-operative union was set up
to encourage the development of the movement. Co-operative movement, which was
introduced after the famine, was rapidly developed after the floods in river Xangtse in
1931 about 20,000 societies were hurriedly formed and loans were advanced to the
affected people. These registered under the provision of the Act of 1935. a push to the
movement was given by the Sino-Japanese War which started in 1933. Due of war,
millions of Chinese living in coastal areas, which were captured by the Japanese
army, most of these persons were skilled workers and had been working in the Chinese
Industrial units which were located in the coastal districts.
Mr.C.W.Wu, Chinese but educated in Scotland, prepare a plan to organize
the workers into small co-operative bodies and help them install small workshops,
wherein they may work and produce the goods that China needed so badly. Management
of the societies was to be in the hands of workers, they raise funds from a Central
Committee helped by the government. As British ambassador told to Mr.Chiang-Kai-
Shek about the Indus-Cos. in 1938, an association for the advancement of Chinese
Indus-Cos was formed at Shanghai.
Mr. Wu succeeded in starting the first industrial co-operative society of
blacksmiths who agreed to work as well as live together around a common
workshop. The society had nine members all of whom were refugees. The society worked
so well that within 14 month, it had all the loans with interest. This followed a
number of societies of soap and candle markers, printers and others. The weavers
organized their own societies and made millions of blankets for the army. Looms and
other tools required by the weavers societies were made by the societies organized by
carpenters. In 1932, there were over 350 co-operative societies making a variety of goods.
About half of these were spinning and weaving societies and others were leather,
metal workers, mining, chemical, food stuffs, printing and paper etc. co-operative
transport societies were also provided transport to industrial societies for shifting their
business or machines.
A central headquarter was established by the government at Chungking , whose
function was to develop co-operative movement. As after 1942, prices of

62
commodities generally went up and the Indus-Cos were required to invest more and
more in the purchase of raw material to be utilized in their production. As well as the
finances with the societies were limited, they were placed in a very embarrassing
position. Central headquarter worked through its 7 regional headquarters which were
spread over the whole of China. It recommended loans to new societies, opened
training centers and purchased mostly products of the society.
In china primary co-operative societies were grouped into Country Unions, which
were further federated into Provincial Unions. At the top was the “All China Federation
of Co-operatives” which was organized in 1950. Chinese government gave assistance to
co-op. societies. The tools and machines required by the societies are supplied at cheap
rates from the Government owned factories. Free technical advice and managerial help,
loans at cheap rates by the State Banks and special tax-relief’s also provided to co-
operatives.
Since the establishment of the Chinese Peoples Republic, progress made in the
country on the agrarian side has been identified with the establishment of agricultural co-
operative societies. The progress on this side had been very spectacular that many people
in the adjoining under-developed countries have been tempted to accept the pattern
of Chinese organization as the basis of land management. The agrarian societies in China
owe their origin to the land reforms that were ordered by the Republican Government and
completed in 1952. As a result thereof, land which previously belonged to the landlords
was distributed among tillers including landless laborers. As the extent of land available
in the country was much less as compared to the large population of 500 million peasants,
the share of each family in the land was small. The result was that agricultural land came
in possession of farmers in small bits on which improvement was not possible and yields
could not be increased. The Government of China, therefore, framed a policy under
which land management was to be gradually entrusted to “Peoples Communes”.
The programme of collective farming was carried through by some stages so that
people may not feel or resist a sudden change in their national ownership. The first stage
consisted of a very simple type of organization known as “Mutual-aid team”. The farmers
of a specified area formed these teams, as a measure of co-operation; they helped
one another by carrying out certain operations jointly. As a second step,
Agricultural Producers Co-operatives, in these types of societies the members not only
pooled their labor, implements and live-stock but also their lands for joint
cultivation. The society maintains some equipment for joint use marketing also done by
the society. Ownership of land, however, remained with the members and income of
the farm was distributed in proportion to land among members. These societies were
identical in their constitution and working to joint farming societies in India. By the end
of 1954, millions of such co-operatives had been organized with 70 million members.
The third step was Socialist Farms, as the agricultural producers co-
operatives were converted into fully socialistic communes, in which the members
surrendered their ownership of land in favor of the commune. Land, thus, became the
collective property of the people and income there from was utilized for the common
benefit of the residents of the commune. The statute of the first commune was that it set
up in 1955.
However, the agrarian co-operative movement has developed side by side
with the land reforms. The farmers and landless laborers were made the owners of land
which had for centuries, been owned by the landlords. These people were thus naturally
more prepared for understanding the new venture of co-operation.
Credit co-operative movement in China, serving an estimated 200 million

63
households, the system has been primary source of basic financial services for
poor farmers. Rural Credit Co-operatives (RCC) holds 12% of all bank deposits and more
than 90% legitimate agriculture lending where almost half workforce still farms and land.
Since 2003, RCC centered by property rights, underwent a reform, which on the
basis of the original, launched three models-first, in the original framework of the system
RCC, the country as a unified legal person established in the community, regional
representative, Jiangsu; second, the establishment of joint-stock rural commercial banks,
representatives are Changshu, Zhangjiagang and Jiangyin rural commercial banks
reformed on the basis of the rural credit co-operatives in 2001, and third RCC
banks, representatives is Yinzhou rural co-operative banks of Zhejiang, succeeded in
restructuring in the April of 2003.
During the recent reform period experienced declining financial performance,
market share of farm purchasing and marketing declined form 36% in 1954 to only 2% in
2006. a heavy debt load increased to more than 20 billion Yuan in 1995 resulting in
interest payment burdens for many SMCs (Supply and Marketing Co-operatives)
also experienced financial losses for eight consecutive years from 1992-2000. Factors
related to decline are; ineffective reforms, lack of accountability and transparency, limited
focus on member needs, a negative image for co-operatives, and poor understanding
of contemporary co-operative management and governance practices. However, the
reforms of SMCs has achieved some success by the end of 2005, the aggregate system of
SMCs had assets totaling 464.61 billion Yuan, members of 160 million, and employees of
4.3 million. SMCs had gross sales of 7489 billion Yuan in 2006, with total profit of
3.95 billion Yuan, nearly a fivefold increase from 2000.

SUMMARY-
th
Co-operation began in the 19 century in England to protect the interest of
the working class have spread throughout the world. However, the origin of the co-
operative movement in world is not on one single line. It differs from continent to
continent, from country to country and even from place to place. Co-operatives
subsist within several different sectors of the economy. Co-operatives are engaged in
agriculture, industry and in service sector with the ultimate goal to lift up the living
standard of the members of the societies through increase in level of production and
productivity, employment, technology, and several other useful services.
Co-operatives are essential self-help groups of people who get together to meet
their needs. Consumer co-operatives provide their members with food and other products
they need, while housing co-operatives provide shelter and workers co-operatives provide
decent work, credit co-operatives provide saving and credit, while agricultural co-
operatives helps farmers to organize inputs they need to grow crops and keep livestock,
and then help them to market and process their products.
References
1. Theory and practice of Cooperation in India and abroad by K. R. Kulkarni Vol – I, II
and III
2. Cooperation in India and abroad by H. G. P. Srivastva
3. Cooperation in India by B. S. Mathur
Questions:
1. Discuss the consumer co-operative in Britain and Sweden.

64
 2. Discuss the credit co-operative movement in Germany and Thailand.
3. Discuss the Dairy co-operative movement in Denmark and distinguish it from
India Dairy co-operative
4. Discuss the features of farming co-operative in Russia and Israel.

CHAPTER – 6
CO-OPERATIVE EDUCATION AND TRAINING
“Education is the most powerful weapon which you can use to change the world”
--Nelson Mandela

Education, Training and Information: The Concept

Education and Training is one of the seven core ICA Principles of Co-operatives.
The fifth principle advocates about education and training for their members, elected
representatives, managers, and employees so they can contribute effectively to the
development of their co-operatives. Besides, they inform the general public - particularly
young people and opinion leaders - about the nature and benefits of co-operation. The
information is meant for providing latest knowledge about ever changing co-operative
scenario worldwide. It also helps employees to update their knowledge and professional
skill for the betterment of co-operative organisations, better known as enterprises now.
Thus, continuous education is the key to the long- term success cooperatives as well as
to creating the possibility of new cooperative enterprises. The new formula, as suggested
by Davis, “managers lead and members govern” which requires a value led management
and leading from the front in cooperatives.
Since Cooperatives are the largest and strongest service providers from the local
to the Global perspective, the outreach of Cooperative Education and Training is
manifold. To cater to this gigantic need, the role played by the concerned agencies like
ICA, NCUI, State federations and other promotional agencies are of great importance.

Role of ICA in Education and Training:

International Co-operative Alliance came into being in the year 1895 in London,
England-the birthplace of co-operative movement in world. Its’ HO is in Geneva,
Switzerland. ICA is considered the guardian of the co-operative identity, values and
principles.

65
 The International Cooperative Alliance (ICA) is an independent non-
governmental organization which unites, represents and serves co-operative organizations
in the world.
ICA members are national and international cooperative organizations covering
various sectors of activity including agriculture, banking, credit and saving, industry,
insurance, fishing, social housing, health, public services, consumer services and tourism.
There are 272 Co-operative Federation as member organizations from 94
countries that represent nearly 1,000 million individuals worldwide (Jan,2014).
In 1946 ICA was the first non-governmental organization to be accorded
consultative status with the United Nations. Now a days it is one of the 41 organizations
which appear in Category I on the list of organizations which enjoy consultative statute
before the Economy and Social Council of the United Nations (ECOSOC).It provides a
global voice and forum for knowledge, expertise and co-ordinated action for and about
co-operatives.
The International Co-operative Alliance is organised into 4 distinct regions viz.,
Europe, Asia-Pacific, America and Africa, each with its own regional office and staff
team.

Objectives of ICA:
The main objective of ICA is to promote and to strengthen independent co-
operatives all over the world. By means of international, regional and national activities
ICA also tries:
• To encourage and defend the values and principles of the co-operative movement;
• To stimulate mutually beneficial relations between its member organizations;
• To favor the economy and social progress of people, thus contributing to security and
international peace.
• To promote a worldwide cooperative movement based on mutual self-help and
democracy.
• To promote and defend co-operative values and principles.
• To facilitate the development of economic relations and other mutual benefits among
its member organizations.
• To promote human sustained development and to encourage the economic and social
progress of the individual.
• To promote gender equity in all the activities within the cooperative movement and in
decision making processes.
• ICA raises awareness about co-operatives. It helps individuals, government
authorities and regional and international institutions understand the co-operative
model of enterprise. ICA is the voice of the co-operative movement.
• ICA ensures that the right policy environment exists to enable co-operatives to grow
and prosper.
• ICA promotes capacity-building and financial support; it facilitates job creation and
supports poverty reduction and microfinance programs around the world.
The ICA Regional Office & Education Centre [ICA ROEC] was opened on
November 14, 1960 at New Delhi, India.

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First Regional Office of ICA

ICA ROEC was the first to be set up by the ICA. It was the precursor and a
model for other regional offices to be set up in Africa, Latin America and Europe.
At the beginning, the Regional Office and the Education Centre functioned
as separate institutions under a Regional Officer and Director respectively.
Although separate institutions they worked in close collaboration with each other.
To ensure further coordination, the Regional Office and Education Centre were
merged in the autumn of 1963 into one institution called the ICA Regional Office &
Education Centre. The Regional Officer was placed in charge of the amalgamated
institution. The designation of the head of the institution was changed to Regional
Director in 1970.
During 1960-1963 it was called ICA Regional Office for South-East Asia,
from 1963 to 1990 it was called ICA Regional Office for Asia and since 1990 it is
known as International Cooperative Alliance Asia Pacific [ICA-AP]. The ICA-Asia
Pacific is presently located in New Delhi.

International Co-operative Alliance Asia and Pacific

• Promotion and defence of co-operative values and principles at the regional
level;
• In the framework of the ICA Global Strategic Plan, submitting annual work
programmes and budgets to be integrated in the overall global work plan and
budget of the ICA;
• Implementation of the regional Strategic Plan and work programme within the
Region;
• Representation on request of Member-Organizations’ policy concerns to
governmental bodies and the public;
• Organisation of the Regional Assemblies and support to elected regional bodies;
• Generating resources for carrying out promotional and technical activities of the
Regional Office by way of negotiations and consultations with stronger Co -
operative Movements and donor agencies;
• Carrying out any other activities as may be requested by the ICA Director -
General or Regional Authorities.
Work Programmes
ICA Asia-Pacific’s current Work Programme aims towards:
• Protecting the Co-operative Identity and Image;
• Creating enabling policies and legislation in member-countries for cooperatives;
• Developing leadership and value-based professional management;
• Promoting international co-operative trade network;
• Utilizing information, communication and technology for development;
• Mainstreaming gender, youth and marginalized groups in co-operatives.
Classification of Activities

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 In accordance with the strategic objectives of the Alliance, adopted the
following classification of its activities:
(i) Membership: Making membership of ICA more meaningful and rewarding
(ii) Influence: Sharing of best practices and strengths of co-operatives with
governments for developing Co-operative Movements
(iii) Development: Creating level-playing field for co-operatives and building
networks
(iv) Governance: Setting good example for co-operatives in the Region.
Strategic Plan for the ICA-AP Business Office in Malaysia
Strategic Objectives
• Increase the business interactions and exchanges between/among Consumer
Cooperatives, Cooperative Insurance & Banking, especially with the count ries
in the Middle east sub-regions;
• To promote ‘Cooperative trade’ strategically by the modes of ‘Fair trade’ and ‘B
to B trade platform’ through the Internet in the Region;
• To promote the technical exchanges and assistances in IT technology in the
forms of workshop and training;
• To transfer the technical and managerial know-how, especially in the business
areas of ‘Resource Recycling’ and ‘ Renewable Energy’ businesses;
• To promote cultural exchanges of youth co-operators in the Region.

ROLE OF NCUI IN EDUCATION AND TRAINING:

In India, National Co-operative Union of India, New Delhi popularly known as
NCUI has taken up the challenging task of providing education, training and information
to the entire co-operative sector through its two wings viz., National Council for Co-
operative Training (NCCT) and National Centre for Co-operative Education (NCCE).

About NCUI
The National Cooperative Union of India(NCUI), the apex organisation of Indian
cooperative movement was originated in 1929 .Having been reorganized as Indian
Cooperative Union(ICU),it was renamed later as All-India Co-operative Union (AICU) in
1954 and re-christened as National Cooperative Union of India in 1961.
Main Objectives:
i) Promote and develop the co-operative movement in India.
ii) Educate, guide and assist the people to build up and expand the cooperative Sector.
iii) To serve as an exponent of co-operative opinion in accordance with Co-operative
Principles.
Cardinal Functions:
i) Organise co-operative education and training programmes and popularize the principles
and practices of Cooperatives.
ii) Develop inter-cooperative relations for better functioning of the cooperative movement
in various sectors /States.
iii) Establish effective liaison and relations with ICA member-organisations and national
cooperative organisations of other countries, etc.

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Membership:
The NCUI is a confederation of co-operatives, and therefore, its membership is open to
all national level, state level sectoral co-operative organisations as well as multi-state co-
operative societies. By 2013, there were 211 Cooperative Institutions as members of
NCUI.
Management
Management Organs of NCUI are comprised of three categories:
1) General Body, which comprises of delegates of member institutions
2) Governing Council comprises of office bearers, elected, co-opted and nominated
members
3) Executive Committee, which is a sub-committee of the Governing Council of NCUI.
Imparting cooperative education to office bearers, members and employees of various
cooperative societies is one of the major activities of NCUI. These activities are carried
out through the following:
1.National Centre for Cooperative Education (NCCE), New Delhi
The NCCE organised 66 programmes mostly LDPs with around 1998 participants
including 12 week Diploma in Cooperative Education and Training during 2012-13. The
programmes are conducted in-Campus and outstation collaborating with ICMs.
2. NCUI Cooperative Education Field Projects in Cooperatively underdeveloped
States/Areas.
As a special measure for strengthening cooperative movement in cooperatively
underdeveloped states /areas and reducing regional imbalance in the level of
development, GOI approved a scheme of Cooperative Education of NCUI in 1976. NCUI
is implementing Central Sector Scheme for the intensification of cooperative education
through 43 Cooperative Education Field Projects in different States. The project activities
include: educational/developmental, Farm/ technical, Socio- economic developmental and
Women development.
3. NCUI Cooperative Field Projects exclusively for Women
Out of 43 projects stated above, 4 Cooperative Education programme are exclusively
for women. These have resulted in the Formation of SHGs and in turn converted into
cooperatives besides bringing about an economic awareness amongst women by large.
4. NCUI Cooperative Field Projects in North Eastern States
Out of 43 projects stated above, NCUI is implementing through its 7 Cooperative
Education Projects located in North –East. The focus is to increase the productivity of
farmer members and thus improve their socio economic conditions.
5. Monitoring and Guidance to Cooperative Activities being carried out by State
Cooperative Unions .The purpose is to create enlightened, participatory and responsive
membership and cooperative leadership for different sectors conducted by Sate Co-
operative Unions .

National Council for Cooperative Training (NCCT), New Delhi

ABOUT NCCT
This training structure was evolved over a period of six decades since 1953 established as
Central Committee for Cooperative Training of the RBI and the Govt. of India, and from
July1962, the Committee for Cooperative Training of the NCUI, and again renamed in
1975 as National Council for Cooperative Training of NCUI.

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NCCT, fully granted by Ministry of Agriculture and Department of Co-operation,
Government of India, manages one National Institute of Co-operative Management
(VAMNICOM), Pune and 19 other Institutes of Co-operative Management spread all
over the country. Out of these 19 Institutes five have been given the status of Regional
Institutes allowing them to cover more than one state for the purpose of imparting training
and education to different levels of employees working in different types of co-operative
organisations and departments.

The main activities of these training institutes are to conduct diploma/ certificate and
short duration training programmes of different durations, ranging from 2 years to 3 days.
Higher Diploma in Co-operative Management (HDCM) is the core programme being
conducted at these Institutes. One day seminars and workshops are also organised by
them. These Institutes also provide research and consultancy services to co-operatives as
and when need arises. Publication of research papers, journals/magazines, articles, book
reviews and books by faculty members are other activities which go on throughout the
academic year. All RICMs/ICMS of NCCT are accredited with C-PEC, BIRD, Lucknow.

At this elaborate network of training Institutions, a range of short as well as long term
programmes are offered to meet the requirements of various sectors of the cooperative
movement. Besides, regular Diploma programmes in different disciplines are also offered
as Basic courses. Since 1993-94, PGDPB (Cooperation) is being offered by
VAMNICOM followed by MBA/PGDM at Selected ICMs.

Focused Activities
Out of the targeted 1600 programmes and 40,000 participants, the achievement during
2014-15 exceeded to 2315 Programmes with74653 participants. The Council through its
units offered various professional courses like PGDM (Agri. Business), MBA.PGDCA,
BBA and Diploma in Rural Management etc. by maintaining good professional standards.
The Council organised various programmes in collaboration with other organisations like,
NABARD, BIRD, NIAM, FMC, MANAGE, WDRA, MOD and NCDC. Faculty of ICMs
(47 so far) has passed the Certified Trainer for Financial Cooperatives (CTFC) offered by
C-PEC, BIRD, Lucknow. The Council nominated Faculty Members to the IIM,
Ahmedabad, CAB, Pune, MANAGE, Hyderabad and CICTAB, PUNE for Exposure
Programmes. ICM, Thiruvananthapuram organised a workshop on Cooperative education
and training for the Principals of JCTC. A National Conference on” Strengthening
Cooperative Education and Training in India” was organised at New Delhi in
Collaboration with the GOI. The Council organised a Colloquium at RICM, Bangaluru
which deliberated on various issues about the systematic approach to training and
capacity building for cooperatives. The 5th All India Principals Conference of
Principals/Directors was organised at RICM, Bangaluru in collaboration with C-PEC,
BIRD, Lucknow.

ROLE OF STATE/DISTRICT CO-OPERATIVE FEDERATIONS IN

PROMOTING EDUCATION AND TRAINING
State Federations manage and run Centre for Co-operative Managements earlier known as
Junior Training Centres. These centres also have their own training infrastructures either
owned or rented by them. They too have a team of faculty members and other supportive

70
staff at their respective centres and run courses like Diploma in Co-operative
Management (DCM) and other certificate courses. They also conduct workshops and
seminars on burning issues concerning to co-operative movement at state or national
level. In all there are 109 CCMs or JTCs all over the country.

Summary:
It is well said, “Productive and efficient management skills are not innate quality,
management skills can be cultivated, developed and learned”. Education is a broader term
concerned with increasing the general knowledge and understanding of the employee’s
total environment. Training is the act of increasing the knowledge and skill of an
employee for doing a particular job. It is concerned with imparting specific skills required
for a particular purpose. Effective managers must be proficient in Conceptual,
Interpersonal, technical, and political skills. As such, Managerial competencies comprise
a cluster of knowledge, skills, and attitudes relating to effective managerial performance.
As reinforced, Members’ quality of life can be ensured through effective education
programmes. However, there is need for enrichment and modernization of modern
training and education material within the cooperative movement. The preparedness of
both trainees and trainers are vital to make any training programme successful. Further, it
is equally important for the cooperative training institutions to enhance their image and
credibility so that they become centre of excellence and move towards self-reliant in the
long-run.

References:
1. Theory and practice of Cooperation in India and abroad by K. R. Kulkarni Vol – I,
II and III
2. Cooperative Development in Independent India by Balram Jakhar and R. C.
Dwivedi
3. Convulsing India with cooperation by JNL Srivastava and Daman prakash
4. Annual Report, NCUI 2012-13
5. Achievement of activities of NCCT 2014-15, published in The
Cooperator,June,2015 NCUI. New Delhi Page 22
6. www.ica.coop
Questions:
1. Discuss the role of NCUI in promoting co-operative education in India.
2. Discuss the anchoring role of NCCT in inculcating professional management in
the cooperative sector.
3. Discuss the focusing role of ICA in reframing principles and practices in
globalizing cooperatives.
4. Write short note on: a. NCCE b. State of co-operative union

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 CHAPTER – 7
CO-OPERATIVE GOVERNANCE
PREFACE
The domain of cooperative enterprise is to build a better world as envisaged by
ICA. Cooperatives are dedicated to the values of openness, social responsibility and
caring for others Cooperatives are important channel for bringing market values and
human values. As a forerunner for rural development, cooperative institutions with the
village level penetration have a road map of social and financial inclusion. Cooperatives
are voluntary organisations and operate under democratic principles of Corporate
Governance. Cooperative success will require a new set of operational capabilities. The
essence lies with the fact that there should less focus on competitive advantage and more
on growth that creates value for cooperatives.
Cooperative Governance has been defined as a set of internal and external
mechanisms and controls enabling the members to define and ensure attainment of
cooperative objectives, securing their continuity and cooperative principles. It is well said
that if the objective of cooperative gets vitiated, so would be the Governance.
The need for governance exists anytime a group of people come together to
accomplish an end. Though the governance literature proposes several definitions, most
rest on three dimensions: authority; decision-making, and accountability. Governance
determines who has power, who makes decisions, how other players make their voice
heard and how account is rendered. One simple definition of governance is “the art of
steering societies and organizations.” Governance is about the more strategic aspects of
steering, making the larger decisions about both direction and roles. Governance is also a
highly contextual concept. The process and practices that will apply will vary
significantly given the environment in which they are applied. Governance in the public
sector needs to take into account legal and constitutional accountability and
responsibilities. In the non-governmental sector, representing stakeholder interests may
be a determining factor in the governance to be applied. Even within these sectors, size,
shape, form and function will vary greatly from one organization to the next.

72
 The main pillars of the Good Governance are transparency, accountability, risk
management and control. Though the Co-operatives Act 2005 and the Co-operatives
(Amendment) Act 2006 have made provisions for greater transparency and accountability
at the level of co-operative societies, the Cooperatives Division of the Ministry of
Industry, Small and Medium Enterprises, Commerce and Co-operatives has worked out
this Code of Best Practices, in consultation with main stakeholders of the co-operative
movement in Mauritius. The Code of Best Practices provides effective guidelines for the
proper functioning of co-operatives and eventually ensures sound co-operative
development.
Co-operative governance regulates the relationship between members of co-
operatives, the Board of representatives of members (that advises management on
behalf of members) and management (that has the care and control of the co-operative).
The good co-operative governance will:
(i) ensure that board and management pursue objectives that are in the interests of co-
operatives and members;
(ii) lead to effective monitoring of activities of societies;
(iii) ensure efficient and effective use of available resources;
(iv) reduce conflicts; and
(v) Increase accountability and transparency in co-operatives.
This document includes Code of Best Practices for:
(i) Board of Directors;
(ii) Members;
(iii) Internal Controller;
(iv) Audit Committee; and
(v) Management.
Co-operative organizations are advised to select clauses and codes that can be
implemented at their level and be fully committed to the implementation of the relevant
parts of the Code of Best Practices.
Recognizing that societies differ in sector, size and resources, it is understood that
levels of implementation of the code will differ.
CODE OF BEST PRACTICES FOR THE BOARD OF DIRECTORS
As per the co-operatives legislation, a Board of Directors shall manage a co-
operative society. The Board of Directors (BOD) shall exercise all the powers of the co-
operative society subject to any limitations contained in the law and the constituting
instruments. The BOD shall abide by the following codes of ethics and good governance:
Leadership & Management
• The BOD should exercise leadership, entrepreneurship, integrity and sound judgment
in directing the affairs of the co-operative
• The BOD shall provide guidance for long-term and short-term planning
Transparency and Accountability
• Directors shall adopt the principles of transparency and accountability
• The BOD should ensure good governance
Compliance

73
• The BOD shall ensure that the society complies with all statutory and legal
requirements, together with co-operative values, principles and prescribed codes of
best practices
Control and Supervision
• The BOD shall set up a monitoring mechanism to assess the performance of societies
• The BOD shall ensure that regular performance appraisal of the management and staff
is carried out
INDEPENDENCE OF THE BOARD OF DIRECTORS
The majority of Board members should be independent non-executive directors
• Directors must not involve in related party transactions
Remuneration
The Board members should be paid a realistic financial compensation for their
work
Communication
The BOD should establish effective and ongoing communication between
stakeholders at all levels

Appointment of Chairperson
A Chairperson having the ability, power and commitment to guide and organize
the work of the Board, initiate and monitor strategic decisions and having the know-how
and experience should be appointed
Members
The Board should ensure expansion of membership, the participation of members
in the operation of the society, and that members are aware of their rights
Co-operative Principles and Values
Boards should adopt co-operative principles and adhere to co-operative values
while managing the affairs of the co-operative societies
CODE OF BEST PRACTICES FOR MEMBERS
In accordance with the Cooperatives Act 2005, a “member” means a person who
holds a share in a society. No individual shall become a member of a society unless he
has attained the age of 18, except in the case of a school society or credit union. An
individual, a society and/or a body corporate may be a member of a primary society. A
member shall comply with the following codes of ethics and good governance:
Rights of Members
• Members should know their rights as members and exercise these rights as members/
owners of societies
• Members should have access to relevant and required information on a timely basis
and in an understandable manner for analysis and comments thereon
Participation of Members
• Members should participate actively and fully in all activities of societies
• Members should participate actively in deliberations at the annual general meetings
and any special general meetings
Responsibilities of Members

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• Members should abide by rules of the society and observe co-operative values and
principles
• Members should refrain from acting to the detriment of societies
• Members should ensure that policies and performance are in accordance with the
stated aims of societies and values and principles of co-operatives
• Members should use the services of societies and settle their liabilities/ debts relating
to societies
CODE OF BEST PRACTICES FOR INTERNAL CONTROLLER
As per the co-operatives legislation, a co-operative society shall have an internal
controller. The Board of Directors and Management of the co-operative society shall
establish an internal control system to ensure efficiency and effectiveness of operations,
reliability of financial reporting and compliance with appropriate laws and regulations.
The internal controller shall comply with the following codes of ethics and good
governance:
Appointment of Internal Controller
• The Board and Management/ Audit Committee shall define the profile, qualifications
and experience of the internal controller and his/ her scope of work
• A panel comprising members of the Board and Management should select the internal
controller. The panel, after obtaining the approval of the Audit Committee, should
propose the selected internal controller for appointment at the annual general meeting.
Functions of Internal Controller
Internal controllers shall:
• Ensure that all activities follow approved and established procedures
• Ensure that all books of societies are kept up to date
• Carry out inspections of money, stocks, books and other assets of society
• Ascertain the authority and validity of all expenditures, payments, loans and advances
as the case may be
• Examine regularly accounts of societies and ensure that all transactions of societies
are properly recorded in respective books, accounts and other relevant documents
Responsibilities of Internal Controller
• The internal controller shall, within a reasonable period, identify errors or
irregularities in transactions already processed, and missing assets/ invalid
disbursements
• The internal controller shall safeguard the assets of the society
• The internal controller shall secure the completeness and reliability of the records of
the society
• The internal controller should produce reviews on the control effectiveness of the
society to the Board/Audit Committee
• The internal controller should ensure that there is separation of duties and that no
individual has control over a transaction. For societies where separation of duties is
not possible because of insufficient staff, vacations, etc., the transactions should have
written approval of the manager
Access to Information

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 The internal controller shall have unrestricted access to all records, property and
personnel matters
Reporting
• The internal controller should provide timely and quarterly reports to the Board and to
the Registrar of Cooperative Societies on significant audit findings and
recommendations; and to the Audit Committee, if any
• The internal controller should provide timely information to the Audit Committee or
the Board concerning suspected fraudulent activities, significant instances of non-
compliance or abuse, if any
Confidentiality
The internal controller shall keep confidential all information obtained in the
exercise of his/ her duties
CODE OF BEST PRACTICES FOR AUDIT COMMITTEE
An Audit Committee may be defined as a Committee of non-executive Directors,
responsible for liaising with the full Board, Internal Audit and External Audit. It may be
composed of 3 to 5 non-executive members (members of the Board of Directors who are
neither officer nor employee having the responsibility to maintain contact with the
internal and independent auditors of the society). The Audit Committee shall abide with
the following codes of ethics and good governance.
Setting Up Of Audit Committee:
• Audit Committees should be formally constituted as subcommittees of the main
Board
• There should be written Terms of Reference, which deal with membership, authority
and duties
• There should be a minimum of three and a maximum of seven members in the
Internal Audit Committee and members elected for the Audit Committee shall hold
office for a period of three years
• Members of Audit Committees must have skills and knowledge in accounting and
auditing
• Audit Committees should have at least one discussion annually with auditors but
without executive Board members, to ensure that there are no unresolved issues of
concern
• Audit Committees should have explicit authority to investigate on matters within its
Terms of Reference and should have full access to relevant information.
CODE OF BEST PRACTICES FOR MANAGEMENT ACCOUNTABILITY AND
RESPONSIBILITY
Management should:
• Ensure that policy decisions taken by the Board are implemented
• Follow the objectives and guidelines set out by the Board Ensure that the functioning
of the society is in line with co-operative values and principles, and the Co-operatives
Act 2005 and the Co-operatives (Amendment) Act 2006
• Be accountable to the Board and member owners.
Efficient Management
Management should:

76
 Ensure that resources of the society are used productively for the betterment of the
society and its members
Build up the image of the society so that trust, reliability and confidence prevail

Transparency
Management should:
• Be committed to integrity and transparency in operations
• Ensure that financial statements are transparent and that the statements give a true and
fair view of the state of affairs of the society

Supply of Information
Management should:
• Supply all required information on a timely basis and in the correct format
• Keep up to date information, especially as regards the books and accounts of the
society

Conflict of Interests in the Society

• The posts of Chairperson of the Board and Management Executive should not be held
by one and the same person
• The posts of Chief Executive and Secretary should not be held by one and the same
person
• Inform the society of any activity being undertaken that may lead to potential conflict
of interests.

Communication
Management should have effective and regular communication with the Board and other
stakeholders.
SUMMARY:
The Cooperative Governance aims at the following key points:
• Keep the members informed and involved
• Maintain Good Board- Management
• Conduct Business like Meetings
• Follow sound Business Policies
• Use Advisors for Development
• Strengthen Internal Capital
• Follow Cooperative Values and Principles

END NOTE:
To reiterate, management of corporate governance in cooperatives is the pathway for its
success. “Truth never damages a cause that is just”.
--Mahatma Gandhi

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 ----------------------

LEADERSHIP
“Leadership is the capacity to translate Vision into Reality”
Warren G. Bennis
Leaders and Leadership are the key factors that guides and drives an organisation in the
path of success. In the process, the leader must have some unique qualities that can help
in achieving the organisational goals. The biggest challenge facing leaders today is the
changing world that wants a new paradigm of leadership. The success stories of
“AMUL”(Verghese Kurien) and Tata Group( Ratan Tata) and others remind us about the
effective leadership which have made possible to the Vistas of success in their respective
fields. Effective leaders are open to new ideas, insights and revelations that can lead to
better ways to accomplish goals.

Leadership Defined
Leadership has been described as "a process of social influence in which one person can
enlist the aid and support of others in the accomplishment of a common task. For
example, some understand a leader simply as somebody whom people follow or as
somebody who guides or directs others while others define leadership as "organizing a
group of people to achieve a common goal". The individuals who are the leaders in an
organization, regarded collectively.
Leadership is a process by which a person influences others to accomplish an objective
and directs the organization in a way that makes it more cohesive and coherent.
Another popular definition of Leadership is a process whereby an individual influences a
group of individuals to achieve a common goal.
Note that all three definitions have one process in common — a person influences others
to get something accomplished
Leadership Involves

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1. establishing a clear vision,
2. sharing that vision with others so that they will follow willingly,
3. providing the information, knowledge and methods to realize that vision, and
4. Coordinating and balancing the conflicting interests of all members and
stakeholders.
5. The act of inspiring subordinates to perform and engage in achieving a goal.
A leader steps up in times of crisis, and is able to think and act creatively in
difficult situations. Unlike management, leadership cannot be taught, although it may be
learned and enhanced through coaching or mentoring. Someone with great leadership
skills today is Bill Gates who, despite early failures, with continued passion and
innovation has driven Microsoft and the software industry to success.
Leaders carry out this process by applying their leadership knowledge and skills.
This is called Process Leadership. However, we know that we have traits that can
influence our actions. This is called Trait Leadership .in that it was once common to
believe that leaders were born rather than made.
While leadership is learned, the skills and knowledge processed by the leader can
be influenced by his or her attributes or traits, such as beliefs, values, ethics, and
character. Knowledge and skills contribute directly to the process of leadership, while the
other attributes give the leader certain characteristics that make him or her unique.

Factors of Leadership
There are four primary factors of Leadership
Leader
Leaders must have an honest understanding of who you are, what you know, and what
you can do. Also, note that it is the followers, not the leader or someone else who
determines if the leader is successful. If they do not trust or lack confidence in their
leader, then they will be uninspired. To be successful you have to convince your
followers, not yourself or your superiors, that you are worthy of being followed.
Followers
Different people require different styles of leadership. For example, a new hire requires
more supervision than an experienced employee does. A person who lacks motivation
requires a different approach than one with a high degree of motivation. You must know
your people! The fundamental starting point is having a good understanding of human
nature, such as needs, emotions, and motivation. You must come to know your
employees.
Communication
Leaders lead through two-way communication. Much of it is nonverbal. For instance,
when he/she “set the example,” that communicates to your people that you would not ask
them to perform anything that you would not be willing to do. What and how you
communicate either builds or harms the relationship between you and your employees.
Situation
All situations are different. What you do in one situation will not always work in another.
You must use your judgment to decide the best course of action and the leadership style
needed for each situation. For example, you may need to confront an employee for
inappropriate behavior, but if the confrontation is too late or too early, too harsh or too
weak, then the results may prove ineffective. Also note that the situation normally has a

79
greater effect on a leader's action than his or her traits. Various forces will affect these
four factors. Examples of forces are: your relationship with your seniors, the skill of your
followers, the informal leaders within your organization and how your organization is
organized.
The Four Pillars: Leadership, Management, Command, and Control.
Leadership: what makes a person want to follow a leader?
People want to be guided by leaders they respect and who have a clear sense of direction.
To gain respect, they must be ethical. A sense of direction is achieved by conveying a
strong vision of the future. The Two most important keys to effective leadership
according to a study by the Hay Group, a global management consultancy, there are 75
key components of employee satisfaction (Lamb, McKee, 2004). They found that: Trust
and confidence in top leadership was the single most reliable predictor of employee
satisfaction in an organization. Effective communication by leadership in three critical
areas was the key to winning organizational trust and confidence: Helping employees
understand the company's overall business strategy. Helping employees understand how
they contribute to achieving key business objectives. Sharing information with employees
on both how the company is doing and how an employee's own division is doing. So in a
nutshell — you must be trustworthy and you have to be able to communicate a vision of
where the organization needs to go.

Principles of Leadership: To help you be, know, and do, follow these eleven principles
of leadership (U.S. Army, 1983).
Know yourself and seek self-improvement - In order to know yourself, you have to
understand your be, know, and do, attributes. Seeking self-improvement means
continually strengthening your attributes. This can be accomplished through self-study,
formal classes, reflection, and interacting with others.
Be technically proficient - As a leader, you must know your job and have a solid
familiarity with your employees' tasks.
Seek responsibility and take responsibility for your actions - Search for ways to guide
your organization to new heights. And when things go wrong, as they often tend to do
sooner or later — do not blame others.
Analyze the situation, take corrective action, and move on to the next challenge.
Make sound and timely decisions - Use good problem solving, decision making, and
planning tools.

Set the example - Be a good role model for your employees. They must not only hear
what they are expected to do, but also see.
“We must become the change we want to see.”
- Mahatma Gandhi.
Know your people and look out for their well-being - Know human nature and the
importance of sincerely caring for your workers.
Keep your workers informed - Know how to communicate with not only them, but also
seniors and other key people.
Develop a sense of responsibility in your workers - Help to develop good character traits
that will help them carry out their professional responsibilities. Ensure that tasks are
understood, supervised, and accomplished. Communication is the key to this
responsibility.

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Train as a team - Although many so called leaders call their organization, department,
section, etc. a team; they are not really teams... they are just a group of people doing their
jobs.
Use the full capabilities of your organization - By developing a team spirit, you will be
able to employ your organization, department, section, etc. to its fullest capabilities.

ATTRIBUTES OF LEADERSHIP: BE, KNOW, and DO

Leaders concentrate on Be, Know, and Do (U.S. Army, 1983): what they are [be] (such as
beliefs and character) what they know (such as job, tasks, and human nature) what they
do (such as implementing, motivating, and providing direction).
BE a professional. Examples: Be loyal to the organization, perform selfless service, take
personal responsibility. BE a professional who possess good character traits. Examples:
honesty, competence, candor, commitment, integrity, courage, straightforwardness,
imagination.
KNOW the four factors of leadership — follower, leader, communication, situation.
KNOW yourself. Examples: strengths and weakness of your character, knowledge, and
skills. KNOW human nature. Examples: Human needs, emotions, and how people
respond to stress. KNOW your job. Examples: be proficient and be able to train others in
their tasks. KNOW your organization. Examples: where to go for help, its climate and
culture, who the unofficial leaders are:
DO provide direction. Examples: goal setting, problem solving, decision making,
planning. DO implement. Examples: communicating, coordinating, supervising,
evaluating. DO motivate. Examples: develop morale and esprit de corps in the
organization, train, coach, counsel.
Environment: Every organization has a particular work environment, which dictates to a
considerable degree how its leaders respond to problems and opportunities. This is
brought about by its heritage of past leaders and its present leaders. Goals, Values, and
Concepts Leaders exert influence on the environment via three types of actions: The goals
and performance standards they establish. The values they establish for the organization.
The business and people concepts they establish. Successful organizations have leaders
who set high standards and goals across the entire spectrum, such as strategies, market
leadership, plans, meetings and presentations, productivity, quality, and reliability. Values
reflect the concern the organization has for its employees, customers, investors, vendors,
and surrounding community. These values define the manner in how business will be
conducted. Concepts define what products or services the organization will offer and the
methods and processes for conducting business. These goals, values, and concepts make
up the organization's personality or how the organization is observed by both outsiders
and insiders. This personality defines the roles, relationships, rewards, and rites that take
place.

Roles and Relationships:

Roles are the positions that are defined by a set of expectations about behavior of
any job incumbent. Each role has a set of tasks and responsibilities that may or may not
be spelled out. Roles have a powerful effect on behavior for several reasons, to include
money being paid for the performance of the role, there is prestige attached to a role, and
a sense of accomplishment or challenge. Relationships are determined by a role's tasks.
While some tasks are performed alone, most are carried out in relationship with others.
The tasks will determine who the role-holder is required to interact with, how often, and

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towards what end. Normally the greater the interaction, the greater the liking. This in turn
leads to more frequent interactions. In human behavior, its hard to like someone whom
we have no contact with, and we tend to seek out those we like. People tend to do what
they are rewarded for, and friendship is a powerful reward. Many tasks and behaviors that
are associated with a role are brought about by these relationships. That is, new task and
behaviors are expected of the present role-holder because a strong relationship was
developed in the past, either by that role-holder or a prior role-holder.

Culture and Climate:

There are two distinct forces that dictate how to act within an organization: culture
and climate. Each organization has its own distinctive culture. It is a combination of the
founders, past leadership, current leadership, crises, events, history, and size (Newstrom,
Davis, 1993). These results in rites: the routines, rituals, and the “way we do things.”
These rites impact individual behavior on what it takes to be in good standing (the norm)
and direct the appropriate behavior for each circumstance. The climate is the feel of the
organization, the individual and shared perceptions and attitudes of the organization's
members (Ivancevich, Konopaske, Matteson, 2007). While the culture is the deeply
rooted nature of the organization that is a result of long-held formal and informal systems,
rules, traditions, and customs; climate is a short-term phenomenon created by the current
leadership. Climate represents the beliefs about the “feel of the organization” by its
members. This individual perception of the “feel of the organization” comes from what
the people believe about the activities that occur in the organization. These activities
influence both individual and team motivation and satisfaction, such as: How well does
the leader clarify the priorities and goals of the organization? What is expected of us?
What is the system of recognition, rewards, and punishments in the organization? How
competent are the leaders? Are leaders free to make decisions? What will happen if I
make a mistake? Organizational climate is directly related to the leadership and
management style of the leader, based on the values, attributes, skills, and actions, as well
as the priorities of the leader. Compare this to “ethical climate” — the feel of the
organization about the activities that have ethical content or those aspects of the work
environment that constitute ethical behavior. The ethical climate is the feel about whether
we do things right; or the feel of whether we behave the way we ought to behave. The
behavior (character) of the leader is the most important factor that influences the climate.
On the other hand, culture is a long-term, complex phenomenon. Culture represents the
shared expectations and self-image of the organization. The mature values that create
tradition or the “way we do things here.” Things are done differently in every
organization. The collective vision and common folklore that define the institution are a
reflection of culture. Individual leaders cannot easily create or change culture because
culture is a part of the organization. Culture influences the characteristics of the climate
by its effect on the actions and thought processes of the leader. But, everything you do as
a leader will affect the climate of the organization.

The Process of Great Leadership

The road to great leadership that is common to successful leaders:
Challenge the process - First, find a process that you believe needs to be improved the
most.
Inspire a shared vision - Next, share your vision in words that can be understood by your
followers.

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Enable others to act - Give them the tools and methods to solve the problem.
Model the way - When the process gets tough, get your hands dirty.
A boss tells others what to do; a leader shows that it can be done.
Encourage the hearts - Share the glory with your followers' hearts, while keeping the
pains within your own.
Leadership is inspiring others to pursue your vision within the parameters you set, to the
extent that it becomes a shared effort, a shared vision, and a shared success.
Leadership is accomplishing things that reach beyond solitary abilities by acting — and
getting others to act — with a maturity that surpasses limited self-interest." leadership is
the art of getting others to do things you want done and feel good about it.'
How to be a successful Leader in an elected form of Management? (A Western
Approach)
1. Identify the “core.”
To allocate scarce resources, governing boards must first identify core versus non-
core businesses or program areas.

2. Focus on a few priorities.

The governing board as a whole must identify a few priorities (three to five at the
most) and then relentlessly pursue those priorities with limited resources. To assist the
board in this courageous conversation about hard choices, it is wise to engage a broad
range of community groups and thus make the resulting priorities more legitimate and
enduring. When new demands for local government action arise, as they will, the
governing board must insist that any new demand replace an existing obligation.

3. Limit requests for new analysis and reports.

While governing board members may resist a community group’s demand to
immediately respond to some problem with a new service, the board often directs staff to
conduct a new analysis or prepare a report. In good times, these kinds of governing board
reactions to new demands may mollify constituents making the service request. In bad
times, such referrals of no priority items to staff simply divert scarce staff resources and
undercut the local government’s ability to perform.
4. Have the courage to say “no.”
Once a governing board identifies core program areas and a few priorities, it must
remain focused and help the organization stay the course. Elected officials must have the
courage to say “no” when groups make new demands.
5. Avoid a zero-risk environment.
To overcome the resource challenges facing local government, governing boards
must encourage innovation. Examples include self-service kiosks for certain kinds of
permits, selling computer support or other services to adjacent public agencies, or sharing
public safety services with other jurisdictions The problem is that local governments are
risk averse. In fact, in an economic meltdown, the media, community groups and elected
officials jump on any mistake and personally criticize committed staff. In such a
hypercritical culture, most employees will hunker down and avoid taking any calculated
risks. Innovation does not occur in a zero-risk environment. Learning from mistakes is a
key element in the innovation process. Employees must be encouraged to experiment, test

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ideas and fix problems and mistakes along the way. If governing boards do not protect
creative and risk-taking employees from abuse, no innovation will occur regardless of
exhortations from the dais.
6. Pursue non-governmental solutions.
Local government can no longer be the centre of all problem-solving. Elected
leaders must put the issue or challenge in the centre and work with private, non-profit and
other community partners to address the problem. Elected leaders need to focus on their
roles as conveners and facilitators and avoid proposing new direct services.
7. Free up funds for a few targeted investments.
Even in severe budgetary times, a local government must make a few strategic
investments to position itself for the future. Consequently, it must “over-cut” to enable
investing in areas such as employee development, information technology, critical capital
improvements, energy efficiencies and strategic partnerships that address neighbourhood
violence or promote economic development.
8. Provide meaning and emotional support to staff.
Again, elected officials cannot achieve their policy agenda without the
commitment of creative staff. To maximize employees’ effectiveness, it’s important to
understand what motivates them. While salary is one motivator, people work for more
than just a salary particularly in the public sector. For many public employees, work-
related rewards include the opportunity to contribute to their community’s quality of life,
help others and achieve a sense of accomplishment.

As Daniel Pink says in the book A Whole New Mind, “meaning is the new
money.” Elected officials should translate their requests to staff in terms of the meaning
of the work. For example, board members need to talk about the meaning of a new bike
lane in terms of making biking safer and promoting healthy lifestyles. Elected leaders are
key translators.
Elected officials can help the organization survive difficult times by showing
concern for employees, providing encouragement and recognizing employee efforts.
Simply telling employees to “suck it up” does not help overcome the productivity
paradox.

9. Help develop talent and rebuild organizational capacity.

Without talent, the governing board cannot solve the problems facing the local
government. In times of severe budget cuts, the local government faces a “free exiter”
problem. The “stars” or “A players” of the organization can freely exit and get a job with
better pay elsewhere. If they stay, they may look for new opportunities as the economy
improves. Employees, especially the “A players,” will stay as long as they are growing
and stretching. In fact, learning is the new social glue that holds organizations together.
To support employee development, board members must resist gutting talent
development budgets. The good news is that talent development programs are
inexpensive. Cost-effective programs include talent exchanges with other agencies,
leadership academies or educational webinars sponsored by a consortium of local
governments, and interim or rotational assignee

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A leader isn't limited to those with positional authority. Leadership, instead, is defined
alternatively as someone who influences others to achieve a common goal. This would
represent the work and contributions of anyone who serves in this capacity."
-- Barbara Steel
A leader comes up with new ideas for his or her business or venture, innovates further as
those ideas develop, and makes sure to choose the right people to get the ideas and
innovations realized. Some business schools push the view that one can be an innovator
or a manager, but not both. I think that’s flat wrong — one has to be both an innovator
and a manager to be a good leader."
-- Dan Biederman
Leadership is getting people to want to follow. That requires engaging them passionately,
from the heart, and requires persuading people to change. Management is tactical;
leadership is strategic."
-- Tom Kennedy
Leadership is a mindset of total personal accountability for the results and outcomes
produced without fault, blame, guilt or any manner of finger-pointing when results are
bad. Leadership is being personally accountable whether someone is going to hold you
accountable or not."
-- Linda Galindo
"Leadership is the ability to make your followers believe that you possess superior
knowledge of the situation, greater wisdom to cope with the unknown or greater moral
force. Unless you seem to have more of these things than the average follower does, they
won't follow you around the first corner."
-- Tom Hopkins
"I believe that a great leader is defined by one factor only: the people he or she leads. If
the people are focused, driven, committed, results-oriented, happy and positive, that is
indeed the sign of a great leader. If you have great results but none of those other things,
then you have a dictator — and that leadership style is not sustainable. Leaders who put
themselves at the bottom of their organization are truly great. It's like handing people a
fish instead of teaching them to fish. If you're the kind of leader who constantly gives
them a fish, you need to be one outstanding fisherman."
-- Rick Campbell
True leadership is being proactive, especially when it comes to addressing the not-so-
pleasurable events that sometimes plague the workplace. The ability to anticipate an
imminent roadblock and tackle it in a proactive manner is what leads to progress. Einstein
once said, 'Intellectuals solve problems, geniuses prevent them.'
-- Michael Raanan
Leadership is self-differentiation. It’s simply setting yourself apart from others and often
times setting an example. It’s not about being in charge or power, but rather caring for
others and helping them achieve a common goal."
-- Michael Flanigan
The key to leadership is having a vision, and being strong enough to say no and not try to
please everybody. That's a recipe for failure. Leadership is practiced through attitude and
actions, rather than words and memos."
-- Matt Mickiewicz

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Leadership is the willingness to speak up when it's easier to stay silent, hold yourself
accountable when you have excuses at the ready and inspire without intimidation or the
fear another will surpass you. A leader shows more empathy than ego and remains
dedicated to the betterment of the whole and not the advancement of one."
-- Brenda Della Casa
Leader is someone who actually listens. Someone who takes advice and implements it.
Most leaders need to listen more and talk less."
-- Jeffery Hayzlett
References:
1. Dynamics of Leadership by B. N. Sahay
2. Dynamics of Leadership effectiveness in Indian organization conditionalization by
Arif Hassan
Model Questions:
1. “Leaders are Born or Made”. Comment.
2. “Value-based Leadership is inevitable in the success of Cooperatives” .Elucidate.
3. “AMUL as a Strategic Leader: A journey Through Transformation”. Narrate.
4. “Cooperative governance is the key to success and sustains cooperative development”.
Comment.
5. Discuss the key elements of corporate governance in cooperatives.

RURAL DEVELOPMENT

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 CHAPTER-1
CONCEPT AND SIGNIFICANCE OF RURAL DEVELOPMENT
Introduction
"India lives in its villages" - Mahatma Gandhi.
Rural development has always been an important issue in all discussions
pertaining to economic development, especially of developing countries, throughout the
world. In the developing countries rural mass comprise a substantial majority (i.e. around
60 %) of the population. Although millions of rural people have escaped poverty as a
result of rural development in many Asian countries, a large majority of rural people
continue to suffer from persistent poverty. The socio-economic disparities between rural
and urban areas are widening and creating tremendous pressure on the social and
economic fabric of many developing Asian economies. These factors, among many
others, tend to highlight the importance of rural development. The policy makers in most
of the developing economies recognize this importance and have been implementing a
host of programs and measures to achieve rural development objectives. While some of
these countries have achieved impressive results, others have failed to make a significant
dent in the problem of persistent rural underdevelopment.
Rural Development- Concept
Rural: The definition of “rural” differs by country, though it is usually used in contrast
to “urban”. However, it is difficult to define it uniformly. Therefore, the use of “rural”
(including fishing and mountain villages) as a relative concept to “urban”, based on
social, economical, and natural conditions in each country may be most adequate. The
term could also be used to describe areas where a majority of the residents are engaged in
agriculture in a broad sense (including livestock farming, forestry, and fisheries).
Lifestyles in rural areas are different than those in urban areas, mainly because limited
services are available.

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 A society or community can be classified as rural based on the criteria of lower
population density, less social differentiation, less social and spatial mobility, slow rate of
social change, etc. Agriculture would be the major occupation of rural area.
Development: It refers to growth, evolution, stage of inducement or progress. This
progress or growth is gradual and had sequential phases. Always there is increasing
differentiation. It also refers to the overall movement towards greater efficiency and
complex situations’
Rural Development (RD)
According to the World Bank (1975), rural development is defined as “a strategy
aiming at the improvement of economic and social living conditions, focusing on a
specific group of poor people in a rural area. It assists the poorest group among the people
living in rural areas to benefit from development”.
According to Agarwal (1989), rural development is a strategy designed to improve the
economic and social life of rural poor.
The United Nations defines Rural Development as: Rural Development is a process of
change, by which the efforts of the people themselves are united, those of government
authorities to improve their economic, social and cultural conditions of communities in to
the life of the nation and to enable them to contribute fully to national programme. Rural
Development is a process of bringing change among rural community from the traditional
way of living to progressive way of living. It is also expressed as a movement for
progress.
Rural Development (RD) is a process, which aims at improving the well being and self
realization of people living outside the urbanized areas through collective process
Rural development designates the utilization of approaches and techniques under one
single programme, which rally upon local communities as units of action. It provides a
large umbrella under which all the people engaged in the work of community
organizations, community progress and community relation.
If the local people are final beneficiaries of development assistance, the aim of rural
development can be defined as the improvement of sustainable livelihoods (especially
impoverished groups), with careful attention paid to local characteristics
The concept of rural development is used confusedly with “agricultural
development” however these concepts differ. Because “Agricultural Development”
mainly aims at increasing agricultural products such as crops, livestock, fish and etc.
Human being, land and capital are simply regarded as production goods and means. On
the other hand, “Rural Development” mainly targets on people and institutions. Rural
development includes agricultural development activities; however it is one of the means
of economic revitalization for active farmers and targeted rural villages.
According to Wikipedia, the free encyclopedia: Rural development generally
refers to the process of improving the quality of life and economic well-being of people
living in relatively isolated and sparsely populated areas. Rural development has
traditionally centered on the exploitation of land-intensive natural resources such as
agriculture and forestry. However, changes in global production networks and increased
urbanization have changed the character of rural areas. Increasingly tourism, niche
manufacturers, and recreation have replaced resource extraction and agriculture as
dominant economic drivers. The need for rural communities to approach development
from a wider perspective has created more focus on a broad range of development goals
rather than merely creating incentive for agricultural or resource based businesses.
Education, entrepreneurship, physical infrastructure, and social infrastructure all play an

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 important role in developing rural regions. Rural development is also characterized by its
emphasis on locally produced economic development strategies. In contrast to urban
regions, which have many similarities, rural areas are highly distinctive from one another.
For this reason there is a large variety of rural development approaches used globally.
Significance of Rural Development
Rural development is a dynamic process, which is mainly concerned with the rural
areas. These include agricultural growth, putting up of economic and social infrastructure,
fair wages as also housing and house sites for the landless, village planning, public health,
education and functional literacy, communication etc. Rural development is a national
necessity and has considerable significance in India on the following grounds:
1. About three-fourth of India's population live in rural areas, thus rural development is
needed to develop nation as whole.
2. Nearly half of the country's national income is derived from agriculture, which is major
occupation of rural India.
3. Around seventy per cent of Indian population gets employment through agriculture.
4. Bulks of raw materials for industries come from agriculture and rural sector.
5. Increase in industrial population can be justified only in rural population’s motivation and
increasing the purchasing power to buy industrial goods.
6. Growing disparity between the urban elite and the rural poor can lead to political
instability.
Need and Importance of rural development
Rural development is a national necessity and has considerable importance in India
because of the following reasons.
1. To develop rural area as whole in terms of culture, society, economy, technology
and health.
2. To develop living standard of rural mass.
3. To develop rural youths, children and women.
4. To develop and empower human resource of rural area in terms of their
psychology, skill, knowledge, attitude and other abilities.
5. To develop infrastructure facility of rural area.
6. To provide minimum facility to rural mass in terms of drinking water, education,
transport, electricity and communication.
7. To develop rural institutions like panchayat, cooperatives, post, banking and
credit.
8. To provide financial assist to develop the artisans in the rural areas, farmers and
agrarian unskilled labor, small and big rural entrepreneurs to improve their
economy.
9. To develop rural industries through the development of handicrafts, small scaled
industries, village industries, rural crafts, cottage industries and other related
economic operations in the rural sector.
10. To develop agriculture, animal husbandry and other agricultural related areas.
11. To restore uncultivated land, provide irrigation facilities and motivate farmers to
adopt improved seed, fertilizers, package of practices of crop cultivation and soil
conservation methods.
12. To develop entertainment and recreational facility for rural mass.

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13. To develop leadership quality of rural area.
14. To improve rural marketing facility.
15. To minimise gap between the urban and rural in terms of facilities availed.
16. To improve rural peoples participation in the development of state and nation as
whole.
17. To improve scopes of employment for rural mass.
18. For the sustainable development of rural area.
19. To eliminate rural poverty.
20. To solve the problems faced by the rural mass for their development.
Philosophical Aspects of Rural Development
The ideology of various schools of thought pertaining to the development of the people
and institutions of rural areas constitute main philosophy behind the rural development.
The philosophical aspects of a few schools of thought such as Gandhian Philosophy and
Philosophy of Sufficiency Economy can be discussed in brief as follow:
Gandhian Philosophy
There are various important socio-economic-political-cultural and environmental
forces which have been affecting the decision making process of rural development. One
of these forces, we may call Gandhian tradition of “village republics” wherein the
villages are assumed as undifferentiated communities of interest, as self-reliant entities
and are able to develop their own social and industrial structure in isolation of the wider
developments meant national development and in this approach, everything else is
regarded as subservient to rural development. The purpose is to make each rural
community stand on its own feet and contribute to national development.
Gandhi’s idea to develop the Indian society was based on his understanding of the society
and hence based on the village system. Talking about the importance of village, he wrote
“if the village perishes, India will perish too” as "India lives in its villages"
His concept of rural reconstruction is a comprehensive one, emphasizing on the fact that
the decentralized village economy should provide full employment to all on the basis of
voluntary cooperation and work for achieving self-sufficiency in it’s basic requirement of
food, clothing and shelter. In short, it can be said that rural reconstruction, according to
Gandhi should not be merely concerned with raising the standard of living of village folk,
though that was important. Besides this the other aspects of an ideal village are all
communities will live together in harmony, the curse of untouchability, intoxicating
drinks and drugs will not exist, women will enjoy the same right as the men, People in
villages will not live in dirt and darkness as animal. No one will wallow in luxury. The
village community should take up the responsibility for providing work to all able bodied
people and every one will have to contribute his quota of manual labour.
An ideal society, he stated is “necessarily highly cultured because every man and women
in that society knows what he or she wants and also no one should want anything that
others could not have. Such a society will be an “Oceanic Circle” where the centre will
be the individual who will always be ready to perish for the village, later ready to perish
for the circle of villagers, till at last the whole becomes a life comprised of individuals”.
Affluence of people was, not in Gandhi’s mind. He believed that there was
sufficient to meet the needs of all people, but not their greed. He considered, that the type
of development, Europe had achieved was the result of a systematic colonization and
exploitation of both people and nature. He, therefore rejected not only supportive
mechanism of development seen as bureaucracy, technology, elitist education, but also

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the whole idea of development as conceived by the builders of the western industrial
society. He advocated for truth, non-violence, freedom, equality, full employment, bread
labour, trusteeship, decentralization, swadesh and cooperation were perceived as cardinal
principles for rural reconstruction and thereby development.
Philosophy of Sufficiency economy
The philosophy of sufficiency economy conveys new theory in addressing current
development challenges, which are issues of institutions, human capital, environmental
sustainability and the role of government. The philosophy of sufficiency economy, as a
new paradigm of development, aims at improving human well-being as a development
goal.
“Sufficiency economy” is a philosophy applies to conduct at the level of the
individual, families, and communities, as well as to the choice of a balanced development
strategy for the nation so as to modernize in line with the forces of globalization while
shielding against inevitable shocks and excesses that arise.
“Sufficiency” means moderation and due consideration in all modes of conduct, as
well as the need for sufficient protection from internal and external shocks. To achieve
this, the application of knowledge with prudence is essential. In particular, great care is
needed in the utilization of untested theories and methodologies for planning and
implementation. At the same time, it is essential to strengthen the moral fibre of the
nation, so that everyone, particularly political and public officials, technocrats,
businessmen and financiers, adhere first and foremost to the principles of honesty and
integrity. In addition, a balanced approach combining patience, perseverance, diligence,
wisdom and prudence is indispensable to cope appropriately with the critical challenges
arising from extensive and rapid socio-economic, environmental and cultural changes
occurring as a result of globalization.
The important issues of PSE such as institutions, human capital the environment
and the role of government in the context of its application for rural development can be
highlighted as follows.
Institution: At the current stage of economic development research, the new generation
of development theorists agrees that “institution matters.” Institutional failure has caused
a wide range of economic and development problems, ranging from asymmetric
information, missing markets and moral hazard to governance and regulation issues. The
problems concerning dysfunctional or nonexistent institutions are believed to be severe in
developing economies. The institutional gap resulting in poor economic development
may be solved to a great extent through the concept of social capital. Social capital, as
defined by Collier (1998), is the internal social and cultural coherence of the society. This
includes the norms and values that govern interaction among people and the institutions
embedded in society.
Human Capital: We all should be able to agree that the ultimate goal of development is
not economic growth per se but, rather, to improve human well-being because the
majority of the world’s population still suffers from poverty, preventable diseases, and
lack of other basic necessities.
Environment: One of the biggest concerns, not only for economists but also for
governments, non-governmental organizations and ordinary people, is the environment.
To achieve economic prosperity at the cost of environmental degradation, deforestation,
pollution, and depletion of resources is now viewed by many as poor decision-making.
Role of the Government: Government plays a significant role in the economy, as the
market alone sometimes cannot function efficiently or properly. Those concerns about

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 market functions that can impede development, such as asymmetric information,
imperfect and missing markets, and law enforcement problems, still require government
action. The optimal role of government in building strong institutions and in deepening
and facilitating market functions is the key.
The concepts of moderation, reasonableness, self-immunity, (the three pillar of
PSE), together with the conditions of morality and knowledge, government should be able
to achieve an optimal role. A PSE-oriented government will aim at maximizing the
welfare of the people while following the middle path. Thus, based on the philosophy of
sufficiency economy as explained above the development equilibrium of rural community
with the help of three capitals as given below can be ascertained. The Development
Equilibrium in 3 Capitals of Rural Community are :
• Social capital : Local wisdom, leadership, participation, people strength, partnership,
culture, value, attitude
• Economic capital : Production, marketing, income, debt, investment, saving
• Environmental capital : Land, water, forest, atmosphere, biodiversity, crops, animals,
genetics.
Sociological Aspects of Rural Development
Sociological aspect of rural development is associated with the study of social life
in rural areas. The sociology of food and agriculture is one focus area of rural sociology
and much of the field is dedicated to the economics of farm production. Other areas of
study include rural migration and other demographic patterns, environmental
sociology, amenity-led development, public lands policies, social disruption, the
sociology of natural resources (including forests, mining, fishing and other areas), rural
cultures and identities, rural healthcare and educational policies. Many rural sociologists
work in the areas of development studies, community studies, community
development and in environmental studies in order to justify the impact of sociological
aspects on rural development.
The sociological aspects of rural development refer to the study of the sociology
of life in the rural environment, which systematically studies the rural communities to
discover their conditions and tendencies and formulate the principles of progress as the
term implies. It is limited to the study of various aspects of rural society. It studies the
human relationships in rural environment and people, engaged directly or indirectly in
agriculture occupation. For instance, for introducing improved farm practices, an
understanding of the farmer, his social and cultural environment within which he
operates, his home, his village and the local region is necessary. Thus, rural sociology
provides such knowledge and makes possible the planning of a strategic approach for the
desired changes. In the absence of this knowledge of rural society the change agent will
not be able to plan a proper strategy of change. The change agent at the first instance has
to understand their programmes and their objectives. Secondly he must know the currents
of thoughts in the minds of the people with whom he works. He needs to understand their
motives, their reactions and their receptivity to new ideas. He should also understand why
some people are more receptive than others, why some people take the initiative and lead
and why others hesitate.
The sociological aspects of rural development include the issues like community
development programmes, cross-cultural situation, social pattern, social attitude,
magnitude of economic participation, Value system of individual, family, group and
communities, education and extension services etc. The study of the importance of these

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aspects in the rural areas pave the way for effective formulation and implementation of
rural development programmes for the wellbeing of rural people.
Approaches of Rural Development in India
The eradication of poverty has been a major concern of third world countries.
Various approaches of rural development have been adopted to eradicate rural poverty
such as:
• Community Development (CD) Approach
• Integrated Rural Development (IRD) Approach
• Basic Needs (BN) Approach

Community Development (CD) Approach

The Community Development (CD) emerges as a dominant approach in 1950s in many
third world countries including India. The economic, social and political development
objectives were included in CD. The first CD programme was launched in India in 1952
with support from the Ford Foundation and the United States foreign assistance agency.
India’s national CD programme was comprehensive and intended to “affect every aspect
of rural life” It covered Agriculture, health, education, public works and social welfare.
Its initial emphasis was based on the assumption that widespread local participation was
crucial to the success of the programme and that to secure such participation it would be
necessary to “awaken rural people to the resources already available to them and to
induce them to begin to participate in local activities utilizing those resources”. The
purpose of India’s national CD programme was general rural development in which
agriculture was recognized as essential. However besides people’s participation,
emphasis was placed on building grassroots democratic institutions and improvement of
well-being of rural people. The CD is a multidisciplinary approach to development. It was
defined as “ a process, method, programme, institution, and/or movement which: (a)
involves people on community basis in the solution of their common problems, (b)
teaches and insists upon the use of democratic processes in the joint solution of
community problems, and (c) activates and/or facilitates the transfer of technology to the
people of a community for more effective solution of their common problems”.

However the CD movement lost momentum in the late 1950s and by the 1960s
some of these programmes collapsed. Some of the reasons for the failure in CD approach
in India are: (a) Disparities in the distribution of benefits of the programme between
different interest groups and between villages became more widespread, (b) the
Programme did very little to reach the poor in India and it was not accepted by people.,
and (c) one of the main aims of the programme i.e. to stimulate the initiative and action of
communities at the village level was not achieved.
Integrated Rural Development (IRD) Approach
The period 1955-70 has been characterized by an exclusive focus on economic growth
and since 1970 the focus has been on equitable income distribution. There was pressure
for poverty-focused IRD project after it was realized that the green revolution and
agricultural growth-oriented programmes of the 1960s did little to improve the welfare of
the poor. The focus of bilateral and multilateral development assistance shifted to IRD by
1972-73. These activities included the provision of farm credit, extension, agricultural
inputs, reliable marketing facilities, assured agricultural product price, rural public works,
and stronger village institutions. IRDA thus became one of the major approaches for

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addressing the problem of rural inequality in the 1970s because of the growing realization
that rapid economic growth does not necessarily guarantee the availability or equitable
access to social services or amenities. There was also a realization that the achievement of
rapid growth in agricultural production and the improvement of rural welfare require an
integrated programme implementation. Thus, IRDA projects that combined activities for
increasing agricultural production with social activities aimed at providing basic human
needs started to emerge. Since the early 1970s, rural development projects became more
complex and multi-sectoral. In course of time it was found that some of the targets which
these projects were supposed to achieve were not achieved or replicated successfully.
Therefore major multilateral and bilateral donors lost confidence in the IRD strategy or
development model in the early 1980s. Hence, after a decade of rapid buildup in the
seventies, IRD was in decline by 1980.
The major reasons for the failure of the IRD Approach are : (a) adverse policy
environment for agriculture, (b) failure of governments to provide counterpart funding for
implementation of programmes, (c) lack of appropriate agricultural technology especially
in dry-land areas, (d) lack of beneficiary participation arising from the top-down approach
which was adopted in the design of the programmes, and (e) the coordination problem
which was a consequence of delegating the execution of sub-programmes to highly
centralized bureaucracies.
Basic Needs (BN) Approach
The focus of development assistance shifted from CD programme to IRD and BN
programmes in the early 1970s. The shift in focus resulted from the awareness that the
benefits of economic growth were not “trickling down” to the masses and reducing
poverty and unemployment. In the 1950s and 1960s development objectives were
expressed in terms of Gross National Product (GNP) per capita without paying much
attention to the alleviation of poverty. Hence, this criterion of development was
questioned when it was evident that the benefits of growth did not “trickle down” as was
envisaged.
In the early 1970s governments and development agencies became concerned
about the distributional impact of economic growth, unemployment among the poor, and
the meeting of their ‘basic needs’. The concept of basic needs entails two elements,
namely (a) minimum requirements for private consumption such as adequate food,
shelter, clothing, certain household equipment and furniture, and (b) essential services
provided by and for the community at large. These include safe drinking water, sanitation,
public transport, health and educational facilities. The Basic Needs (BN) approach
requires a departure from the “top-down” approach which characterized central planning
to participation by the people in the decision making process. Such participation is
essential especially in the determination of basic needs. A BN strategy incorporates both a
rapid rate of economic growth and improvement in the quality of employment or
conditions of work. It means not only should output rise over time but the structure of
production must change.
The BN approach also came under severe criticism in the 1980s as it failed to
solve one of the most fundamental rural development problems achieving a reliable food
surplus. The lack of effective decentralization and required professionalization in
executing the programmes were the major reasons for the failure.
The failure of the above stated approaches lead to redesigning of the programmes
during 1990s with similar objectives as envisaged by CD, IRD and BN approaches of
rural development so as to achieve the targeted growth of rural development by taking
care of all the pitfalls of earlier approaches.

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 Effective Approaches for Rural Development
This approach emphasizes on the need for effective use of external resources and
internal resources of rural areas. Although the “trickle-down” theory was based on the
belief that an expanded macro economy could improve the living standards of
impoverished people, its effectiveness has been questionable. However its failure does
not necessarily mean that efforts should be concentrated at the grass-roots level only. This
is because the development of rural areas cannot be achieved without attention to urban
areas, which are the main consumers of agricultural products. If conventional
development projects were effective, rural poverty would have improved more
significantly. Therefore, it is clear that the traditional rural development approach needs
to be improved. Hitherto, rural development depended on external assistance from foreign
countries. However external inputs have been restrained due to donors’ current poor
financial conditions. As a result, the promotion of rural development requires effective
external inputs to generate sufficient results and is capable of engendering further
improvements. Development issues must therefore be comprehensively and cross-
sectionally understood for this to be realized. Maximum use of human and material
resources in rural areas is also necessary. Some potential approaches are described as
follows below
1) Endogenous Development
• To emphasize comprehensive local development for human rights advocacy, human
development and qualitative progress of living standards based on environmental
conservation and sustainable social development.
• To adopt a development approach that promotes inter-industrial relationships through
the comprehensive utilization of local resources, techniques, industries, human
resources, cultures, and networks placing value on mixed economic working situations.
Also, to implement necessary regulations and instruction to promote cooperation
between cities and local economy.
• To facilitate community participation in policy-making. To establish local autonomy
through community participation, decentralization and resident self-governance. At the
same time, to develop project implementation bodies based on regional realities.
2) Participatory Development
The promotion of the development of human and physical resources in rural areas
requires recognizing the fact that local people themselves are the main implementors of
development projects. If the people participate passively in projects, they become inactive
and will depend on external inputs. In order to avoid this situation, local decision-making
in project planning and implementation is important. In other words, a project that the
local people themselves plan and implement is given priority as local materials and
human resources are utilized effectively by the local people’s initiative and responsibility.
Local independence and sustainable development of project outcomes are enhanced by
the effective use of local resources.
An effective approach of development must be accompanied by a chart of well defined
objectives so as to reach the target efficiently and effectively. Thus a “Development
Objectives Chart” showing the following development objectives should be formulated so
as to provide effective tuning to any effective approach of development.
Development Objectives
1. Improvement of Economic Capabilities (Agricultural income improvement, non-
agricultural income improvement, improvement of industries, and development of
infrastructures)

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2. Improvement of Human Capabilities (General health improvement and development of
educational standards)
3. Improvement of Protective Capabilities (Conservation of natural environment and
natural disaster prevention measures)
4. Improvement of Political Capabilities (Decentralization and improvement of policy-
making capabilities).
Rural development programmes
Poverty eradication has been one of the major goals of development planning
since independence and the planning process has been sensitive to the needs of the poor.
Accordingly, the development efforts have been directed in creating adequate livelihoods
and provision of services for a better quality life of the poor. However, the poverty
estimates as per methodology suggested by Tendulkar Committee put 41.8% of rural
population below poverty line which indicates that concentrated efforts are needed to
alleviate poverty in the rural areas.
The census of 2011 estimates that 833 million people continue to live in rural
India. Approaches to 12th Five year Plan therefore, emphasizes on expansion of income
opportunities in the farm sector and a progressive absorption into non-agricultural activity
as one of the most potent weapon for reducing poverty in rural areas. Thus, development
and transformation of rural economy requires rapid expansion of employment and income
opportunities, both on farm and off farm along with improvements in health, education
and skill development.
Agriculture & Rural Development has been the key mantra for a sustained and
long-term economic growth in India. The same is in the sharper focus today with the
Government taking keen interest to ensure a comprehensive and visible uplift of this
sector through effective implementation of various old and new schemes.
To enhance the pace of rural development and reduce poverty, several rural
development are being implemented currently both by the Central Government and the
State Government. To mention few schemes currently in operation are:-
Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)
Evolving the design of the wage employment programmes to more effectively
fight poverty, the Central Government formulated the MGNREGA in 2005. The object of
the MGNREGA is to provide enhanced livelihood security to the households in rural
areas by providing at least 100 days of guaranteed wage employment in a financial year
to any rural household whose adult members volunteer to do unskilled manual work.
Notified on September,2005, the Act covered 200 with effect from 2nd February, 2006
and additional 130 districts were added from 2007-08. All the remaining districts of the
country have been notified with effect from 1st April, 2008.The funding under
MGNREGA is shared between the Centre and State in the ratio of 90:10.
During 2011-12, the scheme has provided employment to around 5 crore
households through about 74 lakh works with more than 212 crore person days of
employment being generated at a total expenditure of about Rs. 37650 crore. The average
wage rate per day has increased from Rs. 65 in 2006-07 to about Rs. 117 in 2011-12.
However, Approach to the 12th Five-year plan observed that the technical soundness of
design and quality of works undertaken in MGNREGA falls short of what is needed to
ensure land productivity enhancement. There appear to be two critical areas in regard to
MGNREGA (i) technical capacity at the local level and (ii) involvement of PRI
representatives at every level of process needs to be addressed and resolved in the Twelve
Plan.

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Swarnjayanti Gram Swarozgar Yojana (SGSY)
Swarnjayanti Gram Swarozgar Yojana (SGSY), is an integrated programme for
Self-Employment of rural poor launched on 1st April, 1999 following the restructuring of
the earstwhile Integrated Rural Development Programme (IRDP) and its allied schemes
such as TRYSEM, DWCRA, SITRA and GKY etc. The basic objective of the SGSY is to
bring the assisted poor families (Swarozgaris) above the Poverty Line by organising them
into Self-Help Groups (SHGs), train them, their capacity building,and provision of
income generating assets through bank credit and government subsidy. Other important
components of the programme are development of infrastructure, establishment of
marketing linkage and providing technological support. Under the scheme special
safeguards have been provided to vulnerable sections by way of reserving 50% benefits
for SCs/STs, 40% for women and 3% for disabled persons. It is envisaged that 50% of the
groups formed in each Block should be exclusively for women.
Since inception i.e.1.4.1999, up to 2012-13 (March,2012) 43.34 lakh SHGs have
been formed, and 14.46 lakh SHGs have taken up economic activities. A total number of
179 lakh Swarojgaries have been assisted with a total investment of Rs.46273.55 crores.
Against the total swarojgaries 47.74% and 60.88% of SC/STs and Women swarojgaries
respectively have been assisted under this scheme.
The SGSY has been restructured as National Rural Livelihoods Mission (NRLM),
[now renamed as “Aajeevika”] to implement it in a mission mode in a phased manner for
targeted and time bound delivery of results. Universal social mobilisation through
formation of SHGs under NRLM will ensure at least one member of each rural BPL
family preferably women members, is covered under SHG net. With a view to form
strong peoples institutions, NRLM will focus on setting up of federation of SHGs from
Village panchayat to district levels. NRLM proposes to ensure Universal financial
inclusion by facilitating opening of savings bank accounts of all its beneficiaries,
simultaneously encouraging thrift and credit activities, facilitating access to credit from
bank etc.
Indira Awaas Yojana (IAY)
Indira Awaas Yojana (IAY) is in operation since 1985-86 with the basic aim to
provide assistance for construction/ upgradation of dwelling units to the BPL rural
households of SCs, STs and free bonded labour categories.
The genesis of the Indira Awaas Yojana can be traced to the programmes like
NREP and RLEGP (began in the early 1980s).There was, however, no uniform policy for
rural housing in the states. As per announcement made by Government in June 1985, a
part of RLEGP fund was earmarked for the construction of house for SCs/ STs and freed
bonded labourers. As a result, Indira Awaas Yojana (IAY) was launched during 1985-86
as a sub-scheme of RLEGP. IAY thereafter continued as a sub-scheme of Jawahar Rozgar
Yojana (JRY) since its launching in April, 1989. From the year 1993-94 the scope of IAY
was extended to cover Non Scheduled Castes/ Scheduled Tribes below the poverty line
families in the rural areas (benefits to the non-SC/ST poor would not exceed 40% of the
total IAY allocation) The assistance under IAY for new construction is Rs. 45,000 per
unit. In the plain area and Rs. 48,500 per unit in hilly/difficult areas. In addition to the
unit assistance available under IAY, a beneficiary can also borrow a top-up loan from any
nationalized bank under Differential Rate of Interest (DRI) scheme (loan upto Rs.80,000
at 4% interest per annum).IAY funds can also be used for upgradation of kutcha houses
(Rs.15,000 per unit can be availed). For construction of a sanitary latrine a beneficiary
can avail financial assistance under Total Sanitation Campaign (TSC) for the house under
IAY. In order to introduce transparency in selection of beneficiaries permanent IAY

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waitlist have to be prepared Grampanchayat wise by the states. Construction of IAY
house is the sole responsibility of the 8 beneficiary.
The funding of IAY is shared between the Centre and States in the ratio of
75:25.But in case of UT it is 100% by centre and for NE it is 90:10. The criteria for
allocation of IAY funds to the states & UTs involve assigning weightage to housing
shortage (75%) and poverty ratio (25%).
IAY is one of the six components of “Bharat Nirman” Programme, under which
60 lakh houses were to be constructed during 2005-06 to 2008-09 (phase-I). Against the
target 71.76 lakh houses were constructed. The target for the next five year period starting
from the year 2009-10 has been doubled to 120 lakh houses. Against this target during the
first three years of Bharat Nirman Programme (Phase-II) approx. 85 lakh houses have
already been constructed.
Approach to the twelve Five Year Plan lay stress on need for developing and
popularising innovative, location specific technologies, materials, designs and methods
through a network on institutions, which could result in low-cost environment friendly
and disaster resistant houses as per local cultural the need of better preferences. Further, it
highlights the need of better systems of monitoring of the programmes and deeper
convergence across various flagship programmes.

PRADHAN MANTRI GRAM SADAK YOJANA:

Rural Road Connectivity is not only a key component of Rural Development by
promoting access to economic and social services and thereby generating increased
agricultural incomes and productive employment opportunities in India, it is also as a
result, a key ingredient in ensuring sustainable poverty reduction. Notwithstanding the
efforts made, over the years, at the State and Central levels, through different
Programmes, about 40% of the Habitations in the country are still not connected by All-
weather roads. It is well known that even where connectivity has been provided, the roads
constructed are of such quality (due to poor construction or maintenance) that they cannot
always be categorized as All-weather roads. With a view to redressing the situation,
Government has launched the Pradhan Mantri Gram Sadak Yojana on 25th December,
2000 to provide all-weather access to unconnected habitations. The Pradhan Mantri Gram
Sadak Yojana (PMGSY) is a 100% Centrally Sponsored Scheme.
The primary objective of the PMGSY is to provide Connectivity, by way of an
All-weather Road (with necessary culverts and cross-drainage structures, which is
operable throughout the year), to the eligible unconnected Habitations in the rural areas,
in such a way that all Unconnected Habitations with a population of 1000 persons and
above are covered in three years (2000-2003) and all Unconnected Habitations with a
population of 500 persons and above by the end of the Tenth Plan Period (2007). In
respect of the Hill States (North-East, Sikkim, Himachal Pradesh, Jammu & Kashmir,
Uttaranchal) and the Desert Areas (as identified in the Desert Development Programme)
as well as the Tribal (Schedule V) areas, the objective would be to connect Habitations
with a population of 250 persons and above (as per 2001 census). The PMGSY will
permit the Up gradation (to prescribed standards) of the existing roads even though Up
gradation is not central to the Programme. Out of the total target of Bharat Nirman
(Phase-I) by May, 2012, 71% of the habitations have been connected by constructing
60% of rural roads..
National Social Assistance Programme (NSAP):

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 National Social Assistance Programme (NSAP) was launched in 1995. Presently,
NSAP which was transferred to State Plan with effect from 2002-03.It comprises of
National Family Benefit Scheme (NFBS) under which Rs. 10000.00 is provided to a BPL
family in case of natural or accidental death of a primary bread earner in the family.
Undoubtedly, Annapurna Scheme which was introduced on 1st April 2000 to provide 10
cups of food grains per month free of cost to eligible beneficiaries who could not be cover
under IGNOAPS and three pension schemes (apart from NFBF and Annapurna) such as
(i) Indira Gandhi National Old Age Pension Scheme (IGNOAPS),for BPL persons of 65
years or above. (ii) Indira Gandhi National Widow Pension Scheme (IGNWAPS),for
BPL widows in the age group of 40-64 years and (iii) . Indira Gandhi National Disability
Pension Scheme (IGNDPS) for BPL disabled in the age group of 18-64 years with 80%
disability. The above mentioned are few schemes launched as a measure to reduce
poverty and meant for rural development which have became laudable. However, most
importantly, whether these schemes have reached the right person at right place and right
time may be a question.
National Land Records Modernisation Programme (NLRMP):
The Department of Land Reform (LR) was implemented two centrally sponsored
schemes viz. Computerization of. Land Records (CLR) and Strengthening of Revenue
Administration and Updating Land Records (SRA & ULR).The cabinet on 20.8.2008 has
approved merger of these schemes into a modified scheme name National Land Records
Modernization Programme (NLRMP) The aims of NLRMP are to usher in a system of
updated land records, automated and automatic mutation, integration between textual and
spatial records, inter-connectivity between revenue and registration, to replace the present
deeds registration and presumptive title guarantee. The NLRMP has three major
components such Computerization of land records, survey/resurvey, and Computerization
of registration. The district has been taken as the unit of implementation, where all
programme activities are to converge. It is hoped that all the districts in the country would
be covered by the end of the 12th plan except where cadastral surveys are being done for
the first time.
A major focus of the programme is on citizen services such as providing records
of rights (RoRs) with maps; other land-based certificates such as caste certificates,
income certificates (particularly in rural areas), domicile certificates, information for
eligibly for development programmes , land passbooks etc.
Providing Urban Amenities in Rural Areas (PURA):
The objectives of the scheme are to provide livelihood opportunities and urban
amenities in rural areas for bridging rural-urban divide and improving the quality of life.
The scheme will be implemented under the framework of Public Private Partnership
(PPP) between Gram Panchayat and Private Sector Partners. This scheme was
implemented on a pilot basis from 2004-05 for three years in seven clusters, one each in
the state of Andhra Pradesh, Assam, Bihar, Maharashtra, Odisha, Rajasthan and
Uttarpradesh. The pilot phase ended in March, 2007.The restructured scheme has been
approved for implementation during 11th Plan on a pilot basis. Based on the learning from
these pilots, there is a proposal to upscale the scheme to cover more areas during 12th Five
Year Plan.
Integrated Watershed Management Programmes (IWMP):
About 60% of the cultivated area in the country is rainfed. Rainfed areas are
usually preparations of poverty, water scarcity, low productivity, Malnutrition and are
prone to severe land degradation. Watershed development programme considered and
adopted as an effective tool to address problems of rainfed/degraded areas in the country.

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To address such problems effectively IWMP was launched in 2009-10. The programme
was implemented as per the common guidelines for Watershed Development Projects,
2008. The assessment carried out by International Crops Research Institute for Semi-Arid
Tropics (ICRISAT) revealed that watershed programme is providing multiple benefits in
terms of augmenting crop yields, increasing cropping intensity, reducing runoff and soil
loss, augmenting ground water, building social capital and reducing poverty etc.
National Rural Drinking Water Programme (NRDWP):
Provision of safe drinking water is a basic necessity. Rural drinking water supply is a
state subject and has been included in the Eleventh Schedule of the Constitution among
the subjects that may be entrusted to Panchayat by the states. The Ministry of Drinking
water and sanitation is mandated to provide safe drinking water in all rural inhabitations.
To achieve this objective, the Ministry is implementing the flagship programme of
National Rural Drinking Water Programme (NRDWP) to assist states in provision of
drinking water supply to all rural habitations. The earlier programmes viz. Accelerated
Rural Water Supply Program (ARWSP) which was started in 1972-73 and National
Drinking Water Mission (NDWM) started in 1986 and got renames in 1991 as Rajiv
Gandhi National Drinking water Mission (RGNDWM) have been revised w.e.f.1st April,
2009. The revised guidelines in the context of rural water supply are known as National
Rural Drinking Water Programme (NRDWP). This programme aims at providing
financial and technical support and assistance to states and UTs for implementing
drinking water supply schemes in all rural inhabitations with a vision of “safe drinking
water for all, at all times, in rural India”.
Total Sanitation Campaign (TSC):

The Central Rural Sanitation Programme (CRSP) was started in 1986 to provide
sanitation facilities in rural areas. However, due to certain deficiencies found in CRSP
lead to the formulation of Total Sanitation Campaign (TSC) approach in 1999 for
accelerating sanitation coverage in rural areas by way of making the people aware of the
advantages of sanitation so as to improve the general quality of life in rural areas.

Nirmal Gram Puraskar (NGP):

The incentive award scheme of Nirmal Gram Puraskar (NGP) has been launched
in 2005 to encourage the Panchayati Raj Institutions to take up sanitation promotion. The
award is given to those PRIs which attain 100 percent open defecation free environment.

Panchayat Empowerment and Accountability Incentive Scheme (PEAIS):

It is a central sector plan scheme being implemented by the Ministry of

Panchayati Raj since 2005-06. The scheme aims at encouraging states to adequately
empower panchayats and put in place systems for bringing about accountability to PRIs.
Incentive grants are provided to states under the scheme for undertaking legislative and
administrative measures for effective devolution of 3Fs (Function, Fund and
Functionaries) to PRIs. Performance of states in this respect is measured through a
devolution Index (DI). However, the annual allocation of funds for the scheme is grossly
inadequate to either motivate the states to devolve powers to PRIs or Panchayats to
become accountable.

Rajiv Gandhi Panchayat Shasastikaran Abhiyan (RGPSA):

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 It has been decided by principle to launch a new umbrella scheme namely RGPSA
during 12th Five Year Plan period by subsuming certain scheme of this Ministry. The
main objective of this proposed scheme is to enhance capacities and effectiveness of
Panchayats and Gram Sabhas through appropriate decentralised strategies which may be
helpful for implanting various rural development programmes efficiently.

Besides the above, it may be worthwhile to mention some of the programmes

started since 1973 and have been working with certain modifications and alteration of
their provisions over time for the cause of rural development and poverty eradication. The
programmes are Drought Prone area Programme (DPAP), Desert Development
Programme (DDP), Hill Area Development Programme (HADP), Integrated Tribal
Development Programme (ITDP) and Minimum Needs Programme (MNP) etc.

Programmes/Policies of Rural Development of State concerned

There are many rural development programmes undertaken by both the Centre
and the states (even though fund allocation is shared between centre and states for certain
programmes as decided). There are certain programmes exclusively undertaken by the
centre for the states and some programmes undertaken by the states for their own suiting
to the local situation. A glimpse of the programmes are as follows:

Sl. Rural Development Programme Year of Objective/Description

No. Beginning

1 Community Development 1952 Over-all development of rural areas

Programme (CDP) with people's participation.
2 Rural Electrification Corporation 1969 Electrification in rural areas
3 Accelerated Rural Water Supply 1972-73 For providing drinking water in
Programme(ARWSP) villages

4 Crash Scheme for Rural 1972-73 For rural employment

Employment
5 National Institute for Rural 1977 Training, investigation and advisory
Development organization for rural development
6 National Rural Employment 1980 To provide profitable employment
Programme (NREP) opportunities to the rural poor
7 Development of Women and 1982 To provide suitable opportunities of
Children in Rural Areas self-employment to the women
(DWCRA) belonging to the rural families who
are living below the poverty line.
8 Rural Landless Employment 1983 For providing employment to
Guarantee Programme (RLEGP) landless farmers and laborers
9 National Fund for Rural 1984 To grant 100% tax rebate to donors
Development (NFRD) and also to provide financial
assistance for rural development
projects.

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10 Council for Advancement of 1986 To provide assistance for rural
People's Actions and Rural prosperity.
Technology (CAPART)
11 Service Area Account (SAA) 1988 A new credit policy for rural areas
12 Jawahar Rozgar Yojana 1989 For providing employment to rural
unemployed.

13 Agriculture and Rural Debt Relief 1990 To exempt bank loans upto Rs.
Scheme (ARDRS) 10,000 of rural artisans and weavers.
14 Supply of Improved Toolkits to 1992 To supply modern toolkits to the
Rural Artisans rural craftsmen except the weavers,
tailors, embroiders and tobacco
laborers who are living below the
poverty line.
15 District Rural Development 1993 To provide financial assistance for
Agency (DRDA) rural development.
16 Mahila Samridhi Yojana 1993 To encourage the rural women to
deposit in Post Office Saving
Account.
17 Swarna Jayanti Gram Swarozgar 1999 For eliminating rural poverty and
Yojana unemployment and promoting self-
employment.
\18 Pradhan Mantri Gramodaya 2000 To fulfil basic requirements in rural
Yojana areas.
19 Pradhan Mantri Gram Sadak 2000 To line all villages with pakka road
Yojana (PMGSY)
20 Bharat Nirman Program 2005 Development of Rural Infrastructure
including six components :
irrigation, Water supply, Housing,
Road, Telephone and Electricity.
21 National Rural Employment 2006 To provide at least 100 days wage
Guarantee Scheme (NREGA) employment in rural areas.
22 Indira Awaas Yojana 1999 To help construction of new
dwelling units as well as conversion
of unserviceable kutcha houses into
pucca/semi-pucca by members of
SC/STs, freed bonded labourers and
also non-SC/ST rural poor below the
poverty line by extending them
grant-in-aid.
23 National Livelihood Mission 2009-10 To reduce poverty among rural BPL

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 by promoting diversified and gainful
self-employment and wage
employment opportunities which
would lead to an appreciable
increase in income on sustainable
basis.
24 Pradhanmantri Adarsh Gram 2010 Integrated development of scheduled
Yojana (PMAGY) castes dominated villages in the
country.
25 Sampoorna Gramin Rozgar 2001 To provide additional wage
Yojana employment in the rural areas as
also food security, along with the
creation of durable community,
social and economic infrastructure in
rural areas.

26 Twenty Point Program 1975 Poverty eradication and and raising

the standard of living.
27 Draught Prone Areas Programme 1973-74 To minimise the adverse effects of
(DPAP) drought on production of crops and
livestock and productivity of land,
water and human resources
ultimately leading to drought
proofing of the affected areas.
28 Annapurna Scheme 2000 To ensure food security for all create
a hunger free India in the next five
years and to reform and improve the
Public Distribution System so as to
serve the poorest of the poor in rural
and urban areas.
29 Western Orissa Rural Livelihoods 2001 To reducing poverty by promoting
Project (WORLP) livelihoods initiatives for the
poorest. The livelihoods
approach adopted by
WORLP focuses on building, and
working with, people's existing
strengths and resources It is
implemented in the four districts of
Odisha; Bargarh, Balangir,
Kalahandi and Nuapara which are
among the poorest in India

References

1. Rural Development-Principle, Policies and Management, by Katar Singh, Sage

Publications

103
 2. Rural Development in India- past, present and future- A challenge in the crisis by
Vasant Desai, Himalaya Publishing House
3. Rural Development by I. Satya Sundaram, Himalaya Publishing House
4. Readings in Rural Sociology, by S.K.Jena, Elegant Publications
5. Indian Economy- Problems of Development and Planning

Questions

1. Define Rural Development and discuss the significance and importance of rural
development in Indian Context.
2. “ Rural Development is a national necessity in India”- Elaborate the statement
with reasons
3. Distinguish between the Gandhian Philosophy and Philosophy of Sufficiency
Economy pertaining to Rural Development.
4. Sociological aspect of rural development is associated with the study of social life
in rural areas- Give your comment.
5. Discuss the objectives and achievements of some of the important rural
development programmes undertaken by your state.

6. Write Short Notes

(a) Gandhian Philosophy on Rural Development
(b) Philosophy of Sufficiency economy
(c) Community Development (CD) Approach
(d) Integrated Rural Development (IRD) Approach
(e) Basic Needs (BN) Approach
(f) Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)
(g) Swarnjayanti Gram Swarozgar Yojana (SGSY)

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 CHAPTER-2
CONCEPT AND STRUCTURE OF PANCHAYAT RAJ SYSTEM
Panchayat Raj System is not new to India. In fact it was developed earliest and preserved
longest in India among all countries of the earth. Mahatma Gandhi has very rightly said,
"Long ago, how long history does not record, the Indian genius worked out the village
and local panchayat. It remained our fort through many a turbulent period, kings, and
dynasties fought and failed, empires rose, ruled, misruled and disappeared, but the
villager's life maintained its even tenor, away from the din of battle and the rush of rising
and failing empires. We had a village state which protected the life and property and
made civilized life possible". However, during the British Rule in India, there was an all
round decay in local-self government agencies. After independence, a specific role in
administration was visualized for village panchayat and it was laid down in our
Constitution as a Directive Principles of State Policy that, " the state shall take steps to
organize village panchayats and to endow them with such power and authority as may be
necessary to enable them to function as a unit of self-government" (Article 40). In the
successive plans the importance of Panchayat Raj System was reiterated with more
vigour. The legislation was enacted as early as in 1947, known as the Panchayati Raj Act.
1947.
Indeed the pattern and objective of the Panchayati Raj System as practiced today owe to
the Report of a Study Team headed by Mr. Balwant Raj Mehta appointed by the Planning
Commission. The Committee was appointed to examine the Community Development
Programme introduced in 1952 and also to examine the question of reorganization of
district administration to provide popular organization between the village and state
levels. It realized the necessity of democratic decentralization of administration so as to
create institutions of democratic administration at the village, block and the district level.
Panchayati Raj was conceived as the process of democratic decentralization. The
recommendation of the Study Team was approved by the National Developments of

105
panchayati Raj to suit its own conditions. In the proposed system five principles were
emphasized:
• There should be a three-tier structure of local self-governing bodies from village to
district levels, with an organic link from the lower to the higher ones.
• There should be a genuine transfer of power and responsibility to these bodies.
• Adequate financial resource should be transferred to these bodies to enable them to
discharge their responsibility.
• All development programme at these levels should be channeled through these bodies.
• The system evolved should be such as to facilitate forth decentralization of power and
responsibility in the future.
Objectives of Panchayati Raj:
Reasons to opt for Panchayati Raj can be traced in the objective as given the Third Plan
includes the followings:
(1) Increasing agricultural production;
(2) Development of rural production;
(3) Fostering Co-operative institutions;
(4) Full utilization of local manpower and other resources physical and financial available
to the panchayats.
(5) Assisting the economically weaker sections of the village community;
(6) Progressive dispersal of authority and initiative, with special emphasis on the role of
voluntary organization; and
(7) Fostering cohesion and encouraging the spirit of self help within the community.
Working of Panchayati Raj System
Panchayati Raj introduced in 1959 now covers all the States. The institutions of
Village Panchayat also exist in all the Union Territories. There are at present 2,28,593
Village Panchayats. In addition; there are 4,525 Panchayati Samities and 330 zila
parishads. The tenure of elected bodies is 3 or/and 5 years.
Structure of Panchayati Raj System
PR System is a three-tier structure of local self-government at the village, bock
and district level. All these are organically linked up. Special representation on these
bodies is given to interests like backward class, women and co-operative societies, elected
directly by and from among villagers. The pattern can be understood from the following
chart:
GRAM SABHA
GRAM PANCHAYAT
PANCHAYAT SAMITI
ZILA PARISHAD
Most of the States have followed the three-tier system as recommended by the
Mehta Committee Report (1958). The village assembly or Gram Sabha (also called Gaon
Sabha, or Pali Sabha in Orissa) has been given statutory recognition in all the States
except Kerala, Tamil nadu and Karnataka. In Bengal the Panchayat Unions, formed for a
group of Panchayat and Panchayat Samiti, thus giving the State a 4-tier system. The
intermediate tier at Tehsil or Taluka level is called by various names. In Tamil Nadu and

106
Karnataka it is called the "District Development Council". In Andhra, Bihar, Maharashtra,
Orissa, Punjab and Rajasthan, it is called the Panchayat Samiti. In Assam the name is
"Anachalik Panchayat" and in Bengal the "Anchalik Parisad". In Gujarat it is called the
"Taluka Panchayat" and in Mysore the "Taluk Board". In M.P. it is known as the
"Janpada Panchayat Union Council". The district level body is known by different name
in Gujarat and M.P. it is known as " Zila Panchayat" . In rest of the States the name
adopted is "Zila Parishad".
The Gram Sabha
It is the general body of the Gram Panchayat and consists of all the local voters residing
in jurisdiction of the Gram Panchayat, which may extend over one village or a group of
village. The Sabha normally meets twice in a year. The Sabha elects from its members an
executive committee which is known as Gram Panchayat and also elects its presidents
known as Sarpanch.
The Gram Panchayat
It is the base level organization of the PR system, elected by the Gram Sabha. The tenure
of the Panchayat is generally three years. The Panchayat has been assigned all functions
which a local government is normally expected to perform. It is looked upon as a vehicle
for the execution of Community Development Progrmmme. The Functions of the
Panchayat are of two types. viz. obligatory and discretionary. In case of discretionary, the
nature and degree depends upon the State Government instructions. .
To enable the Panchayats to carry out their functions, they have been given following
powers:
(i) Regulatory powers
(ii) Fiscal powers (to levy taxes)
(iii) Judicial power (where Nayaya Panchayats are not working separately).
(iv) Administrative powers
The Panchayat is subject to a wide-ranging system of direction control and
regulation by the State Government. The State Government has the power to delimit and
alter its jurisdiction, to effect mergers and even abolish it. Its control over the Panchayat
extends to almost every aspect of its work such as the appointment of staff, records
management, financial administration, election etc. If a Panchayat fails to carry out a task
which it is obliged to undertake, the State Government may call for necessary reports and
records. It may suspend the Panchayat if it considers that the implementation of the
resolution may spell danger to public life, health or property. It may suspend or remove a
Panch or a Sarpanch under certain conditions. It can even supersede a Panchayat if the
latter is consistently negligent of its duties.
The Panchayat Samiti
It constitutes the intermediate tier in the Panchayat Raj system of rural local Government
in India. It is the main executive body charged with the responsibility of implementing
the Community Development Programme. Its responsibilities extend to agriculture,
animal husbandry, fisheries health, rural sanitation, communication, social education, co-
operation, cottage and small-scale industries, etc. Besides this the Panchayat Samiti is
charged with the preparation and implementation of development plans for the block and
acts as an agent of the State Government in the performance of tasks which may have
beenspecified to it. It also exercises supervision over Panchayats and provides the
necessary technical and financial support to them. It scrutinizes the budgets of Panchayat

107
 of the area under its control and makes suggestions to them. In nutshell, the Panchayat
Samiti is to provide civic amenities and implement development programme.
The Panchayat Samiti functions through Standing Committees which are set up
for looking after specific aspects of the Samiti's work like production programme,
education and social welfare, finance and taxation, public health and sanitation, etc.
Member of the Standing Committee are elected by the members of the Panchayat Samiti.
All Acts provide that the presidents (Pradhan/Pramukh) of the Panchayat Samiti shall be
the ex-officio chairman of the "standing committee. The implementation of the
programme is looked after by the Block Development Officer who functions as the Chief
Executive Officer of the Panchayat Samiti and the Block Staff consisting of the extension
officers' and the village level workers (VLWs).
Zila Parishad
It is the apex body of the three-tier system of Panchayati Raj. It generally consists of the
representatives of the Panchayati Samities and some representatives of the weaker
sections of the community. The membership of the Zila Parishad has been designed in
such a way as to link it organically with the intermediate tier of the Panchayat Raj. i.e.,
the Panchayat Samiti and with the State legislature and the national parliament at the
upper level.

It also functions through a net work of standing committees. It performs the

following functions:
I. To examine and approve the budget of intermediary tier the Panchayat Samities.
II. To issue directions to the Panchayat Samities for an efficient performance of their
functions.
III. To co-ordinate development plans prepared by the Panchayat Samities.
IV. To advise the State Government on all matters relating to development activities
in the district.
V. To distribute funds allocated by the State Government to the Panchayat Samities
in the district.
VI. To inform the District collector and the Divisional Commissioner about
irregularities, if any, committed by the Panchayat and the Panchayat Samiti.
VII. To collect statistics pertaining to the activities of local authorities in the district.
VIII. To advise the State Government on the allocation of work to be made among the
Panchayat and the Panchayat Samities in the district and also on the co-ordination
of work between the Samities and among various Panchayats themselves.
IX. To exercise such powers and perform such functions as may be conferred by the
State Government.
The Zila Parishad is an ex-officio body. A substantial portion of its membership
consist of district level officials from the various development departments such as public
health, engineering, education, public works, backwards welfare, etc.

If the organization pattern of the Panchayat Raj system is to be seen from a

broader point of view it is like:
National Level Union Minister of Agriculture (Ministry of

108
 Rural Development)
State Level Ministry of Panchayat Raj
District Level Zila Parishad
Block Level Panchayat Samiti
Village Level Gram Panchayat
Role of Panchayat Raj Institution in Rural Economy
Panchayat Raj Institutions have associated in the gigantic task of rural development.
They have done a lot quantitatively and qualitatively. Before analyzing the weakness of
the system, it will be better to prepare a theoretical frame work or rational of Panchayati
Raj system for rural development.
i. Economic Growth vitally depends upon performance levels of organization involved
in development. In this task
a) PR leadership plays an educative role vis-s-vis the general director of
development
b) Local planning will gain through participatory process. Every area has own local
design and life style.
c) Involvement implementation since they perform the function of a watchdog.
ii. PR system is political system. Politicization occupies a high salience in the process of
economic growth. By broadcasting and intensifying politicization in rural areas, PR
institutions have a significant contribution to make in rural and national development.
It has been very rightly said that democracy is both the means and end of economic
growth.
iii. PR system was a response to the perceived gaps in the wake of the community
development experience. No programme of economic development can be successful
without public participation.
Now we can analyze the performance of the PR system in rural development.
Everybody will agree that Gram Panchayat as institutions for inculcating civic
responsibility and as examples of local decentralized organs of administration are today a
picture of disharmony, inefficiency, corruption, group rivalries, spirit of petty forgery and
social antagonism of the worst type. In some of the States the movement is still in
embryonic stage. To be more precise following difficulties have been experienced with
the PR system:
i. It has created vested interests in the rural scene. Factionalism makes it impossible
to make commonly accepted decisions.
ii. Lack of proper leadership has made the Panchayats a tool in the hands of
irresponsible persons, who is wielding power - a really committed person or a
wealthy person or a leader of socially powerful group.
iii. Capability of people - Concept of people's participation is also clouded with
ambiguities. Can people plan for themselves? Do they have time and energy to do
so? Do they have any felt needs?
iv. More inequalities - Who got the fruits? All have been pocketed and cornered by a
few well- off, leaving the needy dry. Growths for justice and growth with justice
have resulted in creating more inequalities.

109
 v. Dual Personality - The leaders in villages in public express progressive
sentiments, while in action they do exactly the reverse. Can such people inspire
any confidence for any work?
vi. Deficient Political will - The single most responsible factor for the failure of PR
system has been the poor vision and short sightedness on the part of the State
Governments. Decentralization of power by mistrust, postponement of election by
long periods (as long as 14 years in a few cases) and frequent superssions,
dissolutions etc. is manifestations of deficient political will.
Probably all it was in this background that the' Janta Government in December, 1977
appointed a committee to review various aspects of PR institutions, under the
chairmanship of Mr. Ashok Mehta. The Committee submitted its report in August 1978.
Important provisions of Panchayat Raj Act
73rd amendment of the Constitution 1992 was the most significant year in the history of
Panchayats in India as the 73rd amendment of the Constitution (amendment of Article
243) was passed by the Indian Parliament that declared Panchayats as institutions of self
government. (The 74th amendment done at the same time relate to urban local bodies).
These amendments came into force from April 24, 1993.
The major features of the 73rd amendment can be enumerated as under:
• There should be three tiers of Panchayats (District Panchayats, Block Panchayats i.e.
intermediary Panchayats and Village or Gram Panchayats) in states with over 25 lakh
of population. States with less than this population will have only two tiers omitting
the intermediary tier.
• Panchayats declared as institutions of self governments (signifying that the status of
Panchayats is same in their respective areas, as that of the Union Government at the
national and State Governments at the state level).
• States were mandated to devolve functions relating to 29 subjects (including
agriculture, land reforms, minor irrigation, fisheries, cottage and small scale
industries, rural communication, drinking water, poverty alleviation programmes etc.)
to the Panchayats. . Panchayats were mandated to prepare plans) for economic
development and social justice and implement them.
• States were asked to constitute a State Finance Commission every five years to
determine the Panchayats' share of state's financial resources as a matter of
entitlement (just as the Central Finance Commission determines how resources of the
Central government should be shared between the union and state governments).
• Panchayat bodies must have proportionate representation of Scheduled Caste,
Scheduled Tribes and women. Such reservation should also apply in the cases of
Chairpersons and Deputy Chairpersons of these bodies.
• There shall be State Election Commission in each state which shall conduct elections
to the local bodies in every five years.
(Note: This amendment is not applicable in some special areas and in the states like
Nagaland, Mizoram, etc. and in areas where regional councils exist).
Amendment of the Constitution necessitated large scale amendments in the
Panchayat Acts of individual states. Though in states like West Bengal almost all the
requirements of the Constitutional amendment were already provided for in the Panchayat
Act.

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Questions:
1. Describe the Role of Pachayati Raj in Rural Development?
2. Write the short note on Gram Sabha and Zila Parishad?
3. Explain the Objective of Panchayati Raj?
4. Write an essay on 73rd Amendment of the Constitution?
References
1. “Rural Credit and Cooperative Development”- S.B. Verma, G.P. Shah, S.C.
Pathak(2006), Deep & Deep Publications Pvt. Ltd., New Delhi-110027
2. “Cooperatives and Rural Development”- Y Suresh Reddy, A. Reddeppa
Reddy(1997), Amol Publications Pvt. Ltd., New Delhi
3. “My Vision for India’s Rural Development”- Jagnnath Mishra(1997), Vikas
Publishing House Pvt. Ltd., New Delhi-110014 Rural Development and Co-
operation”- B.L. Mathur(1996), RBSA Publishers, Jaipur
4. “Agriculture and Rural Development in India”- Dr. Smita S. Patel(2012),
Paradise Publishers, Jaipur
5. “Rural Development and Co-operation”- B.L. Mathur(1996), RBSA Publishers,
Jaipur
6. “Agriculture and Rural Development in India”- Dr. Smita S. Patel(2012),
Paradise Publishers, Jaipur
7. “Rural Development and Cooperation”- Satish Munjal(1997), Sublime
Publications, Jaipur

CHAPTER – 3
SOCIAL FORESTRY AND WASTELAND/DRYLAND DEVELOPMENT
Overview
Social forestry means the management and protection of forests and afforestation
on barren lands with the purpose of helping in the environmental, social and rural
development.
The term, social forestry, was first used in India in 1976 by The National
Commission on Agriculture, Government of India. It was then that India embarked upon
a social forestry project with the aim of taking the pressure off currently existing forests
by planting trees on all unused and fallow land.
Need of social forestry
This need for a social forestry scheme was felt as India has a dominant rural
population that still depends largely on fuel wood and other biomass for their cooking and
heating. This demand for fuel wood will not come down but the area under forest will
reduce further due to the growing population and increasing human activities. Yet the
government managed the projects for five years then gave them over to the village
panchayats (village council) to manage for themselves and generate products or revenue
as they saw fit.
Types of social forestry
Social forestry scheme can be categorized into groups; farm forestry, community
forestry, extension forestry and agro forestry.
Farm forestry
At present in almost all the countries where social forestry programmes have been
taken up, both commercial and non commercial farm forestry is being promoted in one
form or the other. Individual farmers are being encouraged to plant trees on their own

111
farmland to meet the domestic needs of the family. In many areas this tradition of
growing trees on the farmland already exists. Non-commercial farm forestry is the main
thrust of most of the social forestry projects in the country today. It is not always
necessary that the farmer grows trees for fuel wood, but very often they are interested in
growing trees without any economic motive. They may want it to provide shade for the
agricultural crops; as wind shelters; soil conservation or to use wasteland. Farm Forestry
is another name for Agro forestry; a part of Social forestry.
Community forestry
Another scheme taken up under the social forestry programme, is the raising of
trees on community land and not on private land as in farm forestry. All these
programmes aim to provide for the entire community and not for any individual. The
government has the responsibility of providing seedlings, fertilizer but the community has
to take responsibility of protecting the trees. Some communities manage the plantations
sensibly and in a sustainable manner so that the village continues to benefit. Some others
took advantage and sold the timber for a short-term individual profit. Common land being
everyone's land is very easy to exploit. Over the last 20 years, large-scale planting of
Eucalyptus,. as a fast growing exotic, has occurred in India, making it a part of the drive
to reforest the subcontinent, and create an adequate supply of timber for rural
communities under the augur of 'social forestry'.
Extension forestry
Planting of trees on the sides of roads, canals and railways, along with planting on
wastelands is known as "extension' forestry increasing the boundaries of forests. Under
this project there has been creation of wood lots in the village common lands, government
wastelands and Panchayat lands.
Schemes for afforesting the degraded government forests that are close to villages
are being carried out all over the country.
Agro forestry
[Comes under Rural Forestry] In agro forestry, silvicultural practices are
combined with agricultural crops like leguminous crop, along with orchard farming and
live stock ranching on the same piece of land. In lay man language agro forestry could be
understood as growing of forest tree along with agriculture crop on the same piece of
land.
In a more scientific way agro forestry may be defined as a sustainable land use
system that maintains or increases the total yield by combing food crop together with
forest tree and live stock ranching on the same unit of land, using management practices
that takes care of the social and culture characteristic of the local people and the
economic and ecological condition of the local area.
Social forestry programme
Government forest areas that are close to human settlement and have been
degraded over the years due to human activities needed to be afforested. Trees were to be
planted in and around agricultural fields. Plantation of trees along railway lines and
roadsides, and river and canal Banks were carried out. They were planted in village
common land, government wasteland, and Panchayat land.
Objectives of social forestry
Social forestry is the forestry by the people and for the people, whose main
purpose is to fulfill the need of forestry which is -manure food, fruit, fiber and productive

112
capacity. As a whole Social forestry's main objective is to reconstruct the ecosystem and
conserve the environment.
Social forestry, schemes that have been started all over the country have made a
considerable difference in overall forest cover in a short time. Afforestation outside the
conventional forest area is for the benefit of rural and urban communities.
The main objectives for Social forestry:-
• Improve the environment for protecting agriculture from adverse climatic factors,
• Increase the supply of wood fuel for domestic use, small timber for rural housing,
fodder for livestock, and minor forest produce for local industries,
• Increase the natural beauty of the landscape; create recreational forests for the benefit
of rural and urban population,
• Provide jobs for unskilled workers and
• Land rehabilitation
• Finally, its object is to raise the standard of living and quality of life of the rural and
the urban people.
Mission
• To carry out a need based and time bound programme of afforestation with special
emphasis on fuel wood and fodder development on all degraded and denuded lands/
forests.
• Afforestation of abandoned jhum lands and mined areas.
• Linear strip plantation of fast growing species on sides of public roads, rivers, streams
and irrigation canals.
• Afforestation on unutilized lands under State/Corporate, institutional or private
ownership.
• Green belts in urban/industrial areas.
• Shelter belt (generally more extensive than the wind breaks) for the purpose of shelter
from wind and sun covering areas larger than a single farm on a planned pattern.
• Farm forestry in the form of raising rows of trees on bund or boundaries of fields and
individual trees in private agricultural land as well as creation of wind breaks round a
farm or orchard by raising one or two lines of trees.
• Raise flowering trees and shrubs mainly to serve as recreation forests for the urban
and rural population.
• Elicit people's participation involving women and young people in conservation of
forests, wildlife and environment.
• Environmental awareness generation and celebration of vanamahotsava, environment
day, wildlife week etc.
Wasteland Development
OVERVIEW
Wasteland development as a sector plays a vital role in the socio-economic and
rural development of a country apart from its role in maintaining ecological stability.
This involves grooving appropriate species of trees of economic value on
degraded land that has been unutilized/ underutilized. The primary objective is to raise
tree crops on wastelands for firewood, fodder, timber and other non-timber forest
produce. Wastelands can be also be utilized for Commercial Forestry/ Captive Fuel wood

113
Plantations by Tea estates/ Pulpwood Plantations/ Ply-wood Plantations/Fodder
development/Sisal Plantations/Tassar - Lac cultivation /Tree patta schemes/ Jhumland
Rehabilitation Nursery Development/Bamboo Plantations etc. Wastelands can also be
developed on watershed basis.
NABARD is playing a catalytic role in preparation of Model Bankable Schemes,
extending loans to State Governments for financing Joint Forest Management schemes
under Rural Infrastructure Development Fund (RIDF), etc., refinance support to all
bankable wasteland development programmes to accelerate credit through banking
channels to the joint sector undertakings or private companies raising plantations for their
raw material needs and also cooperatives or private entrepreneurs raising such
plantations to meet raw material needs of user industries with appropriate market tie up.
The following are some of the activities having good potential;
1. Farm Forestry
This involves afforestation activities on farm lands/ bunds/ boundaries of agricultural land/
Wastelands lying barren and unutilised for many years.
2. Agro-forestry
This is basically combining food crops (annual) with tree crops (perennials) and/ or
livestock in the same unit of land, either alternately or at the same time. The suitable
species of trees that can be raised on such lands are Poplar, Subabul, Casuarina,
Kadam, Eucalyptus, Bamboo, and Sissoo, etc.

3. Commercial Forestry
This involves raising plantations by Forest Development Corporations, User
Industries, and Public Sector Units on government wastelands, degraded forests,
private wastelands, etc.
4. Commercial Nurseries
This involves setting up or small but viable nurseries for raising seedlings of trees of
economic value.
DRYLAND FARMING
Agriculture is the single largest livelihood source in India with nearly two thirds of people
depend on it. Rainfed agriculture is as old as agriculture itself. Growing of crops entirely
under rainfed conditions is known as dryland agriculture. Depending on the amount of
rainfall received, dryland agriculture can be grouped into three categories:
Definitions
a) Dry farming: is cultivation of crops in regions with annual rainfall less than 750 mm.
Crop failure is most common due to prolonged dry spells during the crop period. These
are arid regions with a growing season (period of adequate soil moisture) less than 75
days. Moisture conservation practices are necessary for crop production.
b) Dryland farming: is cultivation of crops in regions with annual rainfall more than 750
mm. In spite of prolonged dry spells crop failure is relatively less frequent. These are
semi arid tracts with a growing period between 75 and 120 days. Moisture conservation
practices are necessary for crop production. However, adequate drainage is required
especially for vertisoils or black soils.
c) Rainfed farming: is crop production in regions with annual rainfall more than 1150
mm. Crops are not subjected to soil moisture stress during the crop period. Emphasis is
often on disposal of excess water. These are humid regions with growing period more

114
than 120 days. United Nations Economic and Social Commission for Asia and the Pacific
distinguished dryland agriculture mainly into two categories: dryland and rainfed
farming. The distinguishing features of these two types of farming are given below.
Dryland vs. rainfed farming
Constituent: Dryland farming Rainfed farming Rainfall (mm) <800 >800Moisture
availability to the crop Shortage. Enough Growing season (days) <200 >200 Growing
regions Arid and semiarid as well as uplands of sub-humid and humid regions
Humid and subhumid regions cropping: system Single crop or intercropping
Intercropping or double cropping Constraints: Wind and water erosion.
Importance of Dry farming in Indian Agriculture:
1. About 70% of rural population lives in dry farming areas and their livelihood depend
son success or failure of the crops
2. Dryland Agriculture plays a distinct role in Indian Agriculture occupying
60% of cultivated area and supports 40% of human population and 60 % livestock
population.
3. The contribution (production) of rainfed agriculture in India is about 42 percent of the
total foodgrain, 75 per cent of oilseeds, 90 per cent of pulses and about 70 percent of
cotton.
4. By the end of the 20th century the contribution of drylands will have to be 60 per cent
if India is to provide adequate food to 1000 million people. Hence tremendous efforts
both in the development and research fronts are essential to achieve this target.
5. More than 90 per cent of the area under sorghum, groundnut, and pulses is rainfed. In
case of maize and chickpea, 82 to 85 per cent area is rainfed. Even 78 percent of cotton
area is rainfed. In case of rapeseed/mustard, about 65.8 per cent of the area is rainfed.
Interestingly, but not surprisingly, 61.7, 44.0, and 35.0 percent area under rice, barley and
wheat respectively is rainfed.
6. At present, 3 ha of dryland crop produce cereal grain equivalent to that produced in one
ha irrigated crop. With limited scope for increasing the area under plough, only option left
is to increase the productivity with the modern technology and inputs, since the per capita
land availability which was 0.28 ha in 1990 is expected to decline 0.19 ha in 2010.
7. The productivity of grains already showed a plateau in irrigated agriculture due to
problems related to nutrient exhaustion, salinity build up and raising water table.
Therefore, the challenges of the present millennium would be to produce more from
drylands while ensuring conservation of existing resources. Hence, new strategies would
have to be evolved which would make the fragile dryland ecosystems more productive as
well as sustainable. In order to achieve evergreen revolution, we shall have to make grey
areas (drylands) as green through latest technological innovations.
8. Drylands offer good scope for development of agroforestry, social forestry, horti-sylvi-
pasture and such other similar systems which will not only supply food, fuel to the village
people and fodder to the cattle but forms a suitable vegetative cover for ecological
maintenance.
Dimensions of the problem:
Majority of the districts in India are dry farming districts and covers 60 percent of the
total cultivated area. Most of this area is covered by crops like millets, pulses, oilseeds,
cotton etc.,.These areas spread throughout the country i.e.Tamilnadu, Karnataka, Andhra
Pradesh, Madhya Pradesh, Maharastra, Gujarat, Rajasthan, Punjab, Haryana and Uttar
Pradesh. In south India the Deccan plateau which is rain shadow area consisting of parts

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of Karnataka, (Bellary, Raichur, Kolar, Tumkur, Dharwad, Belgam, Gulberga) and
Maharastra (Sholapur, Parbani, Puna, Aurangabad). The dry farming areas in Andhra
Pradesh are found in Kurnool, Anantapur, Kadapa, Mahaboobnagar, Chittoor, and
Nalgonda districts.
a) The area under dryland agriculture is more in India (60 per cent of total cultivable area)
b) Areas of low rainfall (below 750 mm) constitute more than 30 per cent of total
geographical area
c) About 84 districts in India fall in the category of low rainfall area
d) Providing irrigation to all the drylands is expensive and takes long time
e) Even after providing all the irrigation potential in India 55 per cent area remains as
rainfed.
Area under dry lands
Globally the area under drylands is about 6150 m.ha. In India out of the total cultivated
area of 143 m.ha the area under drylands is about 85 m.ha, which comes to 60% . It is
estimated that even after creating entire irrigation potential for irrigation about 55% of
total cultivated area remain as rainfed. Except in the states of Punjab, Haryana and
Pondichery the percentage of area under drylands is high in all other states. In Andhra
Pradesh the area under drylands is about 6.576 m.ha (60 %).
Dry land area in different regions of India
Region States Per cent of rainfed area Cold and northern region Jammu and
Kashmir,Uttaranchal and Himachal Pradesh, 60 to 81 Arid western Region Rajasthan and
Gujarat 66 to 88 Semi arid to arid central and southern region Madhya Pradesh,
Maharastra, Andhra Pradesh, Karnataka ,Tamilnadu 76 to 82 Sub humid to humid eastern
region Eastern Uttar Pradesh, Bihar, Jharkhand, Orissa, West Bengal 33 to 73 Humid to
per humid north eastern region Assam and north eastern hill states up to 90
Reference:
1. Handbook of Agricultural Science by S. S. Singh
Questions:
1. What is social forestry? Explain types of social forestry.
2. Write about need for afforestation.

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 Chapter- 4

OTHER PROGRAMMES AND POLICIES OF RURAL DEVELOPMENT OF

STATE CONCERNED

Various innovative schemes/programmes are being launched by different States, in

addition to the central schemes under the Ministry of Rural development, of GOI to
facilitate the specific needs of the rural community. The specific schemes and
programmes for rural development by the Government Of Odisha during 2011-2012 have
been outlined below as a reference.

RURAL HOUSING PROGRAMMES:

1. INDIRA AWAAS YOJANA(IAY)

The IAY is being implemented from the year 1985-86 to provide assistance for
construction/upgradation of dwelling units to the below poverty line (BPL) rural
households belonging to the Scheduled Castes and Scheduled Tribes. From the year
,1993-94 the scope of the scheme was extended to cover the rural BPL from the non SC
and ST poor subject to stipulated conditions. The Scheme provides coverage of at least
60% SC/ST BPL rural households and 40% from other categories.

2. IAY (FRA)

In order to provide permanent dwelling units to traditional Forest dwellers and Scheduled
tribe people residing in hilly areas, the GOI sanctioned 99, 986 IAY houses in this state.

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3.’MO KUDIA’

The State Government have introduced a new scheme ‘MO KUDIA’ under the State Plan
2008-09.The main objective is to provide a house to left out beneficiary of the permanent
BPL List.

BACKWARD REGION GRANT FUND (BRGF):

The BRGF is a central scheme launched in 19 districts of the State since 2006-07.The
scheme is aimed to redress the regional imbalances in development, bridge critical gaps in
local infrastructure and development requirements.

GOPABANDHU GRAMINA YOJANA (GGY):

The principal objective is to provide additional development funds to the targeted districts
to provide infrastructure consisting primarily of Bijli, Sadak, Pani (i.e. Electrification,
Roads and Water Supply) to every revenue village in the identified districts. During the
financial year 2011-12 there was a provision of Rs.165 crore under State Plan for GGY
Districts.

CEMENT CONCRETE ROAD (CC ROAD):

The State Government introduced this scheme from the financial year 2010-2011 for
construction of cement concrete roads in the villages in every nook and corner of the
State with special focus on SC/ST/PVTG (Particularly Vulnerable Tribal Group)
habitations.

TRIPTI (Targeted Rural Initiatives for Poverty Termination and Infrastructure):

The project TRIPTI is a unique approach of the State Govt. to address rural poverty
through community participation. The project started in March 2009 is being
implemented in ten districts of the State covering 38 poverty stricken blocks. The project
aims at “Enhancing the socio economic status of the poor especially women and
disadvantaged groups in selected districts”.

e-Governance

The need in employing ICT for empowering the rural citizens, the panchayat Raj
Department has launched a number of e-Governance initiatives in the form of Hardware,
Connectivity, Manpower, I.T.P.(Interactive Training Programme),Application Software
put to use.

Towards inclusive Governance

The concept of inclusive governance is gaining acceptance across different levels.
Panchayati Raj Department has a vision to implement various initiatives for the higher
level of e-governance. This pertains to Gram panchayat Computerisation & G.P.
Connectivity, Gram Panchayat Database Facility Management Centre, etc.

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Besides, the State Government is also implementing various Central Schemes of rural
development as per the policy guidelines of GOI.

NODAL AGENCIES INVOLVED IN RURAL DEVELOPMENT PROGRAMMES:

State Institute of Rural Development (SIRD):

Established in the year 1964 and presently is a nodal institute for training, research,
evaluation and consultancy under the aegis of Panchayat Raj Department, of the Govt.
The focus is to capacity development of local governance (CDLG) and other stakeholders
related with rural development.

Orissa Rural Development And Marketing Society (ORMAS):

ORMAS is functioning since 1991 in the State to facilitate marketing supports to rural
products and thereby improving the economic condition of rural artisans and producers.
Besides, it provides support to in maximum number of beneficiaries of agriculture
/horticulture produce by value addition at micro level for benefitting more people at
village level. The popular projects of ORMAS include ‘Shakti Gaon Project’ and ‘Bazar
On Wheel (BOW)’ facilitating the rural livelihood mission.
Reference: Annual Report 2011-12, Panchayati Raj Department, Government of Odisha.

AGRICULTURE

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 CHAPTER – 1
WORLD AGRICULTURE & INDIAN AGRICULTURE
Agriculture, also called farming or husbandry, is the cultivation
of animals, plants, fungi, and other life forms for food, fiber, bio fuel, medicinal and
other products used to sustain and enhance human life. Agriculture was the key
development in the rise of sedentary human civilization, whereby farming
of domesticated species created food surpluses that nurtured the development
of civilization. The study of agriculture is known as agricultural science. The history of
agriculture dates back thousands of years, and its development has been driven and
defined by greatly different climates, cultures, and technologies. However, all farming
generally relies on techniques to expand and maintain the lands that are suitable for
raising domesticated species. For plants, this usually requires some form of irrigation,
although there are methods of dry land farming. Livestock are raised in a combination of
grassland-based and landless systems, in an industry that covers almost one-third of the
world's ice- and water-free area. In the developed world, industrial agriculture based on
large-scale monoculture has become the dominant system of modern farming, although
there is growing support for sustainable agriculture, including permiculture and organic
agriculture.
A remarkable shift in agricultural practices has occurred over the past century in
response to new technologies, and the development of world markets. This also has led to
technological improvements in agricultural techniques, such as the Haber-Bosch method
for synthesizing ammonium nitrate which made the traditional practice of
recycling nutrients with crop rotation and animal manure less important.
Modern agronomy, plant breeding, agrochemicals such as pesticides and
fertilizers, and technological improvements have sharply increased yields from

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cultivation, but at the same time have caused widespread ecological damage and negative
human health effects. Selective breeding and modern practices in animal husbandry have
similarly increased the output of meat, but have raised concerns about animal welfare and
the health effects of the antibiotics, growth hormones, and other chemicals commonly
used in industrial meat production. Genetically modified organisms are an increasing
component of agriculture, although they are banned in several countries. Agricultural
food production and water management are increasingly becoming global issues that are
fostering debate on a number of fronts. Significant degradation of land and water
resources, including the depletion of aquifers, has been observed in recent decades, and
the effects of global warming on agriculture and of agriculture on global warming are still
not fully understood.
The major agricultural products can be broadly grouped into foods, fibers, fuels,
and raw materials. Specific foods include cereals (grains), vegetables,
fruits, oils, meats and spices. Fibers include cotton, wool, hemp, silk and flax. Raw
materials include lumber and bamboo. Other useful materials are produced by plants,
such as resins, dyes, drugs, perfumes, biofuels and ornamental products such as cut
flowers and nursery plants. Over one third of the world's workers are employed in
agriculture, second only to the services sector, although the percentages of agricultural
workers in developed countries has decreased significantly over the past several
centuries.

History – World Perspectives

Agricultural practices such as irrigation, crop rotation, application
of fertilizers and pesticides, and the domestication of livestock were developed long ago,
but have made great progress in the past century. The history of agriculture has played a
major role in human history, as agricultural progress has been a crucial factor in
worldwide socio-economic change. Division of labour in agricultural societies made
commonplace specializations rarely seen in hunter-gatherer cultures, which allowed the
growth of towns and cities, and the complex societies we call civilizations. When farmers
became capable of producing food beyond the needs of their own families, others in their
society were free to devote themselves to projects other than food acquisition. Historians
and anthropologists have long argued that the development of agriculture made
civilization possible. The total world population probably never exceeded 15 million
inhabitants before the development of agriculture. According to geographer Jared
Diamond, the costs of agriculture were: "the average daily number of work hours
increased, nutrition deteriorated, infectious disease and body wear increased, and lifespan
shortened."
Prehistoric origins
Forest gardening, a plant-based food production system is thought to be the
world's oldest agro ecosystem. Forest gardens originated in prehistoric times along
jungle-clad river banks and in the wet foothills of monsoon regions. In the gradual
process of a family improving their immediate environment, useful tree and vine species
were identified, protected and improved whilst undesirable species were eliminated.
Eventually superior foreign species were selected and incorporated into the family's
garden.
Global Exchange

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 After 1492, a global exchange of previously local crops and livestock breeds
occurred. Key crops involved in this exchange included maize, potatoes, sweet
potatoes and manioc traveling from the New World to the Old, and several varieties of
wheat, barley, rice and turnips going from the Old World to the New. There were very
few livestock species in the New World, with horses, cattle, sheep and goats being
completely unknown before their arrival with Old World settlers. Crops moving in both
directions across the Atlantic Ocean caused population growth around the world, and had
a lasting effect on many cultures.[41] Since being introduced by Portuguese in the 16th
century, maize and manioc have replaced traditional African crops as the continent's most
important staple food crops.
After its introduction from South America to Spain in the late 1500s, the potato
became an important staple crop throughout Europe by the late 1700s. The potato allowed
farmers to produce more food, and initially added variety to the European diet. The
nutrition boost caused by increased potato consumption resulted in lower disease rates,
higher birth rates and lower mortality rates, causing a population boom throughout
the British Empire, the US and Europe. The introduction of the potato also brought about
the first intensive use of fertilizer, in the form of guano imported to Europe from Peru,
and the first artificial pesticide, in the form of an arsenic compound used to
fight Colorado potato beetles. Before the adoption of the potato as a major crop, the
dependence on grain caused repetitive regional and national famines when the crops
failed: 17 major famines in England alone between 1523 and 1623. Although initially
almost eliminating the danger of famine, the resulting dependence on the potato
eventually caused the European Potato Failure, a disastrous crop failure
from disease resulting in widespread famine, and the death of over one million people in
Ireland alone.

Modern Development
The British Agricultural Revolution, with its massive increases in agricultural
productivity and net output, is a topic of ongoing debate among historians and agricultural
scholars. The changes in agriculture in Britain between the 16th and 19th centuries would
subsequently affect agriculture around the world. Major points of development included
enclosure, mechanization, crop rotation and selective breeding. Prior to the 1960s,
historians viewed the British Agricultural Revolution of having been "largely facilitated
by a small number of key innovators," including Robert Bakewell, Thomas Coke and
Charles Townshend. However, modern historians disperse much of the importance
surrounding these individual men, and instead point to them holding a smaller position
within a major societal shift regarding agriculture in Britain.
The agricultural changes, along with industrialization and migration, allowed the
population of Britain, as well as other countries who followed its model, such as the US,
Germany and Belgium, to escape from the Malthusian trap and increase both their
population and their standard of living. It is estimated that the productivity of wheat in
England went up from about 19 bushels per acre in 1720 to 21–22 bushels by the middle
of the century and finally stabilized at around 30 bushels by 1840.
The development of agriculture into its modern form was made possible through a
continuing process of mechanization. Prior to this, basic agricultural tools had slowly
been improved over centuries of use. The plough, for example, was a heavy implement
with wheels in the 1500s. By the 1600s it was lighter, and by 1730, the Rotherham
plough dramatically changed farming with no wheels, interchangeable parts, stronger
construction and less weight. During the early 1800s, cast iron replaced wood for many

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parts, leading to longer-lasting implements. Seed drills had been under development since
the early 1500s, but it was Jethro Tull's 1731 invention of a horse-drawn seed drill and
horse shoe (a small plough to hoe between crop rows) that would eventually revolutionize
planting in Britain, although they would not become popular until the early
1800s. Andrew Meikle patented the first practical threshing machine in 1784.
The Industrial Revolution caused a boom in international trade and shipping.
Increased production caused a rise in the need for raw materials, with European
merchants purchasing the majority of the goods. The value of goods traded worldwide
increased by five times between 1750 and 1914, with annual shipping tonnages increasing
from 4 million to 30 million tons between 1800 and 1900. In the second half of the 19th
century, trade also expanded in the food (including grain and meat) and wool markets,
and England (with the repeal of the Corn Laws in 1846) began to trade quantities of
industrial products for wheat from around the world. The vast expansion of railroads that
followed the invention of the steam engine further revolutionized world trade, especially
in the Americas and East Asia, as goods could now be more easily traded across vast land
distances. The developments of heat processing and refrigeration in the 19th century led
to a similar revolution in the meat industry, as they allowed meat to be shipped long
distances without spoiling. Countries in tropical locations, such as Australia and South
America, were at the forefront of this effort.
The Green Revolution refers to a series of research, development, and technology
transfer initiatives, occurring between the 1940s and the late 1970s, that increased
agriculture production around the world, beginning most markedly in the late 1960s. It
involved the development of high-yielding varieties of cereal grains, expansion of
irrigation infrastructure, modernization of management techniques, distribution of
hybridized seeds, synthetic fertilizers, and pesticides to farmers. The initiatives, led
by Norman Borlaug, the "Father of the Green Revolution", are credited with saving
hundreds of millions of people from starvation. Demographer Thomas Malthus in 1798
famously predicted that the Earth would not be able to support its growing population, but
technologies such as those promoted by the Green Revolution have thus far allowed the
world to produce a surplus of food.
Although the Green Revolution significantly increased rice yields in Asia, yield
increases have not occurred in the past 15–20 years. The genetic "yield potential" has
increased for wheat, but the yield potential for rice has not increased since 1966, and the
yield potential for maize has "barely increased in 35 years". It takes a decade or two for
herbicide-resistant weeds to emerge, and insects become resistant to insecticides within
about a decade. Crop rotation helps to prevent resistances.
The cereals rice, corn, and wheat provide 60% of human food supply. Between
1700 and 1980, "the total area of cultivated land worldwide increased 466%" and yields
increased dramatically, particularly because of selectively bred high-yielding varieties,
fertilizers, pesticides, irrigation, and machinery. However, concerns have been raised over
the sustainability of intensive agriculture. Intensive agriculture has become associated
with decreased soil quality in India and Asia, and there has been increased concern over
the effects of fertilizers and pesticides on the environment, particularly as population
increases and food demand expands. The monocultures typically used in intensive
agriculture increase the number of pests, which are controlled through
pesticides. Integrated pest management (IPM), which "has been promoted for decades and
has had some notable successes" has not significantly affected the use of pesticides
because policies encourage the use of pesticides and IPM is knowledge-intensive. In the

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21st century, plants have been used to grow biofuels, pharmaceuticals (including
biopharmaceuticals), and bio-plastics.
In 2009, the agricultural output of China was the largest in the world, followed by
the European Union, India and the United States, according to the International Monetary
Fund . Economists measure the total factor productivity of agriculture and by this
measure agriculture in the United States is roughly 1.7 times more productive than it was
in 1948. Six countries – the US, Canada, France, Australia, Argentina and Thailand –
supply 90% of grain exports. Water deficits, which are already spurring heavy grain
imports in numerous middle-sized countries, including Algeria, Iran, Egypt, and
Mexico, may soon do the same in larger countries, such as China or India.
Crop Statistics
Important categories of crops include cereals and pseudo cereals, pulses
(legumes), forage, and fruits and vegetables. Specific crops are cultivated in
distinct growing regions throughout the world. In millions of metric tons, based
on FAO estimate.

Top agricultural products, by crop types

(million tonnes) 2004 data

Cereals 2,263
Vegetables and melons 866
Roots and Tubers 715
Milk 619
Fruit 503
Meat 259
Oil crops 133
Fish (2001 estimate) 130
Eggs 63
Pulses 60
Vegetable Fiber 30
Source: Food and Agriculture Organization (FAO)

Top agricultural products, by individual crops

(million tonnes ) 2011 data
Sugar cane 1794
Maize 883
Rice 722

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 Wheat 704
Potatoes 374
Sugar beet 271
Soybeans 260
Cassava 252
Tomatoes 159
Barley 134
Source: Food and Agriculture Organization (FAO)

INDIAN AGRICULTURE
Agriculture in India has a significant history. Today, India ranks second
worldwide in farm output. Agriculture and allied sectors like forestry and
fisheries accounted for 16.6% of the GDP in 2009, about 50% of the total workforce. The
economic contribution of agriculture to India's GDP is steadily declining with the
country's broad-based economic growth. Still, agriculture is demographically the broadest
economic sector and plays a significant role in the overall socio-economic fabric of India.

Overview
As per the 2010 FAO world agriculture statistics, India is the world's largest
producer of many fresh fruits and vegetables, milk, major spices, select fresh meats,
select fibrous crops such as jute, several staples such as millets and castor oil seed. India
is the second largest producer of wheat and rice, the world's major food staples. India is
also the world's second or third largest producer of several dry fruits, agriculture-
based textile raw materials, roots and tuber crops, pulses, farmed fish, eggs,
coconut, sugarcane and numerous vegetables. India ranked within the world's five largest
producers of over 80% of agricultural produce items, including many cash crops such
as coffee and cotton, in 2010. India is also one of the world's five largest producers of
livestock and poultry meat, with one of the fastest growth rates, as of 2011.
One report from 2008 claimed India's population is growing faster than its ability
to produce rice and wheat. (http://en.wikipedia.org/wiki/ Agriculture_in_India -
cite_note-nytagriculture-5 )Other recent studies claim India can easily feed its growing
population, plus produce wheat and rice for global exports, if it can reduce food staple
spoilage, improve its infrastructure and raise its farm productivity to those achieved by
other developing countries such as Brazil and China.
In fiscal year ending June 2011, with a normal monsoon season, Indian agriculture
accomplished an all-time record production of 85.9 million tonnes of wheat, a 6.4%
increase from a year earlier. Rice output in India also hit a new record at 95.3 million
tonnes, a 7% increase from the year earlier. Lentils and many other food staples
production also increased year over year. Indian farmers, thus produced about 71
kilograms of wheat and 80 kilograms of rice for every member of Indian population in

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2011. The per capita supply of rice every year in India is now higher than the per capita
consumption of rice every year in Japan.
India exported around 2 million metric tonnes of wheat and 2.1 million metric
tonnes of rice in 2011 to Africa, Nepal, Bangladesh and other regions around the world.
Aquaculture and catch fishery is amongst the fastest growing industries in India.
Between 1990 and 2010, Indian fish capture harvest doubled, while aquaculture harvest
tripled. In 2008, India was the world's sixth largest producer of marine and freshwater
capture fisheries, and the second largest aquaculture farmed fish producer. India exported
600,000 metric tonnes of fish products to nearly half of all the world's countries.
India has shown a steady average nationwide annual increase in the kilograms
produced per hectare for various agricultural items, over the last 60 years. These gains
have come mainly from India's green revolution, improving road and power generation
infrastructure, knowledge of gains and reforms. Despite these recent accomplishments,
agriculture in India has the potential for major productivity and total output gains,
because crop yields in India are still just 30% to 60% of the best sustainable crop yields
achievable in the farms of developed as well as other developing
countries.[14] Additionally, losses after harvest due to poor infrastructure and unorganised
retail cause India to experience some of the highest food losses in the world.
With agricultural policy success in wheat, India's Green Revolution technology
spread to rice. However, since irrigation infrastructure was very poor, Indian farmer
innovated with tube-wells, to harvest ground water. When gains from the new technology
reached their limits in the states of initial adoption, the technology spread in the 1970s
and 1980s to the states of eastern India — Bihar,[Orissa] and West Bengal. The lasting
benefits of the improved seeds and new technology extended principally to the irrigated
areas which account for about one-third of the harvested crop area. In the 1980s, Indian
agriculture policy shifted to "evolution of a production pattern in line with the demand
pattern" leading to a shift in emphasis to other agricultural commodities like oilseed, fruit
and vegetables. Farmers began adopting improved methods and technologies in dairying,
fisheries and livestock, and meeting the diversified food needs of India's growing
population. As with Rice, the lasting benefits of improved seeds and improved farming
technologies now largely depends on whether India develops infrastructure such as
irrigation network, flood control systems, reliable electricity production capacity, all
season rural and urban highways, cold storage to prevent food spoilage, modern retail,
and competitive buyers of produce from the Indian farmer. This is increasingly the focus
of Indian agriculture policy.
India's agricultural economy is undergoing structural changes. Between 1970 and
2011, the GDP share of agriculture has fallen from 43 to 16%. This isn't because of
reduced importance of agriculture, or a consequence of agricultural policy. This is largely
because of the rapid economic growth in services, industrial output, and non-agricultural
sectors in India between 2000 to 2010.
Output
As of 2011, India had a large and diverse agricultural sector, accounting, on
average, for about 16% of GDP and 10% of export earnings. India's arable land area of
159.7 million hectares (394.6 million acres) is the second largest in the world, after the
United States. Its gross irrigated crop area of 82.6 million hectares (215.6 million acres) is
the largest in the world. India is among the top three global producers of many crops,
including wheat, rice, pulses, cotton, peanuts, fruits and vegetables. Worldwide, as of

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2011, India had the largest herds of buffalo and cattle, is the largest producer of milk and
has one of the largest and fastest growing poultry industries.
The following table presents the twenty most important agricultural products in
India, by economic value, in 2009. Included in the table is the average productivity of
India's farms for each produce. For context and comparison, included is the average of the
most productive farms in the world and name of country where the most productive farms
existed in 2010. The table suggests India has large potential for further accomplishments
from productivity increases, in increased agricultural output and agricultural incomes.
Agriculture in India, largest crops by economic value
Average World's most
Economic
Unit price yield, India productive farms
value
Rank Product (2010) (2010)
(2009 prices, (US$ / (tonnes per (tonnes per
Country
US$) kilogram) hectare) hectare)
$38.42
1 Rice 0.27 3.3 10.8 Australia
billion
$24.86
2 Buffalo milk 0.4 1.7 1.9 Pakistan
billion
$17.13
3 Cow milk 0.31 1.2 10.3 Israel
billion
$12.14
4 Wheat 0.15 2.8 8.9 Netherlands
billion
5 Mangoes $9 billion 0.6 6.3 40.6 Cape Verde
6 Sugar cane $8.92 billion 0.03 66 125 Peru
Average World's most
Economic
Rank Product Unit price yield, India productive farms
value
(2010) (2010)
7 Bananas $8.38 billion 0.28 37.8 59.3 Indonesia
8 Cotton $8.13 billion 1.43 1.6 4.6 Israel
Fresh
9 $5.97 billion 0.19 13.4 76.8 USA
Vegetables
10 Potatoes $5.67 billion 0.15 19.9 44.3 USA
11 Tomatoes $4.59 billion 0.37 19.3 524.9 Belgium
12 Buffalo meat $4 billion 2.69 0.138 0.424 Thailand
13 Soyabean $3.33 billion 0.26 1.1 3.7 Turkey
14 Onions $3.17 billion 0.21 16.6 67.3 Ireland
Chicken
15 $3.12 billion 0.64 10.6 20.2 Cyprus
Meat
16 Chick peas $3.11 billion 0.4 0.9 2.8 China
17 Okra $3.07 billion 0.35 7.6 23.9 Israel
18 Cattle Meat $2.93 billion 0.83 13.8 24.7 Jordan

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19 Eggs $2.80 billion 2.7 0.1 0.42 Japan
20 Beans $2.57 billion 0.42 1.1 5.5 Nicaragua

The Statistics Office of the Food and Agriculture Organisation reported that, per
final numbers for 2009, India had grown to become the world's largest producer of the
following agricultural products:

• Fresh Fruit
• Lemons and limes
• Buffalo milk - whole, fresh
• Castor oil seeds
• Sunflower seeds
• Sorghum
• Millet
• Spices
• Okra
• Jute
• Beeswax
• Bananas
• Mangoes, mangos teens, guavas
• Pulses
• Indigenous Buffalo Meat
• Fruit, tropical
• Ginger
• Chick peas
• Areca nuts
• Other Bastfibres
• Pigeon peas
• Papayas
• Chilies and peppers, dry
• Anise, badian, fennel, coriander
• Goat milk, whole, fresh

Per final numbers for 2009, India is the world's second largest producer of the
following agricultural products:
• Wheat
• Rice
• Fresh vegetables
• Sugar cane
• Groundnuts, with shell
• Lentils
• Garlic
• Cauliflowers and broccoli
• Peas, green
• Sesame seed
• Cashew nuts, with shell
• Silk-worm cocoons, reelable
• Cow milk, whole, fresh

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• Tea
• Potatoes
• Onions
• Cotton lint
• Cottonseed
• Eggplants (aubergines)
• Nutmeg, mace and cardamoms
• Indigenous Goat Meat
• Cabbages and other brassicas
• Pumpkins, squash and gourds

In 2009, India was the world's third largest producer of eggs, oranges, coconuts,
tomatoes, peas and beans.
In addition to growth in total output, agriculture in India has shown an increase in
average agricultural output per hectare in last 60 years. The table below presents average
farm productivity in India over three farming years for some crops. Improving road and
power generation infrastructure, knowledge gains and reforms has allowed India to
increase farm productivity between 40% to 500% over 40 years. India's recent
accomplishments in crop yields while being impressive, are still just 30% to 60% of the
best crop yields achievable in the farms of developed as well as other developing
countries. Additionally, despite these gains in farm productivity, losses after harvest due
to poor infrastructure and unorganized retail cause India to experience some of the
highest food losses in the world.
Agriculture productivity in India, growth in average yields
from 1970 to 2010
Average YIELD, Average YIELD, Average YIELD,
Crop
1970-1971 1990-1991 2010–2011
kilogram per hectare kilogram per hectare kilogram per hectare[54]
Rice 1123 1740 2240
Wheat 1307 2281 2938
Pulses 524 578 689
Oilseeds 579 771 1325
Sugarcane 48322 65395 68596
Tea 1182 1652 1669
Cotton 106 225 510

India and China are competing to establish the world record on rice yields. Yuan
Longping of China National Hybrid Rice Research and Development Centre, China, set a
world record for rice yield in 2010 at 19 tonnes per hectare in a demonstration plot. In
2011, this record was surpassed by an Indian farmer, Sumant Kumar, with 22.4 tonnes per
hectare in Bihar, also in a demonstration plot. Both these farmers claim to have employed
newly developed rice breeds and System of Rice Intensification (SRI), a recent
innovation in rice farming. The claimed Chinese and Indian yields have yet to be

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demonstrated on 7 hectare farm lots and that these are reproducible over two consecutive
years on the same farm.
Problems
India lacks cold storage, food packaging as well as safe and efficient rural transport
system. This causes one of the world's highest food spoilage rates, particularly during
Indian monsoons and other adverse weather conditions. Food travels to the Indian
consumer through a slow and inefficient chain of traders. Indian consumers buy
agricultural produce in suburban markets known as 'sabzi mandi' such as one shown or
from roadside vendors.
Indian agriculture includes a mix of traditional to modern farming techniques. In some
parts of India, traditional use of cattle to plough farms remains in use. Traditional farms
have some of the lowest per capita productivities and farmer incomes.
"Slow agricultural growth is a concern for policymakers as some two-thirds of
India’s people depend on rural employment for a living. Current agricultural practices are
neither economically nor environmentally sustainable and India's yields for many
agricultural commodities are low. Poorly maintained irrigation systems and almost
universal lack of good extension services are among the factors responsible. Farmers'
access to markets is hampered by poor roads, rudimentary market infrastructure, and
excessive regulation."
Productivity
Although India has attained self-sufficiency in food staples, the productivity of
Indian farms is below that of Brazil, the United States, France and other nations.
Indian wheat farms, for example, produce about a third of the wheat per hectare per year
compared to farms in France. Rice productivity in India was less than half that of China.
Other staples productivity in India is similarly low. Indian total factor productivity growth
remains below 2% per annum; in contrast, China's total factor productivity growths is
about 6% per annum, even though China also has smallholding farmers. Several studies
suggest India could eradicate hunger and malnutrition within India, and be a major source
of food for the world by achieving productivity comparable with other countries.
By contrast Indian farms in some regions post the best yields, for sugarcane,
cassava and tea crops.
Yields for various crops vary significantly between Indian states. Some Indian
states produce two to three times more grain per acre than in other Indian states. The table
compares the statewide average yields for a few major agricultural crops within India, for
2001-2002.
Average farm yield in Average farm yield in Average farm yield in
Crop
Bihar Karnataka Punjab
kilogram per hectare kilogram per hectare kilogram per hectare
Wheat 2020 unknown 3880
Rice 1370 2380 3130
Pulses 610 470 820
Oil seeds 620 680 1200
Sugarcane 45510 79560 65300

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 Crop yields for some farms within India are within 90% of the best achieved
yields by farms in developed countries such as the United States and in European Union.
No single state of India is best in every crop. Tamil Nadu achieved highest yields in rice
and sugarcane, Haryana in wheat and coarse grains, Karnataka in cotton, Bihar in pulses,
while other states do well in horticulture, aquaculture, flower and fruit plantations. These
differences in agricultural productivity within India are a function of local infrastructure,
soil quality, micro-climates, local resources, farmer knowledge and innovations.
The Indian food distribution system is highly inefficient. Movement of
agricultural produce within India is heavily regulated, with inter-state and even inter-
district restrictions on marketing and movement of agricultural goods.
One study suggests Indian agricultural policy should best focus on improving
rural infrastructure primarily in the form of irrigation and flood control infrastructure,
knowledge transfer of better yielding and more disease resistant seeds. Additionally, cold
storage, hygienic food packaging and efficient modern retail to reduce waste can improve
output and rural incomes.
The low productivity in India is a result of the following factors:
• The average size of land holdings is very small (less than 2 hectares) and is subject to
fragmentation due to land ceiling acts, and in some cases, family disputes. Such small
holdings are often over-manned, resulting in disguised unemployment and low
productivity of labour. Some reports claim smallholder farming may not because of
poor productivity, since the productivity is higher in China and many developing
economies even though China smallholder farmers constitute over 97% of its farming
population. Chinese smallholder farmer is able to rent his land to larger farmers,
China's organised retail and extensive Chinese highways are able to provide the
incentive and infrastructure necessary to its farmers for sharp increases in farm
productivity.
• Adoption of modern agricultural practices and use of technology is inadequate,
hampered by ignorance of such practices, high costs and impracticality in the case of
small land holdings.
• According to the World Bank, Indian Branch: Priorities for Agriculture and Rural
Development", India's large agricultural subsidies are hampering productivity-
enhancing investment. Over regulation of agriculture has increased costs, price risks
and uncertainty. Government intervenes in labour, land, and credit markets. India has
inadequate infrastructure and services. World Bank also says that the allocation of
water is inefficient, unsustainable and inequitable. The irrigation infrastructure is
deteriorating.[64] The overuse of water is currently being covered by over pumping
aquifers, but as these are falling by foot of groundwater each year, this is a limited
resource.
• Illiteracy, general socio-economic backwardness, slow progress in implementing land
reforms and inadequate or inefficient finance and marketing services for farm
produce.
• Inconsistent government policy. Agricultural subsidies and taxes often changed
without notice for short term political ends.
• Irrigation facilities are inadequate, as revealed by the fact that only 52.6% of the land
was irrigated in 2003–04, which result in farmers still being dependent on rainfall,
specifically the Monsoon season. A good monsoon results in a robust growth for the
economy as a whole, while a poor monsoon leads to a sluggish growth. Farm credit is
regulated by NABARD, which is the statutory apex agent for rural development in the

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 subcontinent. At the same time over pumping made possible by subsidized electric
power is leading to an alarming drop in aquifer levels.
• A third of all food that is produced rots due to inefficient supply chains and the use of
the "Walmart model" to improve efficiency is blocked by laws against foreign
investment in the retail sector.
Farmer Suicides
Following the liberalizing economic reforms of 1991 the government withdrew
support from the agricultural sector. These reforms, along with other factors, led to a rise
in farmer suicides. Various studies identify the important factors as the withdrawal of
government support, insufficient or risky credit systems, the difficulty of farming semi-
arid regions, poor agricultural income, absence of alternative income opportunities, a
downturn in the urban economy which forced non-farmers into farming, and the absence
of suitable counseling services.
Diversion of agricultural land for non-agricultural purpose
The National Policy for Farmers, announced in 2007, insisted that the government
conserve productive land and allow any change in use only under “exceptional
circumstances.” In 2013, the Ministry of Rural Development published the draft National
Land Utilisation Policy. It argued that the shrinkage of per capita ownership of
agricultural land and the demand to produce more food necessitates the protection of
fertile land.
FDI in Agricultural Land
As of January 2014, the existing Foreign Exchange Management Act (FEMA)
regulations prohibit the use of FDI funds to buy farmland. But, there have been instances
of real estate companies trying to bypass them. Citing reasons that 100 per cent FDI is
already permitted in developing townships, housing and other infrastructure projects, the
Ministry of Urban Development has asked for easing the FEMA restrictions, and the
government has constituted a three-member Cabinet committee to look into it.
ECONOMIC ACTIVITIES
Indian Agriculture and Economy:
Indian Agriculture is one of the most significant contributors to the Indian
economy. Agriculture is the only means of living for almost 60% of the employed class
in India. The agriculture sector of India has occupied almost 43% of India's geographical
area. Agriculture is still the only largest contributor to India's GDP (16%) even after a
decline in the same in the agriculture share of India. Agriculture also plays a significant
role in the growth of socio-economic sector in India.
In the earlier times, India was largely dependent upon food imports, but the
successive story of the agriculture sector of Indian economy has made it self-sufficing in
grain production. The country also has substantial reserves for the same. India depends
heavily on the agriculture sector, especially on the food production unit after the 1960
crisis in food sector. Since then, India has put a lot of effort to be self-sufficient in the
food production and this endeavour of India has led to the Green Revolution. The Green
Revolution came into existence with the aim to improve the agriculture in India. The
services enhanced by the Green Revolution in the agriculture sector of Indian economy
are as follows:
• Acquiring more area for cultivation purposes
• Expanding irrigation facilities
• Use of improved and advanced high-yielding variety of seeds

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• Implementing better techniques that emerged from agriculture research
• Water management
• Plan protection activities through prudent use of fertilizers, pesticides.
All these measures taken by the Green Revolution led to an alarming rise in the
wheat and rice production of India's agriculture. Considering the quantum leap witnessed
by the wheat and rice production unit of India's agriculture, a National Pulse
Development Programme that covered almost 13 states was set up in 1986 with the aim to
introduce the improved technologies to the farmers. A Technology Mission on Oilseeds
was introduced in 1986 right after the success of National Pulse Development Programme
to boost the oilseeds sector in Indian economy. Pulses too came under this programme. A
new seed policy was planned to provide entree to superior quality seeds and plant
material for fruits, vegetables, oilseeds, pulses and flowers.
National income
National Income is important because of the following reasons,
• To see the economic development of the country.
• To assess the developmental objectives.
• To know the contribution of the various sectors to national income.
Internationally some countries are wealthy, some countries are not wealthy and
some countries are in-between. Under such circumstances, it would be difficult to
evaluate the performance of an economy. Performance of an economy is directly
proportionate to the amount of goods and services produced in an economy. Measuring
national income is also important to chalk out the future course of the economy. It also
broadly indicates people’s standard of living.
Income can be measured by Gross National Product (GNP), Gross Domestic
Product (GDP), Gross National Income (GNI), Net National Product (NNP) and Net
National Income (NNI). The Indian economy is the 12th largest in USD exchange rate
terms. India is the second fastest growing economy in the world. India’s GDP has touched
US$1.25 trillion. The crossing of Indian GDP over a trillion dollar mark in 2007 puts
India in the elite group of 12 countries with trillion dollar economy. The tremendous
growth rate has coincided with better macroeconomic stability.
India has made remarkable progress in information technology, high end services
and knowledge process services.
Agricultural income in GDP
Agriculture sector contributed 32% in 1990-91, 20% during 2005-06 and around
16% now. Though the contribution of agriculture to the GDP income of India, it is great
news that today the service sector is contributing more than half of the Indian GDP. It
takes India one step closer to the developed economies of the world. Earlier it was
agriculture which mainly contributed to the Indian GDP. The Indian government is still
looking up to improve the GDP of the country and so The Indian government also set up
Ministry of Food Processing Industries to stimulate the agriculture sector of Indian
economy and make it more lucrative. India's agriculture sector highly depends upon the
monsoon season as heavy rainfall during the time leads to a rich harvest. But, the entire
year's agriculture cannot possibly depend upon only one season. Taking into account this
fact, a second Green Revolution is likely to be formed to overcome such restrictions. An
increase in the growth rate and irrigation area, improved water management, improving
the soil quality and diversifying into high value outputs, fruits, vegetables, herbs, flowers,

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medicinal plants and biodiesel are also on the list of the services to be taken by the Green
Revolution to improve the agriculture in India.
Agriculture per capita income
The per capita income of the agriculture sector declines to 1/3 of the national per
capita income during the recent years. The per capita income of the agriculture population
is estimated around Rs. 10,865 in 2010, which is around 32% of the national per capita
income at Rs. 33,802/-. Per capita income of the agriculture population was around half
(1/2) at Rs. 5,505 of the national per capita income at Rs. 11,433/- during 1980 however,
it came down to around 42% at Rs. 6,652/- of the national per capita income at Rs.
16,020/- during 2000.
Income Distribution in Agriculture sector
Year/ Period Agriculture
Share in GDP Population Dependent on Agriculture Per Capita (in Rs.)
1980 39 70 4745 (56%)
1990 31 65 5505 (48%)
2000 25 59 6652 (42%)
2010 16 58 10865 (32%)

Women in Agriculture and empowerment

Women in India now participate in all activities such as education, sports, politics,
media, art and culture, service sectors, science and technology, etc. Indira Gandhi, who
served as Prime Minister of India for an aggregate period of fifteen years is the world's
longest serving woman Prime Minister.
The Constitution of India guarantees to all Indian women equality (Article 14), no
discrimination by the State [Article 15(1)], equality of opportunity (Article 16) and equal
pay for equal work [Article 39(d)]. In addition, it allows special provisions to be made by
the State in favour of women and children [Article 15(3)], renounces practices derogatory
to the dignity of women [Article 51(a) (e)], and also allows for provisions to be made by
the State for securing just and humane conditions of work and for maternity relief.
(Article 42).
The feminist activism in India picked up momentum during later 1970s. Since
alcoholism is often associated with violence against women in India, many women
groups launched anti-liquor campaigns in Andhra Pradesh, Himachal Pradesh, Haryana,
Orissa, Madhya Pradesh and other states. Many Indian Muslim women have questioned
the fundamental leaders' interpretation of women's rights under the Shariat law and have
criticized the triple talaq system. In 1990s, grants from foreign donor agencies enabled
the formation of new women oriented NGOs. Self-help groups and NGOs such as Self
Employed Women's Association (SEWA) have played a major role in women's rights in
India.
In 2010 March 9, one day after International Women's day, Rajya Sabha passed
Women's Reservation Bill, ensuring 33% reservation to women in Parliament and state
legislative bodies. Women empowerment would become more relevant if women are
educated, better informed and can take rational decisions. It is also necessary to sensitize
the other sex towards women. It is important to usher in changes in societal attitudes and
perceptions with regard to the role of women in different spheres of life. Adjustments
have to be made in traditional gender specific performance of tasks. A woman needs to be
physically healthy so that she is able to take challenges of equality. But it is sadly lacking

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in a majority of women especially in the rural areas. They have unequal access to basic
health resources.
Most of the women work in agricultural sector either as workers, in household
farms or as wageworkers. Yet it is precisely livelihood in agriculture that has tended to
become more volatile and insecure in recent years and women cultivators have therefore
been negatively affected. The government's policies for alleviating poverty have failed to
produce any desirable results, as women do not receive appropriate wages for their
labour. There is also significant amount of unpaid or non-marketed labor within the
household. The increase in gender disparity in wages in the urban areas is also quite
marked as it results from the employment of women in different and lower paying
activities. They are exploited at various levels. They should be provided with proper
wages and work at par with men so that their status can be elevated in society. There is no
doubt about the fact that development of women has always been the central focus of
planning since Independence. Empowerment is a major step in this direction but it has to
be seen in a relational context. A clear vision is needed to remove the obstacles to the
path of women's emancipation both from the government and women themselves. Efforts
should be directed towards all round development of each and every section of Indian
women by giving them their due share. (SEWA) have played major roles in women's
rights in India. Many women have emerged as leaders of local movements.
RESOURCES - CONCEPT & THEIR CLASSIFICATION
Agriculture is an important natural, economic and cultural resource in the East
Central region. Most of the soils of the region are well suited for agricultural production.
The majority of the prime farmland is in the southeast one-half of the region, an area that
is also the most densely populated. This area contains three major urban areas. These are
significant economic development centers and are generating significant amounts of land
consumption. This primary urban development and its sprawl impacts are resulting in a
substantial loss of prime farmland and, left unchecked, a significant loss of agricultural
potential.
Agriculture is a valuable part of the region’s economy. The market value of
agricultural products sold in the region in 1997 was approximately 800 million dollars.
While this market value continues to increase, it is only about one-half the statewide rate
of increase. This difference reflects the loss of the most valuable farmland to
development. The average per farm income has been increasing, primarily due to an
increase in the size of farms. Agriculture only accounts for about 1.5 percent of total
employment in the region. While this number is low, most of these employees are
owner/operators.
The character and culture of agriculture is changing. Farming is no longer the
predominant economic and employment activity that defines community lifestyle. The
local community and surrounding farm interdependence has diminished due to increased
technology, better transportation and global agricultural marketing. The family dairy
farm, once commonplace, is now relegated to a few portions of the region and is changing
in size and Characteristics. Many farmers are retiring or nearing retirement and their
children are not continuing the farm. This puts more pressure on farm sale for land
development or alternatively conversion to larger farms. While grain farming is an
important agricultural activity, it is also a supplemental income for many farmers and
transitional land use for others. For numerous farmers, agriculture is a second income as
they have other primary employment. The agriculture sector is also changing with value

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added activities supplementing traditional farms and specialized activities such as
horticulture supply and nurseries becoming more dominant.
Current intergovernmental cooperative efforts to meet agricultural needs within
our region, and the interaction between agriculture and other plan elements, are discussed
below. That discussion is followed by a regional vision for the future of agriculture. The
remainder of the chapter compares current trends to the identified vision, identifies goals
to address identified issues and concludes by summarizing key finding operation
All levels of government, federal, state, and local play a significant role in the
success or failure of agriculture and farming. A key to successfully addressing
agricultural issues is cooperation and coordination not only between different
governments but also between government and private agricultural interests. The
establishment of a shared vision for agriculture is critical to form partnerships and
promote consistent approaches and actions.
Land Use
Agriculture is the predominant land use in the region. With the exception of some
forest lands, agriculture is the land use most converted to development including
residential, commercial and industrial uses. The conversion of prime farmland is one of
the largest and most controversial issues facing the region. Almost all stakeholders agree
that prime farmland should be preserved however the methods to reach this goal widely
differ. Farmland near the urban centers of the region is under extreme development
pressure. Once prosperous farms located on prime agricultural soils are currently being
converted to housing and shopping centers. Other farms are transitional, waiting for
development market opportunities. Still other farmland areas are being fragmented with
scattered residential development that poses farm operational conflicts and limits farm
expansion. While right-to-farm laws have been passed to protect farmers the political
pressure from rural residential populations will pose increased constraints on farm
operation and expansion.
Vision Statement for Agriculture
The purpose of a vision statement is to present an ideal future that serves a basis
for determining goals and strategies for achieving the vision. Public input is crucial in
developing a vision. All viewpoints positive and negative, focused and diverse,
conflicting and supporting should be included.
Nature is dynamic. It causes inheritable changes in all living organisms. For
thousands of years, farmer around the world have been selecting and conserving varieties
of different crop plants that they cultivated. This process has generated a rich wealth of
varieties in each crop plant, seen to be most abundant in countries near the equator and
India is no exception. In the world there are Mega centers of biodiversity of which aware
present in India. This is because in India, the different soils and agro-climatic situations
are present. So Indian farmers grow a large number of crops. Generation of Indian
farmers, with their continued selection and conservation, has created a rich wealth of
varieties in many crops. Therefore India is the original home of many crops such as rice,
little and kodo millets, red gram, moth bean, jute, pepper, cardamom, many vegetables
and fruit species. These plants were identified from the wild, selected and cultivated by
Indian farmers over hundreds of years. The present wealth of varieties in India includes
both crops that originated in the country and those that were introduced from the other
countries during the distant and recent past are soybean, sunflower, oil pail and kiwi fruit.
The Indian economy is predominantly rural and agriculture oriented. In
agriculture, 85% of the holdings are less than two hectares and the declining trend in the

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average size of the farmer holdings, poses a serious problem. Majority of them are dry
lands, which depend on erratic monsoon rains. The rest of the area is cultivated with
supplemental irrigation. The farmers concentrate mainly on crop production, which is
invariably subjected to a high degree of uncertainly income and employment.
In India the cultivable land is 143.8 million hectares and there is very little
possibility of extending it further. Therefore, to meet the requirement of food grains for
increasing population, the only option open is through time and effective space utilization
in agriculture. The time concept relates to increasing the intensity of cropping under
assured irrigated conditions, whereas space utilization pertains to building up of vertical
dimension through multi-tier cropping and farming system approach. Thus by making use
of these time and space concept either in irrigated or in rained areas, the productivity per
unit area per unit time can be substantially enhanced. Therefore the only way to increase
an agricultural production in the small/marginal units of farming is to increase the
productivity per unit time and area. This may be achieved of quicker maturing varieties
with equal yields or by improving techniques of culture, fertilizer use, weed and pest
control.
However modern crop production technology has considerably raised output but
has residues in farm produce, gene erosion of fossil fuel based inputs such as fertilizer,
pesticide, herbicides and labour spacing but energy intensive farm machinery.
Land water and plant (bio diversity) are the natural resources and conservation of
these natural resources is vital important. As far as resources degradation is concentrated,
India is facing top soil depletion, falling ground watertable and contamination of water,
ecological imbalance due to deforestation and health hazards linked to increase use of
toxic agro- chemical because of increase in food consumption. The adverse soil loss is
estimated to be over 16 tones/ha/year, which is layer of top soil. Annual top soil loss is
6000 million tones, which carries about 8.4 million tones of nutrients and it is more than
what we are using today. Similarly tat energy research institute ( TERI ) reported that
more than 10% of GDP is being lost annually on account of environment and around 11-
26% of country’s apicultural output is lost on account of soil degradation.
The rate of human induced land and degradation is very high. Out of total
geographical area of 329 million ha, 187 million ha, representing almost 57% of total
geographical area of the country are reported to have degraded of which 162 million ha is
way of wind and water related degradation.

References:
1. Handbook of Agriculture by ICAR
2. Handbook of Agricultural Science by S. S. Singh
3. Problems of Indian Agriculture by Dr. S. P. Dhondyal
Questions:
1. Write in brief about major problems in development of Indian agriculture.
2. Write role of credit in Agriculture Development.

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 CHAPTER – 2
FARMING ORGANIZATION AND FARMING SYSTEMS
Farmer’s organizations (FOs) need to be relatively sophisticated and well-funded
to become involved in agricultural technology development and transfer. This is because
of the complexity of understanding members technological needs and of building
productive partnerships with other technology suppliers. Only small-scale initiatives are
likely to be possible for organizations which have limited capacity. Such initiatives
usually rely on leaders existing knowledge of or access to improved technologies.
Organizations with relatively homogenous membership and with close links to the market
(which helps both to set quality standards and to generate money for the organization
itself) are generally better able to get involved in technology than their larger, more
political counterparts. The attitude of the public and private technology suppliers is also
likely to be a critical factor in determining whether farmer’s organizations will be
successful in their technology-related activities, as is the support of donors and/or NGOs
on the capacity-building and financial sides.
Policy Conclusions
• The ability of large membership organizations to play the role of a technology
pressure group, and thereby ensure that agricultural technology systems meet their
members need, has been overstated. If such organizations are to work effectively with
the technology system, they will need to be strengthened and supported financially.
• Organizations with market links tend to be the most successful in assisting members
to meet their technology needs. However, these organizations have shown little desire

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 to act as technology pressure groups. Providing resources to support them in this will
therefore generate limited benefits.
• Donors play a critical role in providing financial support to farmers organizations.
This should probably be complemented by more technical assistance, more small-
scale activities and more general capacity-building over a long period if the role
played by these organizations is to expand. However, most farmers’ organizations
have their own institutional objectives (which may not include technology) and
donors cannot always expect their agenda to dominate.
• There is no strong evidence that the pressure of farmers organizations can force the
opening up of reluctant agricultural technology systems. Donors wishing to see
change will also therefore need to work with the public sector, possibly earmarking
funds for research and extension with farmer’s organizations.
Over the past decade, the extent to which formal farmers or producers
organizations can contribute to increasing the effectiveness of agricultural technology
development and transfer has been much debated. During the 1970s and 1980s it became
widely recognized that farmers themselves are an important source of agricultural
innovation. Much attention was paid to developing new methods of trying to incorporate
them into the research and extension system. However it soon became apparent that these
new methods, though valuable, had serious limitations: the operational costs of working
with farmers on a large scale were high, and farmer participation was rarely a systematic
part of the process of technology development and transfer. In addition, because
researchers were often working with individual farmers (for example in on farm trials)
there was little sense in which the new methods were building towards a future where
farmers would be empowered to make their own demands on the system.
Working with groups seemed to offer a partial solution. Many donor-funded
projects looked to improve their effectiveness and efficiency through sponsoring the
formation of groups to meet their immediate project objectives. At the same time,
Training and Visit extension systems began to move from working with individual often
isolated contact farmers to working with groups. However, farmers were still operating
very much from the position of junior partner; the agenda remained firmly with the
researchers and extensionists (and donors) themselves. It was they who decided when
groups should be consulted and, often, who should be a member of a particular group.
Because the groups were almost exclusively technology- focused they tended to be small
and apolitical. There were few cases in which they had matured into independently
powerful organizations capable of articulating demand; usually when researchers
withdrew, the groups would collapse.
NGOs too were investing large amounts of money and effort in group formation
for consciousness-raising and empowerment. It was, however, still quite rare for NGO-
sponsored groups (or NGOs themselves) to have the capacity, technical skills or
inclination to engage with technology providers over a prolonged period. These groups
were therefore contributing little to the goal of making national agricultural research
systems in developing countries accountable to their clients on a systematic basis.
In recognition of this, attention turned to more formally constituted farmers
organizations (the developing country equivalents of the powerful agricultural unions in
Europe and North America). Such organizations were perceived to have both political
power and an ability to generate resources from their members. This would put them in a
position not only to articulate demands but also to ensure their satisfaction. They could
operate at many different levels from the national to the local and from adaptive research
and extension through to overall technology priority setting and form multiple linkages

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with the technology system. They seemed like the ideal candidates both to increase the
reach of technology, by undertaking operational technology activities and disseminating
the results to members, and to change the overall relationships in technology generation,
through lobbying and other policy level activities (Christoplos, 1996). Put another way, in
uniting their members, farmers organizations are thought to be able to perform both
efficiency and claims functions (Stewart, 1996).
Can farmer’s organizations increase the reach of technology?
Formal farmers organizations should be well placed to play a functional role in the
agricultural technology system, helping to increase members exposure to new
technologies and drawing members accumulated experience into trials and research in
which they become involved. This, in turn, should increase both the effectiveness and the
efficiency of the agricultural technology system. It is assumed not only that they are well-
acquainted with their member’s needs, but also that they have direct access to members
and are able to act as channels for horizontal learning and information sharing between
different groups of members.
At the same time they should be able to distribute the physical inputs (for example
planting material and fertilizers) in which much technology is embedded, perhaps even
overseeing quality standards for the inputs and developing recommendations for their use
amongst different sub-sets of members. If this were true, they would stand at the interface
between highly dispersed members and often over centralized technology generation and
dissemination bodies. In an environment which is becoming ever more market- oriented,
and in which there is a tendency for low-resource farmers to be neglected, increasing the
efficiency of technology supply is a critical concern. This is, in fact, the area of
technology in which farmers organizations have had the greatest success. However, the
costs of working through large, formal farmers organizations have proved to be higher
than was anticipated. The fact that these are organizations of the people might be an
advantage in some ways, but it also brings disadvantages in terms of the replication of
existing social hierarchies within organizations (so the needs of the poorest members are
still neglected), weak management (leading to poor accountability to members) and
difficulties with both raising and controlling finances. Overall levels of success in
increasing the reach of technology are limited by:
• Statutory barriers: Farmer’s organizations may be prohibited from engagement in
seed multiplication and input supply. In China, for example, they are allowed to act as
agents of supply and marketing cooperatives but not to sell fertilizers and agro-
chemicals on their own account (which reduces their ability to raise revenues).
• Lack of resources: this limits the breadth and depth of technology-related activity. It
also means that leaders are over-extended; externally-focused activities (such as
participating in committees and interacting with donors) often occupy them to the
detriment of vital internal organization-building.
• Complexity of members needs: large organizations struggle to understand their
member’s technology needs. These may be very diverse and poorly understood by
members themselves, if they have had limited or no contact with external technology
agents in the past. It is only when members produce a single cash crop for sale that
their technology needs tend to be relatively homogenous; the fact that producers are
constrained to respond to market demand limits the range of options which they can
pursue.
• Poor internal communications in large organizations: formal structures are rarely
operational and organizations themselves are often over-centralized. This means that

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 organizations are often unaware of members needs or else unable to prioritize them.
Different organizations have had different levels of success in increasing the reach of
technology, but few have achieved as much in this area as might have been hoped. In
general, the more commercial aspects of technology supply, such as input provision,
are probably better performed by smaller organizations with a narrower range of
institutional objectives. Packaging research results to make them more accessible to
members may be feasible for larger organizations but requires significant effort to be
put into capacity-building. The potential of such capacity- building seems, however,
to be strong; there is certainly a good deal of scope for farmers organizations to
become involved in farmer-to-farmer extension activities.
Have farmer’s organizations changed overall relations within the agricultural
technology system?
The apparent advantage of formal farmer’s organizations over researcher-created
groups is not that they will necessarily function better in any single research endeavour,
but that, because they exist independently of the research and extension bodies with
which they are associated, they will over time be able to alter the fundamentals of the way
in which the system operates. Through their lobbying/claims activities and by acting as
pressure-groups, it is widely assumed that they will be able to change the agenda of
agricultural development so that it becomes more relevant to members needs. This will
ensure their representation on key committees where farmers viewpoints can be brought
together with scientific perspectives on what is feasible and desirable in the long term. It
will also enable them to cement structural and operational linkages with the technology
system. In this way their input into the technology decision-making process will be
institutionalized. Resulting technology systems will be more accountable to their clients
and therefore more effective.
Increasing capacity for technology involvement areas for attention Identifying and
prioritizing members production problems
If farmer’s organizations are to maintain their legitimacy as representatives of
large groups of farmers they need to develop transparent priority-setting procedures. In
large organizations, problem identification and priority-setting is probably best done on a
commodity-by- commodity basis incorporating market information into the decision-
making process where relevant. Special attention will need to be devoted to ensuring that
the needs of the poorest members are not neglected.
Increasing technical capacity
If farmer’s organizations have reliable access to technically-trained personnel,
their credibility in the technology area is likely to be enhanced. In-house agronomists can
assist in: problem identification; the search for likely solutions; training and sensitization
of members to the potential benefits of agricultural technology; and improving the quality
of interactions with research and extension personnel. Where resource constraints prevent
organizations from employing their own technical personnel, it may be important to
encourage external resource people with technical skills to support them so that technical
options can still be generated internally.

Developing relations with the technology system

A chief reason why farmers are unable to access technology is because they are
unaware of how and where it is developed and who the key decision-makers are.
Investment in understanding the system and developing cross-cutting webs of formal and
informal relations over a long period of time is unlikely to be wasted. Ideally,

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 organizations should be able to engage simultaneously at all stages of technology
development. However, organizations of low-resource farmers are unlikely to have this
capacity and will probably need to take a much more incremental approach. Donors, with
insider knowledge of the technology system should be able to assist in this area.
Increasing their resource base and improving financial management
Technology involvement tends to be expensive. Those organizations which are
renowned for their success in the technology tend not to represent the poorest farmers and
have often received significant amounts of donor money. It is not sufficient simply to
improve access to funds; organizations need to be able to manage that money efficiently.
This is one problem which is often overlooked by enthusiastic, financially-constrained
leaders. The Malian Union of Cotton and Food Crop Producers (SYCOV), for example, is
lobbying to be able to access a percentage of its members cotton payments directly. This
would generate more than $1 million per annum for the organization. Since SYCOV has
neither a functioning neither office nor paid staff it is unclear how this sum would be
accounted for or how expenditure priorities would be developed within the organization.
Poor management and subsequent allegations of corruption can effectively destroy
organizations as both potential donors and members themselves quickly become
disaffected. However, evidence to support this hypothesis is weak. There are few farmers
organizations in developing countries which have a systematic influence on the way in
which agricultural technology systems evolve. This may be because many farmers
organizations are young and institutionally immature (few were formed before the 1980s
and many have come into being only in the 1990s). It may also be because their priorities
lie elsewhere. Farmer’s organizations whether in developed or developing countries
rarely coalesce around technology issues. Exceptions to this general rule do occur for
example when groups face a crisis and technology activities are part of a multi-faceted
response or when technology is included as part of a market-entry strategy (as in China)
but they are rare. There are a variety of reasons why technology is seldom the primary
concern of farmer’s organizations. These include the fact that involvement in technology
tends to be costly, risky and long-term. By contrast, success in achieving prominent
political goals, such as securing better access to land or higher prices for members
produce, is highly visible. It may also be critical to members livelihoods over the short-
term. If so, it can do much to increase membership of and thence the revenue flowing to
an organization. In addition, members views on issues such as price tend to be uniform,
while the technological concerns of most low- resource farmers are highly site- and
situation-specific. Indeed, this brings us back to the original reason why forward thinking
researchers believed that working with farmers organizations was essential. They foresaw
that the public sector alone would never have the resources to develop technologies
appropriate for the diverse agro- ecological conditions facing low income farmers. They
therefore looked for intermediaries to perform this task with them. However, the
intermediaries, though organizations of the farmers themselves, have often proved
unwilling or unable to take on this challenge.
Other limiting factors for farmer’s organizations are:
• They have little leverage and few means to ensure that their views are heeded: the fact
that they sit on committees does not mean that they can necessarily wield influence. They
are particularly constrained by their financial weakness which is usually overcome only
when they have access to significant amounts of donor money or are mandated to collect
levies on crop sales. In rare instances, such as in Brazil in the 1990s, rural unions
representing small farmers have been able to call effective rural strikes to draw attention
to their cause.

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• Members do not prioritize this area of activity: low- resource farmers, whose needs have
been so neglected in the past, are seldom aware of the potential benefits of technology.
This is particularly true in countries such as South Africa where there has been no on-
farm research in poor areas and where extension officers working with low-resource
farmers have had very limited technical back-up. While members remain ignorant of the
potential of technology, it is unlikely that they will put pressure on their representative
organizations to work in the technology sphere.
• Political interference by farmers unions in objective science is discounted: large claims-
oriented unions are often considered to be too political to be taken seriously by
researchers and technology decision-makers. While this is clearly not the case in that
priority-setting at least is an inherently political task it can prevent such organizations
from gaining access or mean that their views are systematically discounted.
• Research and extension priorities are never made explicit: often research and extension
priorities develop in an adhoc or organic way as the result of hundreds of separate
underlying decisions. Where this is the case, precedent is often the guiding principle for
future decision-taking and this pattern is difficult to dislodge. Taken together, these
factors mean that many farmers’ organizations have had neither the inclination nor the
means to force the opening up of technology systems which are reluctant to embrace the
views of their members. The fact that farmers organizations exist does not, therefore,
mean that low-resource and independently powerless farmers have been empowered.
That said, the increased visibility that such organizations bring to the cause of low
resource farmers might, over time, contribute to an incremental re-orientation of
technology systems to meet these people’s needs. Certainly, success for farmer’s
organizations in other areas of agricultural policy is likely to increase the overall standing
of low-resource farmers. However, farmer’s organizations are likely to have to be brought
into the technology sphere in an incremental way if initial inexperience is not to damage
their credibility. Funds destined for research and extension might need to be earmarked
for use with farmer’s organizations, even if the organizations play only a consultative role
at the outset.
Thinking strategically about involvement in technology
Farmer’s organizations are not the panacea for which many have been looking. It
cannot automatically be assumed that they will be able to make technology systems more
responsive to the needs of low-resource members. However, farmer’s organizations
which do wish to play a continuing role in the technology area need to think strategically,
to increase their professionalism, and to focus on a limited number of areas. This is true
whether they wish to work as partners in adaptive research endeavours, to take on
dissemination functions themselves, or to influence the overall direction and volume of
technology supply. Increased professionalization might not be attractive to some farmer’s
organizations, particularly to those whose leaders pride themselves on their grassroots
affiliations. However, movement in this direction should demonstrate to other often
skeptical and dismissive members of the technology system that farmer’s organizations
are committed to this area. Gaining the goodwill of others is a critical first step; it is rare
that farmer’s organizations can force the opening up of reluctant technology systems
without first courting broad political support.
Decentralization Decision- Increased
Farmer’s organizations in a changing world. The environment facing farmers
organizations is changing. In particular the public sector role is being reduced and a new

143
emphasis is being placed on creating space for the private sector and developing
institutional partnerships for services provision and natural resource management.
Overall, these are favourable developments for farmer’s organizations. However,
the trends are not all positive, as Box 3 argues. Certainly, if farmer’s organizations are to
capitalise on the positive aspects of the changes, they must be dynamic, flexible and
probably somewhat opportunistic. This is a lesson which can be learnt from farmer’s
organizations in Europe which have evolved different structures, norms and operating
procedures over time as a response to changes in their environment. Some developing
country organizations have already demonstrated their responsiveness and willingness to
change.
Farming systems
The concept of farming systems has been defined differently by different people. Some
of the definitions of the term are:
(i) "a unique and reasonably stable arrangement of farming enterprises that the
household manages according to well-defined practices in response to physical,
biological and socio-economic environments and in accordance with the
household's goals, preferences and resources. These factors combine to influence
output and production methods. More commonality is found within the system
than between systems. The farming system is part of larger systems - e.g., the
local community - and can be divided into sub systems - e.g., cropping systems,"
(Shaner et al., 1982).
(ii) "A specific farming system arises from the decisions taken by a small farmer or
farming family with respect to allocating different quantities and qualities of land,
labour, capital, and management to crop, livestock, and off-farm enterprises in a
manner which, given the knowledge the household possesses, will maximise the
attainment of the family goal(s)." (Norman, 1980).
(iii) "The total of production and consumption decisions of the farm-household
including the choice of crop, livestock and off-arm enterprises and food
consumed," (Byerlee et al., 1980).
(iv) "The way farmers satisfy their needs and priorities with the resources at their
disposal, in the circumstances (natural and economic) in which they find
themselves" (Collinson, 1982).
(v) Anderson (1985) analyses the term by defining each word separately. He defines
a system as "a set of components that work together for the overall objectives of
the whole system". Therefore, the farming systems approach is simply a way of
thinking about these total systems and their components.
(vi) "A collection of distinct functional activities or enterprises such as crops,
livestock, processing, marketing and investment. These enterprises interact in
receiving resources and delivering outputs to the prevailing environment"
(Anandajayasekeram, 1996).
Farming System Research (FSR)
FSR may be defined as an approach designed to generate relevant technologies for
specific clients, most commonly, the resource - limited farm households. It focuses on
clients' priority needs and problems, applies an inter-disciplinary systems perspective in
diagnosing problems and generating technological solutions, and involve a series of
operational activities carried out on farm with farmers.

144
Although descriptions of FSR vary, the general consensus is that there are four major
activities: diagnosis, planning and priority setting, experimentation and evaluation
(Stroud, 1994).
FSR recognises the fact that an understanding of the production process and decision
behaviour in traditional agriculture is crucial in determining the true relevance,
practicability and potential success of any innovation (Anandajayasekeram, 1985).
Emphasis is given to building-on indigenous farmer knowledge and other information.
One could observe that although there is considerable variation in the content that various
writers give to the notion 'Farming Systems' of the complicated, interrelated, dynamic
decision problem that farmers actually face.

145
The various components involved in the existing farming systems and their linkage are represented in below figure:

Figure: -Components and linkages of the existing systems

RESOURCE
ENDOWMENT FACRORS OF WHICH FARMER
& HAS LITTLE OR NO CONTROL
CONSTRAINTS
POLITICAL CONSTRAINTS

CULTURAL BELIEVES
ATTITUDES (SOCIAL &
INSTITUTIONS & CROP
ANTHROPOLOGICAL) FARMER AUTHRORITIES
THE CENTRAL FIGURE

TECHNOLOGY OR KNOW)
HOUSEHOLD
• COMPOSITION, AGE
STRUCTURE NATURAL FACTORS:
• PRIORITY OBJECTIVES WEATHER, RAINFALL,
• DEMAND FOR FOOD PRODUCTION CLIMATE, SOIL &
SUPPLY DECISION TOPOGRAPHY)
• DEMAND FOR LABOUR OR
• OFF FARM DECISION MAKING
INFRASTRUCTURE
EMPLOYMENT TRANSPORT, CREDIT ETC.

COMMODITY MARKETS
EXISTING FARMING SYSTEM (FORMAL AND INFORM)
References:
1. Handbook of Agricultural Science by S. S. Singh
2. Cropping Systems in the tropics, Principal and Management by SP. Palaniappan
3. Handbook of Agriculture by ICAR
Questions:
1. What do you mean by farming system?
2. Write different types of cooperative farming? Why Cooperative farming is
suitable for Indian condition?

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 CHAPTER – 3
CROPPING & LAND USE PATTERN,

Major Crops of India

Crop plants are those plants whose economic or commercial 'values are known and they
are grown in community for the known or specific purpose. Crop classification is
necessary to know about adaptation, habitat, life cycle, nutrient requirement, insect-pest
and disease reaction so that an appropriate production technology could be adopted for
maximum productivity at least cost. Besides, the breeders get help in evolving required
germplasm for greater advantages to the farmers. Thus it is beneficial to agronomists,
crop physiologists, plant breeders, extension workers and finally to planners and farmers.
For general understanding the crops could broadly be classified in three major
categories viz. garden crops which include orchard crops, kitchen garden vegetables,
ornamental crops etc.; plantation crop like tea, coffee, cocoa, rubber, cardamom, etc.; and
field crops like foodgrain crops, oilseeds, pulses, etc.
The field crops could be classified in following ways based on various
considerations for easy understanding, planning; production, protection and utilization,
etc.

1. According to the place of origin

According to the place of origin, the crops may' be classified as native and exotic or
alien or introduced or acclimatized either for breeding and Crop improvement or for their
as such production to boost the crop yields. The crops of Indian origin are rice, barley,
black gram, .green gram, mustard, sugarcane, cotton, etc., which are the native crops
while those which are of foreign origin and introduced in India are tobacco, potato,
maize, jute, etc.
2. Botanical classification
This is also called as' taxonomic classification of crops according 10 which the'
crops having resemblance are put together in a specific natural order or the family. This
helps in an easy understanding about the plant characteristics 'requirements and
management practices needed for their, production. Thus the crop plants are grouped into
different families viz. (Germaine or, grass family consisting of millets, cereals, grasses
and sugarcane etc.; leguminocae family consist it of leguminous plants like pulses,
ground nut, soybean, beans, clovers, etc. which are characterized with nodule bacteria
'and symbiosis process; similarly crop' plants be ongoing to families like Cucurbitacae,
Cruciferae, Malvacae, Lilacae, etc.
3. Commercial classification of crops
This classification is based on the trade and commerce of agricultural produce in
which they are, sold in the market viz. food' crops (including rice, wheat, coarse grains,
green gram, black gram, soybean etc.); food crops (including oats, napier, sorghum,
maize, berseem, lucerne, etc.); industrial or commercial crops (including: cotton, jute,
sugarcane, sugarbeet, tobacco, etc.); food adjuncts which include spices and condiments,
etc.

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4. Economic classification of crops
This classification is based on the use of crop plants or their products. Other
synonyms of this classification are "agrarian or agricultural classification viz. cereals,
millets; oil seeds, pulses, feed or forage crops, fibre crops, sugar crops, spices and
condiments, drug: crops, narcotics, beverages, tuber crops, etc.
5. Seasonal classification of crops
This classification is grouping of the crops according to their climatic requirements
viz, requirement of temperature, humidity, photo-period, etc. which includes kharif, rabi
and zaid. Presently evolution of photo and thermo non-sensitive trains of various crops
has made it possible to grow a crop in any season or throughout the year like maize,
sorghum, rice, etc.
• Kharif crops: The crops, which grow during the Kharif season, are known
as Kharif Crops. Kharif crops are rice, millets, sugarcane etc. These crops are
harvested in winter.
• Rabbi crops: The crops, which grow during Rabi season, are known as Rabi
Crops. Rabbi season begins in autumn. The chief rabbi crops are wheat, barley,
gram, pulses, linseed and mustard .These crops are garneted in spring season.
6. Ontogenic classification of crops
This classification indicates the life cycle of crop plants such as annuals-plants
which complete their life span i.e. germination tc maturity within a season/year 'as most
of the grain crops; biennials or those plants which take two years for completion of their,
life cycle out of which first year is exclusively used for vegetative growth while second
year for reproductive growth viz. carrot, radish, cabbage, cauliflower, etc. and, perennial.
crops or those crop plants which may grow years together and may be sexually or
vegetatively propagated like perennial grasses, colocasia, ginger, sweet potato, etc.
7. Agronomic classification of crops
This classification is based on agro-techniques or (cultural requirements of the crops. This
indicates crop's reaction to tillage operations (deep r's. surface tiling). Soil reaction (salt
tolerance of different crops), textural behaviour of soil (crops suited to .light medium and
heavy textural Class of the soil), adverse weather conditions viz. drought frost. Flood etc.
water supply like irrigated and dryland conditions, method of sowing as line sowing or
broadcasting/direct sowing or transplanting. etc. This way it helps in best crop
management to boost the productivity.
Co-operative Farming Societies
The Royal Commission on Agriculture in 1928 observed that if co-operation
failed, there would fail the hope of the Indian agriculturist. Co-operative farming is a
compromise between collective farming and the peasant proprietorship and gives all
merits of large-scale farming without abolishing private property. It implies an
organization of the farmers on the basis of common efforts for common interests. Under
this system, all landowners in a village form a co-operative society for tilling the land.
The land is pooled, but each farmer retains the right of property. The produce is
distributed by each. They are allowed to withdraw from the co-operative farm whenever
they desire. In India, the exceedingly small size of holdings is perhaps the most serious
defect in our agriculture. If agriculture has to be improved, the size of the holdings must
be enlarged.

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Signification of Cooperation to Indian agriculture
As per the latest figures more than 75 per cent of India’s population lives in rural
areas, majority of which depends on agriculture for its livelihood. Indian agriculture is
typically characterized with small and medium sized holdings, large number of
agricultural workers spread over a large area, low income generation and low savings as a
result of which the farmers look upon agriculture not as business but only as a way of life.
Green Revolution during mid-1960’s increased food production through the introduction
of improved seeds, fertilizers, irrigation, farm mechanization, etc. all of which involve
substantial financial investment that was ensured through both public support as well as
personal interest of farmers. The compelling requirements of national food security and
economic well being of farming community require further increase in production and
productivity per unit area which is bound to invite still higher investment in agriculture.
However, the economic status of a large majority of our farming community is not
financially sound to make such investments. The farmer requires credit which drags him
to exploitation of money lenders who charge exorbitant rates of interest. The adoption of
principles of ‘Cooperation’ is the only solution for the progress of this type of agriculture
and elimination of rural indebtedness in the country.
Cooperation was introduced in India in the beginning of twentieth century
primarily for the supply of credit to agriculture. The basic objective of the cooperative
movement in India was to eradicate local money lenders who usually exploit the farmers
by charging unreasonable rates of interest. Agricultural credit societies were established
with the promulgation of Cooperative Credit Societies Act 1904. In the beginning only
small societies covering generally one each village were considered to be most suitable
for Indian conditions. But soon it was felt that on account of small business and limited
funds these societies could not effectively serve the needs of members. The cooperative
structure has thus suitably been expanded to strengthen the facility of credit in the form of
large societies and cooperative banking especially through supply of inputs like seed,
fertilizer, weedicides, pesticides, etc. It is now obvious that apart from easy availability of
credit, the adoption of mechanization and efficient marketing of agricultural produce is a
serious handicap of Indian agriculture. The cooperative societies have great relevance to
provide credit, to ensure availability of farm machinery on contract basis, consolidation of
small farming units through contract farming and joint marketing of farm produce in
distant markets to draw maximum economic gains from farming. On account of
inadequate storage facility and financial liabilities no individual farmer can hold back his
farm produce to wait for remunerative price of his produce.
Cooperative societies can help farmers with such a facility at affordable cost and
ensure better economic returns. In the current phase of increasing relevance of agro-
processing and value addition to agricultural produce, cooperation becomes the only hope
to wean the farmers away from the practice of distress selling of precious farm produce so
that higher income can be realized through sale of processed products. Simultaneously,
the agro processing units will provide the additional benefit of gaining rural employment.
In addition to such obvious or direct involvement in agriculture, the cooperative societies
have the potential to bring around social change in rural areas.
A substantial proportion of farmers’ credit needs are now met by cooperative
societies. The co-operative societies have led to the use of better farming methods such as
the use of improved seeds, fertilizers, etc. The marketing and processing societies have
helped members to buy their requirements cheaply and sell their agricultural produce at
acceptable prices. It has also provided good storage facilities to the farmers to wait for
appropriate time for higher prices. The non-credit societies, like the housing co-operative

150
societies, the consumers’ co-operative societies, etc. have helped their members to raise
their economic conditions and have saved them from the exploitation by powerful groups.
Cooperatives have very well served in the past and have great relevance to extend support
to agricultural production in terms of provision of credit, input delivery and processing
and marketing of agricultural produce to ensure adequate returns to farmers.

Structure of Agricultural Cooperatives in India

The Agricultural credit market in India is characterized of Organized
(Institutional) Agricultural Credit; and Unorganized (Non-Institutional) Agricultural
Credit. The organized credit market comprises of Cooperatives; Commercial Banks;
Regional Rural Banks and Non-Bank Financial Intermediaries. The non-institutional
credit market comprises landlords, agricultural money lenders, professional money
lenders etc. who usually charge unreasonable rates of interest. The entire cooperative
network in India has two major segments of Rural Cooperative Credit Institutions and
Urban Cooperative Banks .The rural cooperative credit institutions have been organized
into short-term and long-term structures. Cooperatives came into existence in the form of
Cooperative Societies to provide Institutional credit by raising funds through loan,
membership and deposits. The same principle of cooperation for supply of credit was
subsequently extended to other facilities like marketing, processing, storage etc. based on
which different types of cooperatives have been established .The basic objective of these
societies has been the supply of credit but these have assumed the broad status of
rendering several services related to input supply, marketing, processing, etc. The
agricultural credit societies were converted into large sized and multipurpose societies
and even special purpose cooperatives. The cooperatives have frequently been classified
based on several criteria like nature of activities of members i.e. consumers; providing
credit; sales; purchase; agriculture; industrial etc. No doubt, a perfect classification is
practically difficult but at least the agricultural cooperatives have quite satisfactorily been
classified based on the function and purpose of each class of cooperatives.

Types of Co-operatives in Agriculture

➢ Co-operative Credit
➢ Co-operative Farming
• Co-operative Tenant Farming
• Co-operative Collective Farming
• Co-operative Better Farming
• Co-operative Joint Farming
➢ Co-operative Marketing
• NAFED
• NCDC
• TRIFED
➢ Co-operative Processing
➢ Co-operative Storage
➢ Consumers’ Co-operatives
➢ Women Co-operatives

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Functioning of Co-operatives in Agriculture
A. Short-term Structure:
➢ Supply of credit for seasonal requirements
1. Primary Agricultural Credit Societies (PACS):
• Crop loans for routine agricultural operations
• Supply of farm requirements such as seeds, fertilizers, pesticides, etc.
• Provide household requirements
2. Large –Sized Multi-Purpose Cooperative Societies(LAMPS)
• Crop loan for routine Agricultural Operations for Tribal development
• Aims at “better farming, better business, better living” of tribal’s
• Support in marketing and processing of agricultural produces
3. Farmers’ Service Societies (FSS):
. Large sized PACS
. Providing support services for agriculture, etc.
4. Marketing Co-operatives:
• To market members’ produce
• Provide credit on security of produce
• Provide grading, processing and pooling of agricultural produce
5. Processing Co-operatives:
• Integration of agricultural production and processing to enhance rural employment
and livelihood
• Establishment of commodity based processing units as Spinning Mills, Sugar
Mills, Oil Mills, etc.
B. Long-term Structure:
Supply of credit for long-term investment for improvement of land, purchase of
costly farm agricultural equipment, sinking of wells and pumps etc .
Co-operative Farming
At present the cultivated area per capita in India is less than one acre which is
further being reduced with an increase in population. Such small operational units of
cultivation are not suitable for the application of modern tools of cultivation like
irrigation, farm machinery etc. The application of principles of cooperation in the
cultivation of land is called Cooperative Farming which necessarily implies pooling of
land and joint cultivation and management. Cooperative farming also ensures a more
rational and judicious use of other farm equipment pooled by members. Small farmers
who are not able to secure adequate credit individually can secure it by joining
cooperative farms. Cooperative farming also enables the pooling of scientific knowledge
of members where one or two talented farmers on the farm can educate their less
progressive co-workers. Moreover, it is easier for the government agricultural officers to
introduce new techniques and educate the farmers about them if they are organized into
institutions aimed at a common cause of agricultural production and profitability.
Kinds of Co-operative Farming: The Co-operative Planning Committee classified
cooperative farming into following four types:-
(i) Co-operative tenant farming: It refers to a system in which a society consisting of
a number of farmers procures a large tract of land either by purchase or in

152
 lease which is divided into smaller holdings and then leased to individual
members of the society. The society provides facilities of credit, seed,
fertilizers and implements and undertakes marketing of members’ produce.
Every member pays a fixed rent for his holding but the produce of his holding
is his own and is entirely at his disposal. Though the society undertakes to
supply credit, seeds, manures and costly inputs but it is optional for the
members to utilize these facilities.
(ii) Co-operative collective farming: It implies the type in which members surrender
their land irrevocably after which it becomes property of society where
members loose their ownership. Land, livestock and other equipment are joint,
work is common and the management is generally through an elected council.
Under this system of farming, every person gets, apart from his wages, a share
in the surplus produce of the farm. The collective farm is a large-scale farm
and is highly mechanized.
(iii)Co-operative better farming: It implies the system in which some or all the
farmers in a village join together for the purpose of improved methods of
farming. The members retain ownership of their land but agree to follow a
plan of cultivation laid down by society. In this type of farming every farmer
is independent, can put his land to any use he likes and does not lose his title
to land. The joint cultivation is not mandatory and each member cultivates his
own land and takes his profits.
(iv) Co-operative joint farming: It implies pooling of land on the part of small
cultivators whose separate holdings are not large enough to permit economic
cultivation. The plots are pooled into one unit and the cultivation is joint,
though every farmer retains ownership of his land. Joint cultivation is done on
pooled land in accordance with the programme decision taken by committee
elected. All operations of purchase, sale and cultivation are done jointly where
each member gets wages for daily labour. The produce is disposed of
collectively and part of profit is transferred to reserve fund.
A critical evaluation of Co-operative Farming in India: The co-operative joint farming
has been viewed as the first stage to ultimate policy of a switchover to collective farming.
It failed in making a frontal attack on the existing inegalitarian economic structure
because it produces virtually no change in the status quo. Traditional status of distinction
between land owners and landless labourers and share-croppers are maintained and, under
the cover of respectability provided by the label co-operation may even become deeply
entrenched. Further, Co-operative farming societies functioning as joint stock companies
with paid managers help capitalistic agriculture in India. Though theoretically land is
pooled, in practice it is not treated as joint property. Again, it is hardly possible to carry
out reforms with the help of a bureaucracy which has no faith in them. To sum up, co-
operative farming as practised in India has failed to serve the ends for which it was
conceived. It is a matter of record that hardly two per cent of the cultivators have formed
into co-operative farming societies and they cultivate barely 0.4 per cent of the total
cultivated area.
Types of Agriculture in India:
1. Shifting agriculture
2. Subsistence farming
3. Intensive agriculture
4. Extensive agriculture

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 5. Commercial agriculture
6. Plantation agriculture
7. Mixed farming
8. Monoculture
9. Dry farming
10. Crop rotation.
Cropping pattern
Cropping systems of a region are decided by and large, by a number of soil and
climatic parameters which determine overall agro-ecological setting for nourishment and
appropriateness of a crop or set of crops for cultivation. Nevertheless, at farmers’ level,
potential productivity and monetary benefits act as guiding principles while opting for a
particular crop/cropping system. These decisions with respect to choice of crops and
cropping systems are further narrowed down under influence of several other forces
related to infrastructure facilities, socio-economic factors and technological
developments, all operating interactively at micro-level.
These are:
Infrastructure facilities: Irrigation, transport, storage, trade and marketing, post-harvest
handling and processing etc.
Socio-economic factors: Financial resource base, land ownership, size and type of land
holding, household needs of food, fodder, fuel, fibre and finance, labour availability etc.
Technological factors: Improved varieties, cultural requirements, mechanization, plant
protection, access to information, etc.
PREVALENT CROPPING SYSTEMS
Multiplicity of cropping systems has been one of the main features of Indian
agriculture. This may be attributed to following two major factors:
• Rainfed agriculture still accounts for over 92.8 million hectare or 65 per cent of
cropped area. A large diversity of cropping systems exists under rainfed and
dryland areas with an over riding practice of intercropping, due to greater risks
involved in cultivating larger area under a particular crop.
• Due to prevailing socio-economic situations (such as; dependency of large
population on agriculture, small land-holding size, very high population pressure
on land resource etc.), improving household food security has been an issue of
supreme importance to many million farmers of India, who constitute 56.15
million marginal (<1.0 hectare), 17.92 million small (1.0-2.0 hectare) and 13.25
million semi-medium (2.0-4.0 hectare) farm holdings, making together 90 per cent
of 97.15 million operational holdings. An important consequence of this has been
that crop production in India remained to be considered, by and large, a
subsistence rather than commercial activity. One of the typical characteristics of
subsistence farming is that most of the farmers resort to grow a number of crops
on their farm holdings, primarily to fulfil their household needs and follow the
practice of rotating a particular crop combination over a period of 3-4 years
interchangeably on different farm fields.
Under influence of all above factors, cropping systems remain dynamic in time and space,
making it difficult to precisely determine their spread using conventional methods, over a
large territory. However, it has been estimated that more than 250 double cropping
systems are followed throughout the country. Based on rationale of spread of crops in

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each district in the country, 30 important cropping systems have been identified. These
are; rice-wheat, rice-rice, rice-gram, rice-mustard, rice-groundnut, rice-sorghum,
pearlmillet-gram, pearlmillet-mustard, pearlmillet-sorghum, cotton-wheat, cotton-gram,
cotton-sorghum, cotton-safflower, cotton groundnut, maize-wheat maize-gram,
sugarcane-wheat, soybean-wheat, sorghum-sorghum, groundnut-wheat, sorghum-
groundnut, groundnut-rice, sorghum-wheat, sorghum-gram, pigeonpea-sorghum,
groundnut, sorghum-rice, groundnut-sorghum and soybean-gram.

Land Use pattern

Introduction
There are considerable regional variations in the general land use of area because
of landform diversities and rainfall in the study region. It is essential to shift from
generalities to particularities in the study region, where agriculture is the only means of
livelihood for majority of the people. Such studies are fundamental for future planning.
Studies on land use pattern have received a good deal of attention from Indian
geographers in the past and continue to draw their attention. Presently the patterns are
being minutely investigated at the regional or micro regional rather than at the national
level. In view of the recent extension of irrigation and other facilities, the North-Western
India and some parts of South-India have received comparatively more attention from the
research works. In Utter Pradesh and Bihar, research publications on this aspect of
agriculture appear to be more numerous than in other part of the country. This is because
the abundance of agricultural resources as well as their various use in the region are
facilitated by congenial environment and capability of the people to adopt themselves to
changes in the environmental determinants. Indian geographers have long been attracted
to study the problems of land use in the country with a view to finding out ways and
means for scientific utilization of land. Such studies range from inventories of land use
surveys to isolated topical or regional descriptive accounts of land use variations both in
space and time. A rational assessment of land and its scientific utilization has become
important. It is possible only if the whole complex of land use is studied at the district,
tahsil or even village level by taking into account the local physical and socio- economic
conditions (Ali Mohmmed 1978); Land use mapping is important for evolution,
management and conservation of natural resources of an area. Land use/land cover
inventories form essential component in land resources evolution and environmental
studies (NRSA).
Land use in any kind of permanent or cyclic human intervention on the
environment to satisfy human needs and the land use capability or land suitability is the
potential capability of given tract and to support different types of land utilization under
given cultural and socioeconomic conditions (Vink A.P.A. 1975). Land is gift given by
the nature to the mankind hence it is the basic resource of human society. Land use is the
surface utilization of all developed and vacant land on a specific point at a given time and
space. This leads one back to the village farm and the farmer to the fields, garden
pastures, fallow lands and forests and to the isolated farm steam (Freeman T.W. 1968).
The study of land use in its spatial context is essential to understand the area of
optimum land use and degraded areas, the comprehensive study of land use is of immense
value to ensure better returns from the land to meet future requirements for food, and
industrial raw materials and for successful planning of agricultural growth, organized
urbanization, regional development and thereby to accelerate the process of development
in the country. It is also useful for planners to evaluate the possibilities and limitations of
further spatial development to avoid or restrict undesirable trends of land exploitation to

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adjust the forms of land use to the land capability and to direct the expansion of intensive
land utilization into suitable areas (Nageswar Rao and Vaidyanathan, 1990). Land is
necessary for human survival, because it provides means with living space, with food and
with number of raw materials which are used in the satisfaction of his wants. But as
necessary as the land factor may be, man plays an important role in conditioning and
transforming his physical environment (Barlowe, R.1963)
The study of land use is important not only in agriculturally dominated, over
populated developing regions but throughout the world because of its relationship with
different human phenomena. It’s importance also increased during the population
pressure and decreasing man and land ratio, increasing demand for food and raw
materials the need for optimum utilization of land in an integrated manner has assumed
greater relevance. Therefore, scientific regional, intensive and proper use of every parcel
of land has become essential. Lands’ planning on micro level, based on land use surveys
is the first step in putting our lands to the maximum use. The nature and intensity of land
use is closely related to the technology adopted by man. Extension of agricultural land
with the help of technology may cause considerable changes in land use. Geography deals
with the spatial relationship between these aspects and planning. This is because land use
changes to meet available demands of the land by the society in its new ways and
conditions of life. The demands for new uses of land may be inspired by a technological
change or by a change in the size composition and requirements of a community. Some
changes are short linked whereas other presents a more constant (Jackson J.N; 1963).
The main objective is to highlight the spatiotemporal pattern of land use in the
study region. The tahsil is considered as a study unit and the land use categories are based
on the census classification. The present chapter deals with the pattern of
agricultural/general land use during the period of 1980-81 to 2001.
Meaning of Land Use
The study of land use pattern is of prime concern to geographers to know the
relationship between man and natural environment (Tripathi and Vishwakarma, 1988).
Land use is an important study particularly relevant to agricultural geography. According
to J. L. Buck, Land utilization is the satisfaction which the farm population derives from
the type of agriculture; develop the provision for future production and contribution to
national needs (Zuated 1951). Land use is also related to conservation of land from one
major use to another general use (Nanvati, 1951). Land use is a geographical concept
since it involves specific areas. The study of land use forms a significant part of
geography and has assumed a place of pride in the field of applied geography. According
to Symons(1978) the land use study forms the sphere head for the advance of geography
into the applied sciences as maps of land use have been recognized as essential tools of
regional planning and development.
According to Lillesand and Kiefer (1987); “The term land use relates to the
human activities associated with specific piece of land, factures present on the earth
surface”. Land utilization research can be described as leading with problem situations in
which people in a given locality are in the process of transformation from activities with
certain land requirement. Jainendra Kumar, (1986) defined land use as, the surface
utilization of all developed and vacant land on a specific point, at a given time and space.
In short land use is the use made of the land by man, as surveyed and mapped in series of
recognized categories. Land use study assumed grater academic and practical significance
especially after the brilliant contribution by Baker (1923); in United states of America,
stamp L.D. to know the details of the scheme of land use survey in Great Britain readers
are advised to consult the account of the history and evolution of land use survey in

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Britain as introduced by L. Dudly Stamp in his work entitled. “The land use of Britain- Its
use and Misuse”, has been able to generate a good deal of regional \ and systematic
survey of land use of whole of Britain.
Chowdaian (2001) explained that land use and land utilization is not one and the
same. Land use is the use actually made of any parcel of land, house, industrial location
etc. are land use categories, whereas term residential, industrial, agricultural, refers to
land utilization and it mainly deals with the problems related to society and the region as
a whole, land utilizations is therefore dynamic concept since it undergoes certain changes
due to change in socio-economic conditions, needs and with the adoption of innovation.
Therefore, study of land use is a subject of continuous interest.
In India, several geographers have paid attention on different aspects of land use
studies at regional, district and micro level. Some of the eminent researchers who have
carried out research work on different aspects of land use studies are chatter see (1952),
Shaffi (1961, 1966,1968); Prakash Rao (1959); Jasbir Singh (1974); Roy(1968) and
Mishra (1990);
The study of land utilization is of immense value in tracing out the past use of
land and its future trend. Only through the study of past land utilization one can be able to
predict its future use and evolve land use planning of a particular region.
Inputs and Technology – Thrust Areas for Growth Sustainability
For realizing the agricultural growth objectives of 11th Plan, particularly from the
crop husbandry segment, the inputs have to play the most crucial role. The experiences of
9th and 10th Plan had firmed up the notion of law of diminishing return in the agricultural
sector. The factor productivity of capital as well as labour has been diminishing. Besides,
the cost of inputs has been increasing. This is seriously impacting the profitability in
agriculture. It is not surprising that the Situation Assessment Survey conducted by the
National Sample Survey organization (59th Round) revealed that 27 per cent of farmers
found agriculture a non-profitable activity and as many as 40 per cent farmers opined that
given an alternative, they would like to quit farming as a profession. To address these
critical issues, the input management would require focused attention on five core areas
viz. seeds, nutritional management, water management, chemicals and management of
energy.
Seeds:
The development of newer and improved seed varieties and effectively using the
diversity of genetic pool and bio-technology had been instrumental in stimulating
agricultural growth in the past. This momentum of technology development and
technology up-gradation needs to be sustained more vigorously for actualizing the
potential of agricultural growth. The infrastructure, scientific strength and expertise
available with the crop research institutions of the country have to be re-energised and
reoriented for this purpose. This endeavour, besides introducing more advance seeds,
would also require provision of seeds and the planting material in cost effective manner.
There had been substantial in-roads made by non-government agencies in seeds
production and supply. Private research is also high priced. For example, there is
substantial price difference in the price of B.T. cotton seeds and the seeds available from
domestic research system. There are also reports that seed price is no guarantee for seed
performance. This also brings to focus the quality assurance of seeds. There had been
several reports of spurious seeds that either do not germinate or do not give desired yield
and quality, causing serious economic losses to farmers. However, the cost of the seeds,
its quality and production assurance had not been promising in many cases.

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 Need for refocusing on quality seed development and production to close the gap
between production and requirement (which is about 91 lakh quintals) and to raise seed
replacement rate to 25%, 33% and 100% for self-pollinated crops, cross pollinated crops
and hybrids. National level seeds corporations, State Seeds Corporations, seed farms of
State Governments and Universities will have to undertake large scale seed production to
meet the gap in demand and supply of seeds.
The gaps between the results attained in the research institutions and at the
farmers end are often attributed to inappropriate and inefficient farming practices in the
field, not matching with prescriptions. Thus, the extension system has to be properly
oriented to practices, specified for the varieties. In addition to the supply of good quality
and cost effective seeds, it would also be necessary to ensure proper practices to be
adopted by the farmers prescribed for particular varieties. The assurance of quality of
seeds assumes greater significance in view of predominant seed supply from private
sources. This would also necessitate proper and effective regulatory mechanism.
Aforesaid discussion on seed development and its availability to farmers does not
undermine the role of farmers as seed producer. There are success stories in farm produce
seeds also. The integration of farmers and farmers groups in seed multiplication
programme needs promotion.
Nutritional Management:
The declining factor productivity in Indian agriculture is partly attributed to the
soil de-gradation, the main cause of that has been the accumulating nutritional deficiency
over the years. One of the main factors for disturbed nutritional status of soil is the
imbalance in the use of NPK in fertilizers. As already mentioned earlier, against the
generalized recommended proportion of 4:2:1 of NPK, the aggregate national averages
stand 7:2:1. There is a tendency of higher use of nitrogen (urea) by the farmers and in
several instances, the phosphate and potash is not at all used. This tendency is more
prevalent in the Indo-Gengatic belt devoted to high productivity of wheat and rice and
where the symptom of soil fatigue due to nutritional imbalance is already evident.
Besides, the production response to the fertilizers use is declining. There are also reports
of ill affect on human health due to excessive intake of nitrogen in food chain in terms of
high prevalence of blood pressure and blood sugar, even among young people, in Punjab
and Haryana.
The imbalanced use of fertilizers by the farmers may not be solely attributed to the
lack of his awareness on the aspect of soil health and its nutrition balance. There is
distorting role of policy and management of fertilizers. The price and availability of
Nitrogenous, Phosphates and Potash is also playing its role in dis-inclination of the
farmers to use them in a balanced manner. The subsidized pricing of Nitrogenous
fertilizers and reported deficit in the production capability of Phosphatic and Potash
fertilisers are also instrumental in disturbing the nutrition balance of the soil over the
decades.
The balanced use of fertilizers, however, cannot be generalized to the entire
agrarian space. It would depend upon the soil health and extent of imbalance to
supplement proper nutrient ingredient through fertilizers use. Further, the nutrients have
complementary and supplementary role in the production and vegetative growth, since
use of one nutrient depends on the other as well as other inputs and practices of use. The
farmers, when used to apply fertilizers in dry form may not be conscious to adopt soluble
practices prescribed in some imported fertilizers. Besides these nutrients, other mineral
deficiency such as Gypsum and Carbon content in the soil also affect the fertilizer use
efficiency. In the 11th Plan, therefore, the nutritional management should be one of the

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thrust areas. For this purpose soil testing, distribution of soil health cards to all the
farmers and creating awareness about on farm nutrition management may need to be
taken in mission mode and efforts should be made to accomplish this in the very first year
of the Plan so that its gains accrue in the subsequent plan period. Some of the states like
Gujarat have demonstrated to accomplish the task of issuing soil health cards to all their
farmers and there is need to replicate such efforts in other states. This should also be
made integral element of all the extension activities.

Water:
Water is the basic input for agricultural operations. The crop cycle depends upon
weather cycle of rainfall along with that of temperature in different parts of the country.
Though, the crop production in India is primarily rain dependent in terms of its acreage,
the main production supply is from the irrigated areas. The irrigation is the single largest
consecutive user of water attributing to 80 per cent of total water utilized. Out of 140
million hectare net sown area and 190 million hectare gross cropped area nearly 40 per
cent is under irrigation which includes both assured as well as protective irrigation. Half
of this is from ground water resources.
However, there are serious issues associated with water use efficiency in
agriculture. The water is becoming a scarce input. The greater entrepreneurship of
farmers, supported by subsidized electricity for agriculture makes ground water
exploitation a more convenient option for irrigation. This phenomenon had already
become evident in recent years. Given this scenario, the judicious use of water for water
resources for agriculture and other competing demand is the need of the hour. The
subdued rainfall precipitation over the year and indiscriminate exploitation of water is
reflecting on depleting ground water resources in many parts of the country. For
production of one Kg. of rice, 3000 litres of water is required.
Water being a State subject, the State Governments have primary responsibility
for use and control of this resource. At the central level the Union Ministry of Water
Resources is responsible for development, conservation and management of water as a
national resource, i.e., for the general policy on water resources development and for
technical assistance to the states on irrigation, multipurpose projects, ground water
exploration and exploitation, command area development, drainage, flood control, water
logging, sea erosion problems, dam safety and hydraulic structures for navigation and
hydropower.
For sustained agricultural production, it is necessary to evolve a well coordinated
strategy to manage the use of water resources such that (i) both surface and ground water
supplies are maintained at desired level, and (ii) the quality of land and water resources
does not deteriorate with time. With very low water use efficiency, the scarcity of water
resources is also increasing its cost of extraction. Therefore, water budgeting and water
use efficiency has to be given extra attention in the 11th Plan. It may also be noted that
nutrient efficiency and the water use efficiency work in tandem. In recent years the
cultivation practices such as Zero Tilling and raised bed cultivation have been propagated
by Agricultural Research Institutions to enhance the efficiency in the use of both these
factors of production. The agricultural development programmes as well as extension
system have to assimilate these factors in their activities.
In the context of irrigation infrastructure creation and its management, the 11th
Plan would require proper investment planning with four-fold focus, (a) the
replenishment of existing irrigation infrastructure, that has been depreciating over the
years on account of various reasons (b) the unfinished projects to be completed on

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priority, (c) the creation of new irrigation projects and (d) ensure substantive increase in
the cropping intensity in irrigated areas.

Chemicals:
Like the use of micro-nutrients and water in agriculture, the chemicals are also
used indiscriminately and un-judiciously. The use of un-prescribed pesticides in
inappropriate doses is not only disturbing the soil conditions but is also destroying the
healthy pool of bio-control agents that normally co-exist with the vegetation. These
biocontrol agents are the friends of agriculture and hence need to be nurtured, cared and
developed by reducing the reliance on chemical’s use in agriculture. The importance of
bio-fertilisers in sustainable agriculture/organic farming in particular, is well known along
with the need for promotion of the cheaper and eco friendly plant nutrient supplements.
Recognizing the importance of biofertilisers as a cost effective and environment
friendly source of plant nutrients, the National Project on Development & Use of
Biofertilisers was launched in 1983 during the 6th Plan and its continued for promoting
the production and use of bio-fertilisers till 9th Plan and finally subsumed under a new
Central Sector Scheme “National Project on Organic Farming”. These efforts need to be
sustained in 11th Plan. There is need for a national plan for bio control measures.
Considering the global concern of ill-effects of chemical pesticides, Integrated
Pest Management (IPM), inter alia, aims at employment of alternate methods of pest
control like cultural, mechanical and biological control in a compatible manner. The
chemical control is resorted to when other control methods fail to provide desired results.
It is ecologically safe and economical. It is noted that implantation of IPM itself is
disintegrated as IPM component in different Plan schemes. Considering the importance of
IPM, these fragmented elements need to be coordinated.
Management of Energy:
The process of vegetative growth in essence is the transformation of energy. The
energy made available through nutrients of the soil is simulated with the solar energy
through the process of photo synthesis in combination with human, bullock, mechanical
and other such energy supplements. The energy use efficiency would necessitate the
change in its consumption and composition giving due consideration to preponderance of
small and marginal farmers in the agrarian space.
One of the ways to enhance energy use efficiency is through farm mechanization.
The farm mechanization is essential not only to save the energy but to transfer the energy
efficiently for crop production. The agricultural development in the Punjab and Haryana
is attributed to extensive farm mechanization. However, in eastern India, the progress of
farm mechanization is very tardy. There is a demand supply syndrome. In eastern India,
there are neither many manufacturers of farm machinery nor the services for repair and
spare parts supply, whereas the agriculture of northern and north-west India has
stimulated farm mechanization as an ancillary economic activity engaging large labour
force outside agriculture and dependent on agriculture.
The substantial technological know-how is supposed to be available with different
institutions dedicated to farm mechanization as well as with the agricultural universities
and crop research institutions. There should not be constraint to have region and crop
specific machinery of proven performance for their wide scale adoptability in the farming
sector. One such study has already been completed by IASRI, ICAR on “Study Relating
to Formulating Long Term Mechanization Strategy for Each Agro-Climatic Zone/State”.
Absence of quality manufacturing of improved design of farm equipment in different

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parts of the country is proving to be an impediment in growth of farm mechanization.
Promotion of quality manufacturing in different parts of the country needs to be
promoted. State Agriculture Department also needs to be sensitized for extension of new
technologies to farmers and also for obtaining feedback on new technologies required.
These dimensions have to be given a special attention in the 11th Plan. The
importance of farm mechanization is to be seen in the context of demographic changes
emerging in agrarian space. The studies have reflected gender issues in labour force
participation in agriculture which is likely to witness female labour participation to go up
from existing 30 percent to 45 percent. This shift is inevitable due to greater movement of
male labour force in diverse occupational options. With this shift, the human energy
supplementation by machine labour assumes further significance.
The energy use efficiency also needs to be viewed in the context of use of power
for irrigation. According to Central Electricity Authority, the total electricity consumption
during 2003-04 was 87089 million KWHs. This translates into about 620 KWH per
hectare per annum corresponding to 140 million hectare net sown area. There is
competing eagerness amongst farmers to apply tube wells disproportionate to the size of
their holdings. This has serious consequences both on energy use as well as water use
efficiency in agriculture. The formation of tube well societies in villages will not only
encourage water use efficiency, but would also bring down energy consumption per
hectare.
In nutshell, the elements of these five thrust areas that are required to be the focus
for sustainable agricultural growth during 11th Plan are summed up as follows:
1. SEEDS
– Development of newer and improved seed varieties,
– Effective use of diversity of genetic pool
– Bio-technology
– Strengthening infrastructure, scientific strength and expertise
– cost of the seeds, its quality and production assurance
– Seed multiplication, seed farms, certification
– Defuse inappropriate and inefficient farming practices
– Seed Production by Farmers

2. NUTRITIONAL MANAGEMENT
– Curb Soil Degradation
– Restoration of Soil health (Carbon)
– Mission of Soil Testing
– Policy support for balanced use of fertiliser
– Rejuvenate fertiliser use efficiency
– Dovetailing with all extension activities
3. WATER
– Efficient use of water
– Water Budgeting
– Appropriate cultivation practices
– Incentives and disincentives

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 – Irrigation Management – Four fold focus:
• Replenishment of existing irrigation infrastructure that has been
Depreciating over the years on account of various reasons
• Unfinished projects to be completed on priority,
• Creation of new irrigation projects and
• Ensure substantive increase in the cropping intensity in irrigated
areas.

4. CHEMICALS
– Check indiscriminate and un-judicious use
– Control of un-prescribed pesticides
– Qualitative and quantitative issues
– Strengthening coordination and adoption of Integrated Pest management
– National Plan for Bio Control Measures
– Propagation of bio fertilisers
5. MANAGEMENT OF ENERGY
– Enhance energy use efficiency in agriculture (Human, Bullock,
Mechanical, Electrical etc.)
– Transform composition and consumption pattern
– Energy saving and energy transformation
– Rationalized farm mechanization
– Dovetailing research with propagation and adaptation
The aforesaid five thrust areas of seeds, nutritions, chemical, water and
management of energy provide the core issues that needs to be addressed for restoring the
growth and sustainability of Indian agriculture. Besides these core issues, the agricultural
development requires to assimilate certain other important aspects, which have being
assuming significance in the contemporary economic environment in which agriculture
has to survive. The 11th Plan reliance on demand stimulation is also based on
accelerating the agricultural exports by 10 percent. This would necessitate putting in
place the production system with post harvest infrastructure and procedures to meet the
conditions of market access in different countries. The foremost among these conditions
are cost competitiveness of production and adherence to Sanitary and Phyto-Sanitary
(SPS) and other food and bio-safety requirements. Thus the research and development has
to be dovetailed accordingly with production of exportable commodities compatible to
the standards laid-down by the importing countries. This endeavour would also require
detailed home work of dynamics of trade intelligence because these conditions vary from
region to region and also change from time to time. This needs to be noted that the
instruments of health and bio-safety, within the framework of WTO, are sometimes used
as trade barriers. The objective of the Cartagena Protocol on Biosafety is to contribute to
ensuring an adequate level of protection in the field of the safe transfer, handling and use
of 'living modified organizms resulting from modern biotechnology' that may have
adverse effects on the conservation and sustainable use of biological diversity, taking also
into account risks to human health, and specifically focusing on transboundary
movements. Accordingly, the similar bio-safety protocol for various commodities is also
needed to be strengthened in respect of importable commodities.

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 Integrated development of agriculture, necessary for inclusive growth, has to take
note of diversified growth covering crops, fisheries, livestock and on and off farm value
addition. This approach alone can help in convergence of production resources for
enhancing profitability and farm returns. One may also have to think alternatives for
improving the farm returns such as infusing one cash crop in each village. There are
positive results accruing to the farm economy by induction of market oriented production
to the emerging demand in urban centers. Such village oriented model, backed by
infrastructure, knowledge and market linkages can enhance efficiency in our agrarian
economy.

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 CHAPTER-4
INTENSIVE AND EXTENSIVE AGRICUTLURE

INTENSIVE AGRICULTURE
System of cultivation using large amounts of labour and capital relative to land
area. Large amounts of labour and capital are necessary for the application of fertilizer,
insecticides, fungicides, and herbicides to growing crops, and capital is particularly
important to the acquisition and maintenance of high-efficiency machinery for planting,
cultivating, and harvesting, as well as irrigation equipment where required.
Optimal use of these materials and machines produces significantly greater crop
yields per unit of land than extensive agriculture, which uses little capital or labour. As a
result, a farm using intensive agriculture will require less land than an extensive
agriculture farm to produce a similar profit. In practice, however, the increased
economies and efficiencies of intensive agriculture often encourage farm operators to
work very large tracts in order to keep their capital investments in machinery
productively engaged--i.e., busy.
On the level of theory, the increased productivity of intensive agriculture enables
the farmer to use a relatively smaller land area that is located close to market, where land
values are high relative to labour and capital, and this is true in many parts of the world. If
costs of labour and capital outlays for machinery and chemicals, and costs of storage
(where desired or needed) and transportation to market are too high then farmers may find
it more profitable to turn to extensive agriculture. However, in practice many relatively
small-scale farmers employ some combination of intensive and extensive agriculture, and
many of these operate relatively close to markets. Many large-scale farm operators,
especially in such relatively vast and agriculturally advanced nations as Canada and the
United States, practice intensive agriculture in areas where land values are relatively low,
and at great distances from markets, and farm enormous tracts of land with high yields.
However, in such societies overproduction (beyond market demands) often results in
diminished profit as a result of depressed prices.
EXTENSIVE AGRICULTURE
System of crop cultivation using small amounts of labour and capital in relation to
area of land being farmed. The crop yield in extensive agriculture depends primarily on
the natural fertility of the soil, terrain, climate, and the availability of water.
Extensive agriculture is distinguished from intensive agriculture in that the latter,
employing large amounts of labour and capital, enables one to apply fertilizers,
insecticides, fungicides, and herbicides and to plant, cultivate, and often harvest
mechanically. Because extensive agriculture produces a lower yield per unit of land, its
use commercially requires large quantities of land in order to be profitable. This demand
for land means that extensive agriculture must be carried on where land values are low in
relation to labour and capital, which in turn means that extensive agriculture is practiced
where population densities are low and thus usually at some distance from primary
markets.
India is the largest producer in the world of milk, cashew nuts, coconuts, tea,
ginger, turmeric and black pepper, and has the world’s largest cattle population (281
million).It is the second largest producer of wheat, rice, sugar, groundnut and inland fish.
It is the third largest producer of tobacco. India accounts for 10% of the world fruit
production with first rank in the production of banana and sapota. India’s population is
growing faster than its ability to produce rice and wheat.

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 The success of any agriculture is influenced by the availability of proper
irrigational facilities. The farmers are still depending heavily on rainfall, specifically
monsoon.
Irrigation is a method by which water is supplied to plants from the outside or the
artificial source of water where natural precipitation falls short. Irrigation is indispensable
to Indian agriculture. In India rainfall is caused by the influence of the summer monsoon;
it is seasonal and unpredictable. Often it is unreliable. But agriculture needs a regular
supply of water by irrigation
• Seasonal rainfall: The Southwest monsoon, which advances from the southern
seas in summer, brings rainfall. For this, most of the rainfall in India occurs in
summer. In dry winter, , agriculture suffers from scanty rainfall. For this
season, irrigation is indispensable.
• Uneven distribution of rainfall: The summer rainfall, which occurs in India, is
not evenly distributed all over the country. The areas receiving scanty rainfall
needs irrigation even during summer monsoon.
• Better land use: With irrigation, cultivation can be done well all the year round.
It allows better use of land.
• Introduction of new method of cultivation: In recent years, new agricultural
methods have been employed. New high yielding seeds are used to get more
crops; even harvesting periods are being reduced to minimum, so that two or more
harvesting can be raised in a year. This new agriculture needs more waters. For
these, irrigation is essential.
The Methods of Irrigation Practiced in India
• Wells and Tube-wells irrigation: Well irrigation is the popular method
of irrigation all over the country. It is widespread in the northern plains, coastal
plains and some parts of the peninsular India where ground water is available.
Wells and tube wells irrigation are widely practiced inPunjab, Haryana, Uttar
Pradesh, Bihar West Bengal and Maharashtra.
• Tank irrigation: The regions where wells and tube-wells cannot be dug out
owing to stony ground and regions where subsoil or ground-water is not available,
rain-waters are collected in the tanks or reservoirs and are used
for irrigation. Tank irrigation is common in southern India.Tank irrigation is
widespread in Tamil Nadu, Karnataka and Andhra Pradesh.
• Canal irrigation: Canal lead irrigation water from rivers or storage reservoirs.
• Inundation canals: These canals lead off water from a river during flood. These
are simple, but do not provide water all the year round.
• Perennial canals: These canals lead off water from a river all the year round.
There are also canals, which are fed by water stored behind a large dam or
barrage. Modern multipurpose river valley projects, which build up dams, not only
provide water for irrigation, but also help to control floods, and generate
hydroelectric power.
Agriculture typology
According to the report of the World Commission on Environment and Development
(1987) there are three basic types of agriculture. These are:
• industrial agriculture;
• Green Revolution agriculture;
• Resource poor agriculture.

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 Industrial agriculture has large farming units, is highly capitalized and relies on
large inputs and subsidies. It is found mainly in the developed world or in specialized
enclaves in the developing countries. Green Revolution agriculture is found in well-
endowed areas of the developing world and in areas either irrigated or with reliable
rainfall. It includes large and small farms and uses high-yielding varieties with
complementary inputs. The third type of agriculture is associated with unfavourable or
difficult areas that are mainly rainfed, often undulating and with fragile or problem soils.
Agriculture in Asia also falls in the above three categories. Industrial agriculture
that was alien to the region emerged in the context of the political colonization by the
European powers. Until World War II it was largely manifested in the region in the form
of large plantations, particularly in the relatively land-rich areas of equatorial South-east
Asia.
The traditional subsistence rice cultivation in the riverine lowlands of Asia could
be considered to be a primitive form of Green Revolution agriculture. These systems are
associated with irrigation, sometimes with local water lifting, and constitute the
productive base for the indigenous civilizations, large and small. Not all the lowlands are
irrigated, with the important exceptions of China and India.
Traditionally the third category of agriculture in Asia is practised by groups that
reside in the hills and on the fringes of the deserts, at the edges of the main lowland
civilizations. In South-east Asia these groups are mainly ethnic minorities; in the Indian
sub-continent they are known as tribes. Some of these groups may have been the original
inhabitants of the lowland areas, and may have been driven into the forested highland by
more dominant civilizations. The type of cultivation associated with these areas is either
rainfed or swidden cultivation (see also section 2.2) that involves the clearing of new
forest plots every one to two years when the natural fertility on the old plots, derived from
the burning of the forest, is exhausted.
Smallholders’ Agriculture
The NGO strategy is to pressure large producers into adopting procurement
policies that exclusively recognize WWF’s endorsed certification schemes. In the case of
palm oil, producers are being pressured into recognizing RSPO as the only mark of
sustainably produced palm oil.
Campaigners ignore the fact that certification is expensive. In the palm oil
industry, costs of pursuing certification are passed down the supply chain to the grower.
In many cases these growers are small farmers who cannot afford certification. The NGO
endgame is to influence the practices of primary producers, and to pressure them into
adopting economically stifling operational procedures that will meet WWF’s vision of
‘sustainability’. This will have a detrimental effect on the millions of households in the
developing world that rely on the palm oil industry. Certification systems were initially
designed to provide a system to assess compliance with stringent voluntary sustainability
requirements; and developed to assess compliance with standards that go beyond
benchmark environmental requirements usually established by governments. Yet
certification schemes such as RSPO are now being presented by NGOs as a baseline
requirement. NGOs are demanding that producers comply with their standards and
achieve certification in order to demonstrate their sustainability. Producers that don’t
comply with NGO endorsed schemes are being threatened with restricted access to
Western markets. NGOs have already pressured some large western consumer goods
companies to phase in procurement principles that effectively discriminate against
smallholder production.

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 Greenpeace for example have attacked a number of large global consumer goods
brands – such as Nestle and KFC - in an attempt to pressure operators in developing
countries to adopt the RSPO certification system advocated by WWF. In environmentally
sensitive Western markets that are vulnerable to campaign pressure, producers that don’t
comply with NGO endorsed certification schemes face the threat of reputational damage
to their brands through ENGO campaigning.
This campaign has significant implications for millions of poor commodity
producing smallholders. They are being pressured into complying with extra-ordinary
requirements that will restrict their economic viability. They are also being pressured to
enter ‘voluntary’ certification schemes when they simply cannot meet this high costs
involved in verifying compliance.
NGO lobbying with the RSPO is perhaps the most egregious example of this
campaign strategy. NGOs have banded together to influence a certification scheme
charged with “promoting the growth and use of sustainable oil palm products through
credible global standards and engagement of stakeholders”. However, by demanding that
small-scale farmers are included
under the system, NGOs are attacking the viability of an industry responsible for
providing millions with a path out of poverty
Value-added Agriculture
Value-added agriculture has been touted as the solution to the problems facing
farmers and rural residents. People promoting value-added agriculture claim that it will
increase income and reduce financial stress in the farm sector and lead to the
revitalization of rural communities. However, for a farm family suffering from low
income and rural communities suffering from the loss of economic vitality, value-added
agriculture may not be a panacea. So, should you participate in value-added agriculture or
stick with traditional farming? The following discussion will shed light on the topic.
Long-range Solution
Value-added agriculture's potential lies in creating long-term solutions rather than
short-term fixes. It contains the elements for solving many of the problems facing farmers
and rural America over the coming decades. It allows for an increase in the amount of
income flowing into the pockets of farmers and rural residents. By doing so, production
agriculture will rely on market forces and move away from the annual infusions of money
from the federal government.
It allows you to move away from the “Pac Man” growth strategy so common in
farming in recent decades. This is a growth strategy where farmers gobble-up neighboring
farms. This results in fewer farmers and smaller rural communities.
Value-added agriculture provides an alternative growth strategy that allows you
the opportunity to expand by moving upward in the food chain rather than expanding
horizontally. This opportunity is available because the food supply chain is becoming
more integrated. By moving aggressively, farmers have the opportunity to play a role in
the development of this new integrated system. This opportunity will provide farmers a
greater role in the ownership and control of the new system.
However, because of its long-range focus, it takes time to implement. If you are
considering any of the value-added opportunities that are available, you must remember
that it may take a considerable amount of time before the benefits from these value-added
activities are received. So, if you are expecting value-added agriculture to be a “silver
bullet” that will provide a “quick fix” for the problems you are facing, you will probably
be disappointed.

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Capital Required
A major ingredient for many value-added businesses is money. This is especially
true for value-added business ventures where farmers commit commodities (corn,
soybeans, hogs) for processing. These processing facilities are usually capital intensive.
Although the potential payoff from these ventures can be significant, there are many
value-added business ventures where the payoff has been low, and some that have failed.
So, if capital is limited, you must determine whether your limited capital will yield a
greater return by investing in your farm business, investing in a value-added business
venture or some of both. This will require a careful risk/reward analysis on your part.
New Skills Required
New skill sets are required if you are going to participate in new value-added
business ventures. Whether it is producing organic foods, growing specialty grains, or
processing agricultural commodities, you will need to develop a whole new set of skills
that are not commonly used in commodity agriculture.
New production skills are needed in the production of value-added crops and
livestock. For example, preserving the identity of crops and livestock, certifying the
quality of crops and livestock (i.e. ISO 9000) and keeping detailed records on the
production, handling, storage and marketing of crops and livestock are practices and
procedures in which commodity producers usually don't participate.
In addition to new production skills, new business skills are also needed. Creating
and operating a value-added business venture is different than most farm businesses. For
example, marketing a food product is much different than marketing a commodity.
Product marketing involves identifying customers, designing and implementing a
promotional plan, pricing your product, identifying and analyzing competitors and a host
of other activities. You also will be involved in conducting feasibility studies and
designing and implementing business plans.
Other skills involve human relationships. As you move from commodity
production to value-added activities, relationships with others become more important.
Value-added activities often involve groups who work together to accomplish business
objectives. Teamwork, communications and conflict management skills become more
important. Working with customers, employees, producers, distributors, processors and
others are important to your success.
From working with value-added groups, the following list of skills that is
important for successful value-added business development:
• Leadership
• Entrepreneurial
• Decision making
• Business management
• Teamwork
• Strategic management
• Negotiation
• Financial and risk management
• Time management
• Marketing/selling
• Communication

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 • Organization and planning
• Conflict management
• Public relations
• Inter-personal
• Personnel management
• Stress management
Developing and honing these new skills can only be accomplished gradually over
a period of time. But the payoff can be great. Individuals who develop these skills will
have an advantage in creating and maintaining successful value-added business ventures.
Agriculture Value chain
Value chain finance for agriculture has become a topic of interest for development
agencies, and is an approach that is being increasingly applied by financial institutions
and by those involved in value chains. Value chain finance can contribute to meeting the
growing need for agricultural finance and investment in response to greater consumer
demands for more processed or value added products.
From a development perspective, governments and support agencies must ensure
that the financial systems in their countries are able to meet these demands arising from
the growth of modern agro-food value chains. Agricultural value chain finance (AVCF) is
an approach to finance that is able to help and address these issues.
The aim of this technical note is to help those involved in development agencies
to understand:
• The transformation of agriculture and modern value chains how this knowledge
can be used to benefit the processes of financial access and delivery;
• How to develop value chain financial services in a way that they benefit all kinds
of farmers and agribusiness firms within value chains and the country as a whole;
and
• The best way to develop a Programme implementation strategy that will
strengthen priority value chains through interventions which address capacity
needs, financing, policy and support infrastructure.
Hence, this technical note can serve as a guide in the design of appropriate
program interventions which apply AVCF approaches in the development of competitive
agricultural value chain. An emphasis is given to interventions which promote financial
inclusiveness, and the overall development goals of governments, as well as technical and
funding agencies.
Although the content of this Technical Note addresses agricultural value chain
finance, it must be emphasized that financing and its application are dependent upon the
nature and context of a value chain and those involved in it. For UN and large-scale
development projects, the interventions must often simultaneously contemplate multiple
value chains while allowing the flexibility for accommodating the specific requirements
of each value chain and context.
ROLE OF AVCF IN DEVELOPMENT FINANCE
Understanding value chain finance can improve the overall effectiveness of those
providing and requiring agricultural financing. Value chain finance offers an opportunity
to expand the financing for agriculture, improve efficiency and repayments in financing,
and strengthen or solidify linkages among participants in the chain. It can improve the
quality and efficiency of financing agricultural chains by: a) identifying financing needs

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for strengthening the chain; b) tailoring financial products to fit the needs of the
participants in the chain; c) reducing financial transaction costs through direct discount
repayments and delivery of financial services; and d) using value chain linkages and
knowledge of the chain to mitigate risks of the chain and its partners.
It is important to note that agricultural value chain financing is not a development
goal; rather it is a means to achieve other social and economic goals. AVCF is a financial
approach and a set of financial instruments that can be applied. It is an important
component of value chains and their development and can facilitate increased financial
access, and reduced costs and risks of financing agriculture.
DEFINING VALUE CHAIN FINANCE
The flows of funds to and among the various links within a value chain comprise
what is known as value chain finance. Stated another way, it is any or all of the financial
services, products and support services flowing to and/or through a value chain to address
the needs and constraints of those involved in that chain, be it a need for finance, a need
to secure sales, procure products, reduce risk and/or improve efficiency within the chain.
It refers to both internal and external forms of finance:
1. Internal Value Chain Finance is that which takes place within the value chain such
as when an input supplier provides credit to a farmer, or when a lead firm
advances funds to a market intermediary.
2. External Value Chain Finance is that which is made possible by value chain
relationships and mechanisms: for example, a bank issues a loan to farmers based
on a contract with a trusted buyer or a warehouse receipt from a recognized
storage facility
This definition of value chain finance does not include conventional agricultural
financing from financial institutions, such as banks and credit unions, to actors in a chain
unless there is a direct correlation to the value chain as noted above.
• Value Chain – the set of actors (private, public, and including service
providers) and the sequence of value-adding activities involved in bringing
a product from production to the final consumer. In agriculture they can be
thought of as a “farm to fork” set of inputs, processes and flows. (Miller
and da Silva, 2007).
• Value Chain Analysis – assessment of the actors and factors influencing
the performance of an industry, and relationships among participants to
identify the main constraints to increased efficiency, productivity and
competitiveness of an industry and how these constraints can be overcome.
(Fries, 2007).
• Value Chain Finance – financial services and products flowing to and/or
through value chain participants to address and alleviate driving
constraints to growth. (Fries, 2007)
BUSINESS MODELS
The strategy for development or strengthening of value chains depends upon the
business model. The term business model in value chains refers to the way it adds value
within a market network of producers, suppliers and consumers. The business model
encompasses the drivers, processes and resources for the entire value chain system, even
if the system is comprised of multiple enterprises. The business model concept is linked
to business strategy (the process of business model design) and business operations. If

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value chain finance is to be successful, the value chain must be viewed as a single
structure, with the model of this structure providing a framework for further analysis.
The relationship between buyers and sellers can be described through various
types of linkages along a continuum: (i) the instant or spot market, where producers come
to sell their commodities, and prices fluctuate; this is the most risky in terms of setting
market price; (ii) a contract to produce and buy, known more generally as contract
farming; (iii) a long-term often informal relationship characterized by trust or
interdependency; (iv) a capital investment by one of the buyers for the benefit of the
producer, characterized by high levels of producer credibility and dependence; and (v) a
company that has achieved full vertical integration. Hence, moving from an uncontrolled
buyer-seller relationship model towards a more integrated one, improves the prospects for
financing both within and in to the chain. Because smallholder production is important for
both economic and social considerations, special emphasis must be given to models
which allow them to fully participate in value chains. The following table adapted from
Vorley (2008), illustrates the typical organization of smallholder production and
marketing – that is, the relation of farmers to the market and/or the larger system. This
analysis offers a basis for value chain business models, and the accompanying finance,
which is expanded upon in the following sections.
Typical organizational models of smallholder production
Model Driver of Organization Rationale
Producer-driven • Small-scale producers, • Access new markets
(Association) especially when formed • Obtain higher market
into groups such as price
associations or cooperatives • Stabilize and secure
• Large-scale farmers market position
Buyer-driven • Processors • Assure supply
• Exporters • Increase supply volumes
• Retailers • Supply more discerning
• Traders, wholesalers and customers –
other meeting market niches and
traditional market actors interests
Facilitator-driven • NGOs and other support • ‘Make markets work for
agencies the poor’
• National and local • Regional and local
governments development
Integrated • Lead firms New and higher value
• Supermarkets markets
• Multi-nationals • Low prices for good
quality
• Market monopolies
Producer-driven business models are driven from the bottom end of the chain.
They can be successful but face two major difficulties. First, producers may not
understand the market needs as well as those in the chain who are closer to the consumer.
Secondly, producers often struggle for financing unless they can find strong partners
and/or can get assistance for financing. Buyer-driven models form the foundation for

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many of the applications of value chain financing. It is often in the buyer’s interest to
procure a flow of products and use finance as a way of facilitating and/or committing
producers, processors and others in the chain to sell to them under specified conditions.
Most often, when financing is involved, the conditions are binding through contracts and
therefore contract farming is the most common buyer-driven value chain model.
Facilitator-driven models exist in many countries where there is almost a dual agricultural
system in which a developed agro-industry coexists alongside marginalized producers
who are living at subsistence levels. The costs of organizing and training small producers
can be deemed too high to be taken on by a large company. As a result, intermediation by
development organizations, both nongovernment organizations (NGOs) and government
agencies, facilitates opportunities for smallholder integration into commercial value
chains, and financing has become a commonplace feature of such facilitation. With a goal
of long term sustainability, facilitation is ideally time bound incorporating a clear exit
strategy. Successful facilitation approaches to value chain development have been proven
around the world. As illustrated below, with proper organization and training, incomes
can be improved. Finally, an integrated value chain model, not only connects producers to
others in the chain – input suppliers, intermediaries, processors, retailers and service
providers including finance – but it integrates many of these through ownership and/or
formal contractual relationships. The integrated model has many of the features of the
other models presented such as strong linkages with multi-party arrangements, technical
guidance and strict compliance, and also incorporates an amalgamated structure of value
chain flows and services.
VALUE CHAIN FOR SUSTAINABLE AGRICULTURE
Problems of Small Farmers
Value addition and efficient marketing determine the success of most of the
production-oriented development programmes. Therefore, in most of the rural
development projects, particularly in the farming sector where farmers are dependent on
many external agencies and marketing of the produce is not well planned, the profit
margins are under severe pressure, often resulting in failures. It is indeed efficient
backward and forward linkages, which play a significant role in lowering the cost of
production and higher price realisation, resulting in higher returns.
The problems of small farmers are lower scale of operation, outdated
technologies, lack of financial support, poor information and communication linkages
with the market and exploitation by the middlemen. Small farmers are heavily exploited
by series of intermediate traders, while procuring agricultural inputs as well as while
marketing their fresh produce. The agricultural inputs required by small farmers being
small in quantity, they tend to procure from local traders, which is about 20-30% higher
than the price paid by large farmers, who procure larger quantities. They further suffer
due to inferior quality of the inputs and delay in procurement. High cost of borrowing
may further increase the cost of these inputs.
Lack of appropriate technology is another major problem of small farmers.
Firstly, it takes a longer time for small farmers to collect information on new technologies
and inputs which have the potential to increase production. Secondly, small farmers
being poor and semi-literate, they are very hesitant to invest in new technologies, which
are expensive and uncertain. There are many examples of new varieties which promise
very high yield but fail to meet the expectation either due to uncertain weather conditions
or newly emergent pests and diseases. Often, small farmers are not able to procure
critical inputs well in time, resulting in significant drop in the yield.

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 Lack of post-harvest management is another serious problem, which affects the
profitability of small farmers to a great extent. Small farmers in general, produce a small
quantity of agricultural produce and it is not practical to transport this produce to the
urban market. Thus, they end up selling the produce to local traders at a substantially
lower price. Many of them would even have entered into informal agreements to sell to
local money lenders to settle their loans. By and large, in the absence of storage facilities
and capacity to hold the produce, small farmers are compelled to sell their produce
immediately after the harvest, when the prices fall due to glut of produce in the market. It
is particularly true for perishable commodities like fruits, vegetable and dairy products,
where about 25-30% of the produce is wasted due to poor post-harvest management. As
small farmers are compelled to sell their produce in distress, their net income is far low as
compared to large holders. Therefore, to improve the profitability of small holders, it is
necessary to strengthen their value chain, which can reduce the cost of production and
realise better value for the produce.

Mobilisation of Small Farmers to Strengthen the Value Chain

An ideal value chain should bring all the stakeholders engaged in the production
system on a common platform to contribute their best, while ensuring fair deal and
transparency. The value chain will include all the input suppliers, technology delivering
agencies, scientists indirectly engaged in developing appropriate technologies and
extension officers who are involved in capacity building and providing various services to
farmers. The stakeholders involved in post-production activities are the agencies
organizing collection, grading, storage, transportation, processing and marketing of the
produce. Agencies like financial institutions and market information centres are also part
of the value chain. Efficient linkage of various stakeholders improves production, price
realisation and profitability.
Value Chain for Dairy Husbandry: Dairy husbandry is one of the most potential tools
for employment generation and for ensuring sustainable livelihood to small farmers in
rural India. BAIF Development Research Foundation, a Civil Society organization,
started promoting dairy husbandry way back in 1970s through efficient delivery of
breeding and minor health care services at the doorsteps of farmers. Efficient technical
services followed by good extension work, helped the farmers to rear high yielding cows
and buffaloes and to come out of poverty. BAIF demonstrated that each cow can
generate a net income of Rs.7000-8000 per annum through sale of milk and with 2-3
cows, a BPL family could come out of poverty. This was possible only because of a
systematic effort to develop and operationalise the value chain.
It can be seen from Figure 1 that for the success of dairy husbandry, critical
components of the value chain are the organization of livestock owners, milk collection
centres, milk processing units and milk distribution network to reach the consumers.
These organizations need various services for performing their best. Important services
required for the farmers are breeding, health care, production and supply of good quality
fodder and feeds, finance and timely technical guidance. BAIF provided these services at
the doorsteps of the farmers, which could also motivate and mentor them to manage their
enterprises efficiently. Many similar programmes implemented by various other agencies
could not make similar progress due to missing links in the value chain. For instance, in
some regions such as Vidarbha in Maharashtra, dairy husbandry has not prospered mainly
due to lack of efficient breeding and extension services. In several districts of Uttar
Pradesh, cattle development was promoted by BAIF successfully, where farmers maintain
cows yielding 3000-4000 kg milk per lactation. However, as the dairy co-operatives

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started incurring losses, the milk procurement activity come to a standstill and farmers
were compelled to sell milk to local traders and sweet makers at substantially lower price.
This being uneconomical, farmers started selling cows and started looking for alternate
ways of income generation. In fact, an initiative to procure milk by a local NGO on
instant pricing of milk based on the quality assessed by automatic bulk coolers and
marketing tie-up with a private dairy, could increase the milk collection by 30%, while
the farmers received 20-25% higher price for the milk.
The advantage of the value chain is transparency, coordination and networking of
various stakeholders, which has been the secret of success of dairy husbandry in selected
pockets in India.
Value Chain Development for Fruits and Vegetables: With regard to marketing of
fruits and vegetables, small farmers are heavily exploited by local traders. For instance,
many traders offer a lump sum money for standing crop at the stage of flowering and
fruitlet of crops like mango, cashew, orange, sapota, etc. In the absence of local demand
and facilities for transportation and storage, it is extremely difficult for small farmers to
sell their produce in nearby urban markets. Therefore, farmers are happy with smaller
profits rather than taking many risks. Such a marketing system proved to be a negative
incentive, when BAIF promoted agri-horti-forestry for rehabilitation of tribals in Gujarat
and Maharashtra.
On the other hand, in the absence of good demand in local markets and poor
connectivity with urban markets, farmers have to literally struggle to dispose off their
perishable commodities when the market is in glut. In such a situation, the exploitation
has been more serious. Therefore, BAIF decided to enter into procurement of raw
mangoes through the Growers’ Cooperatives. Initially, it was decided to provide at least
5-10% higher price over the prevailing price in the market yard of the nearby town. This
provided excellent support for the farmers as they did not have to sell in distress. Once
the price was declared by BAIF, which served as a bench mark, it was difficult for other
local traders to buy raw mangoes at lower price.

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 Hence, they also had to fix more or less the same price. This proved to be very
effective. However, it was necessary to increase the volume of procurement to ensure fair
price for all the growers and market at a remunerative price. It was essential to manage
this business without incurring any loss to ensure its sustainability. Thus, various

Fig. 1: Value Chain for Dairy

Development

Plant breeders
Water conservation/
supply Soil scientists

Seeds
Fertilizers Micro-finance Monitoring /
Crop residues
Fodder production Feed/Minerals Evaluation

Pasture
Fodder producers / development
Traders
Small holder/ Milk Milk
Hub/ Consumer
Dairy cattle collection processing/
Local org.
marketing

Breed selection
Breeding services Training /
Superior germplasm
Vaccinations
Performance evaluation Capacity building
Deworming Paravet
Disease Veterinarian
Lab services Investigation
Input supply Veterinary services

National/ Regional Players

Private Entrepreneurs

Wider Replication

innovative approaches were adopted. These included packing superior quality graded
mangoes in cardboard boxes and supplying to employees to various industrial houses in
Mumbai and Pune who had placed order earlier. However, it was not possible to increase
sale beyond a certain level. Thus, it was decided to set-up a processing unit in the project
area itself, for producing a wide range of products using raw as well as ripe mangoes.
The sales agreement with selected super markets before the processing helped the
cooperative to produce products of certain specifications, which ensured better price
realisation. This not only gave a boost to the confidence of the growers, but also created
additional jobs, particularly for the local landless families.
With regard to cashew processing, BAIF was the pioneer in introducing
commercial cashew plantations in Gujarat. Hence, the tribal farmers had no clue about
the processing and use of cashew nuts as well as cashew apple. Nevertheless, it was
decided to set up decentralised processing and centralised grading units and marketing
unit which could be implemented very efficiently. A similar strategy was adopted for
processing and marketing of Indian Gooseberry and other minor fruits grown locally.
Subsequently, BAIF also established linkage with retail marketing agencies to supply
fresh unripe mangoes in large bulk, while ensuring 10-15% higher price. Last year, more

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than 1200 tons of Keshar mangoes were supplied to one of the leading agencies. Looking
to various options and risks involved, coordinating the producers to collect, grade and
pack fresh fruits at the village level and supplying to retailers for direct marketing seems
to be the best option, which is low capital intensive and remunerative.
Even with regard to marketing of vegetable grown as intercrops in fruit orchards,
BAIF’s role in organizing the small growers to come together, grade and supply to retail
marketers in bulk quantity proved to be the best option. In the absence of such an
arrangement, it is extremely difficult for small farmers and even large farmers to depend
on unpredictable fluctuating market. There are instances where farmers have spent more
on transportation and handling, than realised by them for the produce in the urban market.
With effective market linkages, such failures can be avoided to a great extent.
Marketing of Other Products: Most of the small farmers are involved in producing a
wide range of food grains and various non-farm products. The problem of marketing
these commodities is difficult as experienced in selling perishable commodities. In such a
situation, Farmers organizations and local NGOs need to play a critical role in organizing
effective marketing. The success of developing effective value chain depends on the
strength of the local organizations to coordinate all the stakeholders and explore
opportunities for all players to perform their best.
While organizing marketing of various products, it is helpful to know the
traditional local uses of these commodities and identify niche markets where these
products are in greater demand. Local organizations can also play a critical role in
assessing local demand for various products and focus on the production of such
commodities which can be sold locally. While organizing sales in local market, it is
beneficial to network with local SHGs and Farmers’ Cooperatives and use them as
distributors to supply their members. This way, the local agencies take special interest in
marketing produce while generating good business for themselves. For instance, a Self
Help Group producing soap powder can sell to all the local families through their SHG or
Cooperatives. As the marketing cost is significantly low, the consumers can purchase the
product at 25-30% lower price, while their organizations earn 8-12% commission. Such
an arrangement can sustain the business in the long run. However, care should also be
taken to ensure high quality and present the product in an attractive package so that the
local consumers are happy to buy the produce, not to support fellow families but to enjoy
benefits of low price and superior quality.
While organizing local processing and marketing of agriculture products, it is also
important to keep a close watch on the competitors who often indulge in spurious
activities of adulteration and avoid prescribed quality standards and taxes to sell their
product cheaper. This can be undertaken through regular consumer awareness. Finally, as
the customers expect varieties and superior quality products, processing and marketing
should be innovative. Exploring wider and new opportunities to produce new products of
superior quality should be an integral part of the value chain development.
Need for sustainable agricultural development
Sustainable development is now widely accepted as an imperative for continued
prosperity in the region. It implies making strenuous efforts to meet the needs of a third of
the world’s population without reducing the options that the next generation will have for
meeting its own needs.
In agriculture, this has meant safeguarding national food security and improving
the quality of life of people who depend on farming for a living, while ensuring that the
natural resource base is not further depleted or degraded but is regenerated instead.

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 In the last three decades there have been radical changes in thinking concerning
agricultural development, both in free-market and in centrally planned economies in the
region. The development models in favour at various times have covered technology
transfer, integrated rural development, improved support services, farm systems research
and development, price policies and sustainable agriculture. The post-Green Revolution
development strategies have included comprehensive sectoral objectives instead of the
simple search for productivity improvements. Strategies have tended to evolve in a
piecemeal manner. In the shift from a narrow obsession with yield and productivity,
poverty reduction was introduced as a new focus, only to be complemented in quick
succession by equity, gender issues, food security and sustainability. What continues to
be overlooked is concern for the human condition at the farm-household level and,
beyond that, innovation that captures agro-ecological opportunities and that
accommodates constraints.
It has to be recognized that sustainable agriculture development will not take place
merely by introducing better crops, new cattle breeds, more credit or rural cooperatives,
as important as these may be. Rather, it will have to be achieved by farmers working in
very specific farm-household systems. It must be based on the tasks, needs and
aspirations of the farmers themselves and on the dynamics and constraints they face, not
only in farming but also in their domestic and non-farm activities. It must take account of
their whole rural life situation, including factors beyond the control of the household: the
ecology and natural resources, the social-cultural environment of the community, and the
policies, prices, services and infrastructure that affect rural prospects. Hence the need for
introduction of a farmer-led rather than a top-down approach.
Therefore, to ensure the development of sustainable agriculture, the countries in
the region have to protect the natural environment, create an enabling policy environment
for sustainable agriculture, generate and disseminate appropriate technology, target
disadvantaged groups, improve support services and encourage community participation,
improve physical infrastructure and social services, and develop non-farm income-
earning opportunities.
References:
1. Principals & Practices of Crop Production by S. S. Singh
2. Handbook of Agriculture by ICAR
3. Handbook of Agricultural Science by S. S. Singh
4. Cropping Systems in the tropics, Principal and Management by SP. Palaniappan
Questions:
1. What do you mean by Land Use Pattern?
2. How Cropping pattern influence the economy of farmers and effect on soil
fertility, explain?
3. What do you mean by Cropping Pattern? Write at least two types of cropping
pattern of your state.
4. Write about extensive and Intensive farming system. Which type of farming is
practice in your state write in brief?
5. What do you mean by agriculture input? How seed is the main input in enhancing
the crop production?
6. Write Role of credit in Agriculture Development.

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 CHAPTER – 5
SOIL FERTILITY AND PRODUCTIVITY

Introduction, Meaning, Definition, Differences between Soil Fertility

and Productivity, Fertility Losses and Maintenance

Crop growth is influenced by aerial and soil environment. Suitable environment is

necessary for better germination, growth and yield of crops. Aerial environment is less
amenable for modification. However, by adjusting plant population and weed control
undue competition for light can be reduced. Soil environment can be altered substantially
by tillage, fertilizer application and irrigation facilitating free aeration, reducing
mechanical resistance and providing adequate nutrients and water.
Soil environment can be studied under physical, chemical and biological
environment. The favourable physical environment for proper crop growth is deep soil
without hard layers or high water table so that crop can exploit larger soil volume. The
soil has to contain higher available water holding capacity, proper aeration and less soil
strength or mechanical resistance. The favourable soil chemical environment is higher
nutrient availability. The biological environment consists of favourable organisms in the
soil. Thorough understanding of soil properties is essential for its management for higher
productivity.
Soil fertility is the status or the inherent capacity of the soil to supply nutrients to
plants in adequate amounts and in suitable proportions.
Soil productivity is the capacity of the soil to produce crops with specific systems
of management and is expressed in terms of yields.
All productive soils are fertile, but all fertile soils need not be productive.
It may be due to some problems like waterlogging, saline or alkaline condition,
adverse climate etc. Under these conditions, crop growth is restricted though the soil has
sufficient amounts of nutrients.
According to modern usage, soil fertility is the capacity of the soil to produce
crops of economic value and to maintain health of the soil without deterioration.
Differences between soil fertility and productivity

Soil Fertility Soil Productivity

It is considered as an index of available It is a broader term used to indicate
nutrients to plants. yields of crops.

It is one of the factors for crop production.
It can be analysed in the laboratory.
It is the interaction of all the factors
Other factors are water supply, slope
that determine the magnitude of
of the land, depth of water table etc.
yields.
It can be assessed in the field under
particular climatic conditions.

It is the potential status of the soil to It is the resultant of various factors

produce crops. influencing soil management.

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Fertility Losses and Maintenance
Soil fertility is depleted due to the removal of nutrients by crops and weeds,
leaching of nutrients, soil erosion and gaseous loss of nutrients either by volatilization or
de-nitrification. Restoration of the soil fertility is a constant problem. Maintenance of soil
fertility should be considered both on a temporary and long term basis. The temporary
measures include suitable cultural practices such as addition of organic manures, green
manures, bio-fertilizers and fertilizers. The long term measures are reclamation of the
soils by amendments and adopting suitable soil conservation practices.

AGRICULTURAL INFRASTRUCTURE
Introduction, Meaning, Kinds of Infrastructure, Categories of
Agricultural Infrastructure, Components of Infrastructure, Roles
Played by Agricultural Infrastructure, Conclusion

Infrastructure refers to services drawn from the set of public works that
traditionally has been supported by the public sector, though in many cases, the
infrastructure services may be produced in the private sector. There are different kinds of
infrastructure such as economic infrastructure, social infrastructure, financial
infrastructure, technological infrastructure, agricultural infrastructure, etc defined in
broader terms. All kinds of infrastructures are complementary to each other and are
essential and integral part of economic development.
Rural infrastructure is a sine qua non for significantly improving the quality of
human life and phenomenally accelerating the process of agricultural development. Rural
infrastructure has direct and strong relationship with farmers' access to institutional
finance and markets, and increasing crop yields, thereby promoting agricultural growth.
The agricultural infrastructure includes all of the basic services, facilities, equipment, and
institutions needed for the economic growth and efficient functioning of the food and
fiber markets. Agricultural infrastructure has the potential to transform the existing
traditional agriculture or subsistence farming into a most modern, commercial and
dynamic farming system in India.
According to ‘Wharton’ agricultural infrastructures are categorized into:
[i] Capital intensive: irrigation, roads, bridges
[ii] Capital extensive: extension services and
[iii] Institutional infrastructure: formal and informal institutions.
Infrastructure, such as irrigation, watershed development, rural electrification,
roads and markets, in close coordination with institutional infrastructure, such as credit
institutions, agricultural research and extension, rural literacy determines the nature and
the magnitude of agricultural output in India. Adequate infrastructure raises farm
productivity and lowers farming costs and its fast expansion accelerates agricultural as
well as economic growth rate. It is acknowledged that infrastructure plays a strategic role
in producing larger multiplier effects in the economy with agricultural growth. It is
estimated that a 1% increase in the stock of infrastructure is associated with a 1% increase
in GDP across all countries. The level of both physical and institutional infrastructure
significantly influences the spread of proven and demonstrated yield enhancing
agricultural technology.

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 Agricultural infrastructure primarily includes wide range of public services that
facilitate production, procurement, processing, preservation and trade. Agricultural
infrastructure can be grouped under following broad based categories.
1. Input based infrastructure: Seed, Fertilizer, Pesticides, Farm equipment and
Machinery etc.
2. Resource based infrastructure: Water/irrigation, Farm power/energy
3. Physical infrastructure: Road connectivity, Transport, Storage, Processing,
Preservation, etc.
4. Institutional infrastructure: Agricultural research, extension & education
technology, information & communication services, financial services, marketing,
etc.
Development economists recognize the growing importance of agricultural
infrastructure in its role not limited to agricultural development but expanding it to
encompass economic development of the country. Researchers have identified 11
components of infrastructure, such as [i] irrigation and public access to water [ii] means
of transportation [iii] storage services [iv] commercial infrastructure [v] processing
infrastructure [vi] public services [vii] agricultural research and extension services [viii]
communication and information services [ix] land conservation services [x] credit and
financial institutions and [xi] health and education services.
Roles played by Agricultural Infrastructure:
1. Infrastructure Increases Agricultural Production and Productivity
The infrastructure in the agricultural sector enhances the ‘comparative
advantages’ of that region in which the infrastructural investment is made. When the
region gains ‘comparative advantage’ in the agricultural activities, the net result is
increase in the production and productivity of various agricultural goods and services in
general.
2. Infrastructure Reduces Cost of Production
Development of agricultural infrastructure in a particular region not only enhances
the agricultural production and productivity but in many cases, leads to reduce the
marginal cost of production. Empirical studies on the agricultural infrastructure have
proved that there exists a negative correlation between level of infrastructure investment
and the marginal cost of production.
3. Infrastructure Increases the Regional Value Added
An important benefit derived from the agricultural infrastructure is that it helps to
increase the level of ‘value added’ in the region. Increased level of agricultural
infrastructure in a particular region would lead to extend investment in allied sectors
which can produce high value added products. The increased level of capital formation in
a region due to the availability of agricultural infrastructure leads to ‘derived demand’ for
the investment in the industries that produce value added commodities.
4. Infrastructure and the Social Benefits
Provision of initial level of agricultural infrastructure or enhancement of the
existing one may lead to a different kind of cropping pattern from the existing one that
would generate some indirect positive benefits that may be called social benefits. These
benefits are enjoyed not only by the regional economic activities but also by activities
beyond the administrative and political boundaries of the region. One of the classic
examples is the irrigation dams. Though designed for irrigation purpose, these dams could
play a major role in providing social benefits to the larger group of users other than the

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 ‘identifiable’ and ‘well-defined user group. Increased availability of fish, benefits from
the biodiversity, eco-system protection, water for drinking and industrial purposes,
tourism benefits, groundwater recharge, flood control, etc are some of the indirect
benefits that are made available by the irrigation dams, apart from the water for irrigation
purpose.
5. Infrastructure and the Economies of Scale
Some types of infrastructure may result in increased economies of scale that
would increase the agricultural income. The economies of scale is realized when the cost
of production of a particular firm declines due to external advantages. For example, rural
electrification for providing electricity for the agricultural sector or rural road network
may attract small-scale industrial units that also consume electricity and road in the
production process.
6. Infrastructure and Accelerator Effects
It should be noted that a particular type of agricultural infrastructure in one region
will have its multiplier as well as accelerated effects in other areas. For example,
additional area of land can be brought under cultivation due to construction of an
irrigation dam in a particular region. This would lead to increased consumption of
fertilizer which would either warrant expansion of the reserved capacity in the fertilizer
industry or would require investment in the new fertilizer units in urban areas. This
multiplier effect in turn would lead to increase the investment in the ‘producer goods’
such as machines required for the fertilizer units, putting the accelerator effect in
operation. In this way, infrastructure in one area may have cascading effects in other
areas, resulting in increased real output and employment.
7. Infrastructure and Increased Welfare of Producers and Consumers
Certain types of agricultural infrastructure enhance improvements in both
producers as well as consumer surplus. Increase in the number of regulated market
committees, increased availability of banking operations in rural areas, increased
availability of transportation facilities, etc prevent the middle-men and the money lenders
from appropriating a substantial amount of producer and consumer surplus.
8. Infrastructure and Reduction in Price Oscillation
In the case of highly perishable commodities, not only the information asymmetry
but also non-availability of storage facilities would lead to the price oscillation
phenomenon. Once the adequate amount of investment is made in the communication
infrastructure, then this would facilitate a long-term forecasting in the supply and demand
factors thereby eliminating the price oscillation.
In a nutshell, agricultural infrastructure potentially can influence rural economic
performance through three avenues (i) expanding the use of existing resources (labor,
capital, etc.) (ii) attracting additional resources to rural areas, and (iii) making rural
economies more productive. The increased agricultural infrastructure plays a strong
positive role not only in promoting agricultural growth of a concerned region but also
other regions of the economy since enormous amount of indirect benefits are generated
by the infrastructure and enjoyed by outside regions.

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 AGRICULTURAL REGIONS

Meaning, Definition, Types of Agricultural Regions in India, Figure

India is a vast country and is endowed with diverse geographical conditions which
are bound to bring in regional variations in agriculture. An Agricultural Region is
defined as an area having homogeneity in relief, soil type, climatic conditions, farming
practices, crops produced and crop association. Several scholars have attempted to
delineate the agricultural regions of India. However, the scheme suggested by the Indian
Council for Agricultural Research (ICAR) is simple and comprehensive and is
reproduced here. It is based on the predominance of crops and crop associations.
Accordingly India can be divided into following agricultural regions:

1. Rice-Jute-Tea Region:
This vast region includes lowlands, valleys and river deltas in the states of Assam,
Arunachal Pradesh, Tripura, Meghalaya, West Bengal, Orissa, northern and eastern Bihar
parts of Jharkhand and Chhattisgarh and Tarai region of Uttar Pradesh. The rainfall varies
from 180 to 250 cm. Rice is the predominant crop due to fertile alluvial soils, abundant
rainfall and high summer temperatures. Jute is mainly grown in the Hugli basin of West
Bengal but some areas have been brought under jute cultivation in Assam, Meghalaya,
Tripura, Orissa and Tarai region of U.P. Tea is mainly grown in Assam, Darjeeling and
Jalpaiguri areas of West Bengal and Tripura. Sugarcane and Tobacco are grown in Bihar.
Coconut is grown in coastal areas. Mango, pineapple, bananas, jack fruits, and oranges
are the main fruit crops.

2. Wheat and Sugarcane Region:

This region comprises Bihar, Uttar Pradesh, Punjab, Haryana, Western Madhya
Pradesh and north eastern Rajasthan. Most of the areas have rich fertile alluvial soils with
some parts having black and red soils. Rainfall is moderate, large part of which is caused
by south-west monsoons in summer. Some rainfall is caused by western disturbances in
winter. Irrigation is a vital input in drier areas. As its name indicates, this region is
dominated by wheat and sugarcane cultivation. The main wheat belt of India extends over
Punjab, Haryana, Ganga-Yamuna doab of Uttar Pradesh and north-eastern Rajasthan.
Sugarcane is mainly grown in Uttar Pradesh and contiguous parts of Bihar. Rice, pulses
and maize are the other important crops.

3. Cotton Region:
It spreads on the regur or black cotton soil area of the Deccan plateau, where the
rainfall varies from 75 to 100 cm. obviously, cotton is the main crop but jowar, bajra,
gram, sugarcane, wheat, etc. are also grown.

4. Maize and Coarse Crops Region:

Western Rajasthan and northern Gujarat are included in this region. The rainfall is
scanty and is normally below 50 cm. Agriculture is possible only with the help of
irrigation. Maize is mainly grown in the Mewar plateau where wheat and ragi are also
produced. In the southern part, rice, cotton and sugarcane are grown. Bajra and pulses are
grown throughout the region.

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5. Millets and Oilseeds Region:
This region includes areas of poor soils and broken topography in Karnataka
plateau, parts of Tamil Nadu, southern Andhra Pradesh and eastern Kerala. The rainfall
varies from 75 to 125 cm. The millets include bajra, ragi and jowar while the oilseeds
grown are groundnut and caster. Pulses are also grown. Mangoes and bananas are
important fruit crops.

6. Fruits and Vegetable Region:

This region extends from Kashmir Valley in the west to Assam in the east. The
rainfall varies from 60 cm in the west to 200 cm in the east. Apple, peach, cherries, plum,
apricot are grown in the west while oranges are important in the east. Besides, rice,
maize, ragi potatoes, chilies and vegetables are also grown.

AGRICULTURE SURPLUS

Situation, Climate, Soil, Topography, Government Help, Products,

Irrigation Facilities

Situation
In the northern plains of India there are three areas of surplus agricultural production. The
Western Plain consists of Punjab, Haryana; Central Plain includes western U.P, parts of
eastern U.P, Bihar and W Bengal. The eastern and northeastern parts consist of the
narrow Brahamputra plain in Assam. In the Deccan Peninsula, some parts of A.P,
Karnataka and Tamil Nadu are also included. These areas have many favourable
geographical conditions which have made them surplus in agricultural production.

(i) Climate
The northern area has favourable climatic conditions. It is reasonably warm and moist.
The rainfall is very high in the east (WB.) and continues to decrease towards the west
(Panjab) but the amount of rainfall is fairly sufficient. In Punjab and Haryana irrigation
from perennial rivers makes up for the rainfall deficiency The southern peninsula
experiences sufficient rainfall.

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(ii) Soil
The soil is alluvial in character. In the west the soil is very fertile. In the central and
eastern parts, the rivers replenish the soil every year by flooding them with new alluvium.
In the southern parts, the soils are red and though not very fertile yet are assets, when
properly fertilized.

(iii) Topography
Except in the Brahmaputra valley, the area is almost plain and favourable for use of
machines. However, most of the farmers still use old farming techniques.

(iii) Government Help

The governments of these states are subsidizing fertilizers, new variety improved seeds,
agricultural machines, etc. The nationalized banks have pumped millions of rupees in the
agricultural sector.

(iv) Products
The major crops are wheat, rice, sugarcane, jute, maize, grams, oil seeds, tobacco, coffee,
spices, etc.

(v) Irrigation Facilities

The northern states of Punjab, Haryana have fairly developed canal irrigation system. In
U.P and Bihar tube-wells are extensively used. In the Peninsular India tanks are a major
source of irrigation.

AGENCIES

AGENCIES IN MARKTING OF AGRICULTURAL PRODUCE

Agricultural Marketing Meaning, Important Marketing Functions,

Marketing Functionaries (Agencies)
Agricultural marketing involves in its simplest form the buying and selling of agricultural
produce. In olden days, when village economy was more or less self-sufficient, the
marketing of agricultural produce presented no difficulty, as the farmer sold his produce
direct to the consumer on a cash or barter basis. However, in modern marketing, the
agricultural produce has to undergo a series of transfers or exchanges from one hand to
another before it finally reaches the consumer. This is achieved through three important
marketing functions, namely (a) assembling (concentration), (b) preparation for
consumption (processing), and (c) distribution (dispersion).

Concentration pertains to the operations concerned with the assembling and

transport of produce from the field to a common assembling area or the market. The
produce may be taken direct to the market after it is harvested, or it may be stored on the
farm or in the village for varying periods before its transport. It may be sold, as obtained
from the field, or may be cleaned, graded, processed and packed either by the farmer or
village merchant before it is taken to the market. Some of the processing is done not
because consumers desire it, but because it is necessary for the conservation of quality. At
the market, the produce may be sold by the farmer direct to the consumer or more usually,
through a commission agent or a broker. It may also be purchased by traders, wholesalers

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or retailers. The transactions may be carried out by direct negotiation or through
middlemen, by barter or by cash, by open auction or by secret auction under cover sale,
on the spot or in ‘futures’ markets. The transactions take place at one or more levels in the
primary, secondary or terminal markets or in all the three. Distribution (dispersion)
involves the operations of wholesaling and retailing at various points. By a series of
indispensable adjustments and equalizing functions, it is the task of the distribution
system to match the available supplies with the existing demand.
Marketing Functionaries (Agencies)
The transfer of produce or goods takes place through a chain of middlemen or
functionaries (agencies). In the primary market, the main functionaries are the producer,
the village or itinerary merchant, pre-harvest contractors, commission agents, transport
agents, etc. In the secondary market, the processing and manufacturing agents are the
additional functionaries. Financing agents, such as shroffs, banks and co-operatives may
also take part. In the terminal or export market, the commercial analyst and shipping
agent also get involved in the transfer of goods.

The functionaries have their own set-up. They may be individuals, partners or co-
operatives who may buy and sell on ready-and-future basis, at a price determined by
forces of supply and demand. Each functionary renders some service in the process of
marketing and also earns a varying margin of profit for himself and at the same time bears
risks involved in the process. This procedure makes marketing rather complicated and
inflates the price of the produce at which it is ultimately sold to the consumer. The nature
of some of the agricultural products, e.g. their bulk form and perishability, and their
seasonal availability further add to the complexity or agricultural marketing.

COMMISSION FOR AGRICULTURAL COSTS AND PRICES (CACP)

CACP-Organization, It’s Composition, Terms of Reference of CACP,
Functions of CACP, Non-Price Measures

A) The organization:
The Agricultural Prices Commission was set up in January, 1965 to advise the
Government on price policy of major agricultural commodities with a view to evolving a
balance and integrate price structure in the perspective of the overall needs of the
economy and with due regard to the interests of the producer and the consumer. Since
March 1985, the Commission has been known as Commission for Agricultural Costs and
Prices.

B) The composition of Commission:

The Commission is composed of a Chairman, a Member Secretary, two official
members and three non-official members. The non-official members are representatives
of the farming community. They are usually persons with long field experience and active
association with the farming community.

C) Terms of reference of CACP:

The main objectives of the Commission are as under:

1) To advise on the price policy of paddy, wheat, jowar, bajra, maize, ragi barely, gram,
tur, moong, urad, sugarcane, ground nut, soy abean, sunflower seed, rapeseed and
mustard, cotton, jute, tobacco and such other commodities as the Government may

185
 indicate from time to time with a view to evolving a balanced and integrated price
structure in the perspective of the overall needs of the economy and with due regard
to the interest of the producer and the consumer.

2) While recommending the price policy and the relative price structure, the
Commission may keep in view the following:
i) The need to provide incentive to the producer for adopting improved technology and
for developing a production pattern broadly in the light of national requirements.
ii) The need to ensure rational utilization of land, water and other production resources.
iii) The likely effect of the price policy on the rest of the economy, particularly on the
cost of living, level of wages, industrial cost structure, etc.

3) The commission may also suggest such non-price measures as would facilitate the
achievement of the objectives such as adoption of improved technology, production
pattern.

4) To recommend from time to time, in respect of different agricultural commodities,

measures necessary to make the price policy effective.

5) To take into account the changes in terms of trade between agricultural and non-
agricultural sectors.

6) To examine, where necessary, the prevailing methods and cost of marketing of

agricultural commodities in different regions, suggest measures to reduce costs of
marketing and recommended fair price margins for different stages of marketing.

7) To keep under review the developing price situation and to make appropriate
recommendations, as and when necessary, within the framework of the overall price
policy.

8) To undertake studies in respect of different crops as may be prescribed by

Government from time to time.

9) To keep under review studies relating to the price policy and arrangements for
collection of information regarding agricultural prices and other related data and
suggest improvements in the same, and to organize research studies in the field of
price policy.

10) To advise on any problems relating to agricultural prices and production that may be
referred to it by Government from time to time.

D) Functions of CACP:
Assurance of a remunerative and stable price environment is considered very
important for increasing agricultural production and productivity since the market place
for agricultural produce tends to be inherently unstable, which often inflict undue losses
on the growers, even when they adopt the best available technology package and produce
efficiently. Towards this end, minimum support prices (MSP) for major agricultural
products are fixed by the government, each year, after taking into account the
recommendations of the Commission for Agricultural Costs and Prices (CACP).

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 While formulating these recommendations, the Commission analyses a wide
spectrum of data, covering the costs of cultivation/production, trends and spread of input
use, production and productivity of the crop concerned, market prices, both domestic and
global inter-crop price parity, emerging supply-demand situation, procurement and
distribution, terms of trade between agriculture and non-agriculture sectors, and so
on. Since the price policy involves certain considerations of long-run consequences, the
Commission also looks at the yield-raising research being conducted by institutions like
ICAR. The basic data are generally collected from the Directorate of Economics and
Statistics, State Governments, Central Ministries and the nodal agencies concerned with
the implementation of agricultural price policy. Besides, the Commission undertakes field
visits for close interaction with farmers in different parts of the country and also have
wider consultation with senior officers, researchers and managers of relevant
organizations.

In formulating the recommendations in respect of the level of minimum support

prices and other non-price measures, the Commission takes into account, apart from a
comprehensive view of the entire structure of the economy of a particular commodity or
group of commodities, the following factors:
i) Cost of production*
ii) Changes in input prices
iii) Input-output price parity
iv) Trends in market prices
v) Demand and supply
vi) Inter-crop price parity
vii) Effect on industrial cost structure
viii) Effect on cost of living
ix) Effect on general price level
x) International price situation
xi) Parity between prices paid and prices received by the farmers.
xii) Effect on issue prices and implications for subsidy

* The estimates of cost of cultivation/production which is an important input for

forming the recommendation of MSP, are made available to the Commission through the
Comprehensive Scheme for Studying the Cost of Cultivation of Principal Crops, operated by
Directorate of Economics and Statistics, Department of Agriculture and Cooperation,
Ministry of Agriculture, Govt. of India. These estimates take into account real factors of
production and include all actual expenses in cash and kind incurred in production by the
farmer, rent paid for leased in land, imputed value of family labour, interest value of owned
capital assets (excluding land), rental value of owned land (net of land revenue), depreciation
on farm implements and buildings and other miscellaneous expenses.

The Commission is required to convey its recommendations to Government well

before the sowing season of the crop. With a view to interacting with various interest
groups, the Commission follows the sequence of steps indicated below:

i) The commission identifies the main issues of relevance for the ensuing season (short,
medium or long run).
ii) The commission sends a questionnaire to Central Ministries, State Govts. and other
organizations related to trade, industry, processors, and farmers both in the co-

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 operative and the private sector and seeks their views on certain issues and factual
information on related variables.
iii) Subsequent to step (ii), the Commission holds separate discussions with the State
Governments, Central Ministries/Departments and other organization. The
Commission also interacts with research and academic institutions and keeps track of
relevant studies and their findings.
iv) The Commission visits certain areas for on-the-spot observations and feedback from
local level organizations and farmers.

Non-price measures:
While recommending the price policy, the Commission also suggests such non-
price measures as would facilitate achievement of the objectives of the policy. In this
regard, the Commission has been emphasizing the following:

1) Establishment/strengthening of agencies of implementation of declared price support

policy,
2) Extension of proven technology to areas where it still needs to be adopted,
3) Evolution of suitable technology for augmenting yield & production of crops,
4) Reform of market regulations & setting up new markets in areas where agricultural
production has made sizeable improvement,
5) Improvement in grading of agricultural produce and expansion of proper storage
facilities,
6) Arrangement for timely & speedy transportation of agricultural commodities from
surplus areas,
7) Utilizing the medium of external trade for domestic price stabilsation,
8) Utilizing the medium of external trade for domestic price stabilsation,
9) Fiscal measures including adjustments in duties/taxes/levies,
10) Developing appropriate technology for processing of agricultural produce,
11) Improving the data base for formulation of price policy.

Model Questions

Q.1. Define soil fertility and soil productivity. Distinguish between soil fertility and
soil productivity.
Q. 2. What do you mean by infrastructure? What are the different kinds of
infrastructure? Explain the importance of infrastructure in development of
agriculture in India.
Q.3. What do you mean by infrastructure? Enlist different categories of agricultural
infrastructure and explain in detail the roles played by agricultural infrastructure.
Q.4. Define agricultural regions. Discuss in detail the various agricultural regions in
India.
Q.5. Critically discuss the factors leading to surplus in agricultural production.
Q.6. Which are the important marketing functions? Write in short about various
agencies involved in marketing of agricultural produce.
Q.7. Enlist main objectives of Commission for Agricultural Costs and Prices (CACP)
and describe in short the functioning of CACP.

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 CHAPTER_6
ANIMAL HUSBANDRY- FISHERIES

Importance, Share, Economic Importance of Production of Livestock, Milk,

Egg, Wool, Meat, Employment Generation and Challenges Ahead

Importance:
Animal husbandry is the art of rearing animals for getting milk, skin, hides and
horns and using them on the farms for agricultural purposes. Animal husbandry sector
play an important role in the national economy and in the socio-economic development of
the country. This sector also play a significant role in supplementing family incomes and
generating gainful employment in the rural sector, particularly among the landless
labourers, small and marginal farmers and women, besides providing cheap nutritional
food to millions of people. Thus, it balances development of rural economy. Besides that,
this sector assumes special significance in the present context of sustained economic
growth, rising income, increasing urbanization, changes in taste and preference that have
lead to dietary changes reflecting the importance of milk, meat, egg and fish.

Share:
India is endowed with the largest livestock population in the world. It accounts for
about 57.3 per cent of the world’s buffalo population and 14.7 per cent of the cattle
population. There are about 71.6 million sheep, 140.5 million goats and about 11.1
million pigs in the country. India has vast resource of livestock and poultry, which play a
vital role in improving the socio-economic conditions of rural masses. Livestock are the
best insurance against the vagaries of nature like drought, famine and other natural
calamities. All India State-wise Livestock Census is provided in Table AH-1.

Economic Importance:

Livestock production:
Livestock production and agriculture are intrinsically linked, each being
dependent on the other, and both crucial for overall food security. According to estimates
of the Central Statistics Office (CSO), the value of output from livestock sector at current
prices was about Rs.4,59,051 crore during 2011-12 which is about 24.8% of the value of
output from total agricultural and allied sector at current price and 25.6% at constant
prices (2004-05). The value of output of milk is Rs.3,05,484 crore in 2011-12, which is
higher than the value of output of paddy and wheat. The value of output from meat group
as per the estimates of CSO at current prices in 2011-12 was Rs.83,641 crore. The value
of output from eggs and wool group is Rs.17,803 crore and Rs.318 crore respectively for
2011-12.

Milk Production:
India is the largest producer of milk in the world. Several measures have been
initiated by the Government to increase the productivity of milch animals, which has
resulted in increasing the milk production significantly from the level of 170 lakh tonnes
in 1950-51 to 127.9 million tonnes in 2011-12. The Annual growth rate for production of
milk is about 5% in 2011-12 compared to 2010-11. Per capita availability of milk at
national level has increased from 176 grams per day in 1990-91 to 290 grams per day
during the year 2011-12, which is more than the world average of 284 grams per day.

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 This represents sustained growth in the availability of milk and milk products for
our growing population. Dairying has become an important secondary source of income
for millions of rural families and has assumed the most important role in providing
employment and income generating opportunities particularly for marginal and women
farmers as most of the milk in the country is produced by small, marginal farmers and
landless labourers.
Egg Production:
India ranks third in egg production in the world. Poultry development in the
country has shown steady progress over the years. Currently egg production is around
66.45 billion in 2011-12 which is about 5% over the previous year production of about
63.02 billion eggs. The poultry meat production is estimated to be about 2.47 million
tonnes. The current per capita availability of eggs is around 55 eggs per year. Exports of
poultry products are currently at around Rs.457.82 crore in 2011-12.
Wool Production:
Wool production declined marginally in 2011-12 to 44.7 million kg. from 45.1
million kg. in 2006-07. The Annual growth rate for production of wool is about 4% in
2011-12 compared to previous year.

Meat Production:
The meat production has registered a healthy growth from 2.3 million tonnes in
2006-07 to 5.5 million tonnes in 2011-12. The Annual growth rate for meat production in
2011-12 was about 13%.
All India Decade-wise production of Major Livestock Products is given in Table
AH-2.
Employment Generation:
The agricultural sector engages about 57% of the total working population and
about 73% of the rural labour force. Livestock employed 8.8% of the agricultural work
force albeit it varied widely from 3% in North-Eastern states to 40-48% in Punjab and
Haryana. Animal husbandry promotes gender equity. More than three-fourth of the labour
demand in livestock production is met by women. The share of women employment in
livestock sector is around 90% in Punjab and Haryana where dairying is a prominent
activity and animals are stallfed
Challenges Ahead:
Livestock have been an integral component of India’s agricultural and rural
economy since time immemorial, supplying energy for crop production in terms of
draught power and organic manure, and in turn deriving their own energy requirements
from crop byproducts and residues. The advances in bio-chemical and mechanical
technologies, however, have weakened the synergy between livestock and crops.
Livestock are now more valued as source of food and contribute over one-fourth to the
agricultural gross domestic product and engage about 9% of the agricultural labour force.
The livestock sector has been growing faster than crop sector; however, in recent years,
the growth both in livestock production and productivity has decelerated considerably.
Livestock sector is expected to emerge as an engine of agricultural growth in the
th
12 plan and beyond in view of rapid growth in demand for animal food products.
Achieving growth rate of 5-6%, however, would require addressing challenges of
shortage of feed and fodder and frequent occurrence of some deadly diseases. The sector
has remained under-invested; and neglected by the financial and extension institutions.
Livestock markets are under-developed, which is a significant barrier to the
commercialization of livestock production. Besides, the sector will also come under
significant pressure of increasing globalization of agri-food markets.

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 Nonetheless, there are number of socio-economic and environmental challenges
that need to be overcome through appropriate policies, technologies and strategies in
order to harness the pro-poor potential of livestock.

Table AH-1: Livestock Census– 2007

(Figs. In Thousands)
States /UTs Cattle Buffaloes Sheep Goats Total Total
livestock poultry
Andhra Pradesh 11223 13272 25539 9626 60175 123981
Arunachal Pradesh 503 3 20 292 1413 1348
Assam 10041 500 354 4320 17227 29060
Bihar 12559 6690 218 10167 30342 11420
Chhattisgarh 9491 1604 140 2768 14418 14246
Goa 71 37 0 11 177 505
Gujarat 7976 8774 2002 4640 23515 13352
Haryana 1552 5953 601 538 8859 28785
Himachal Pradesh 2269 762 901 1241 5217 810
Jammu & Kashmir 3443 1050 4127 2068 10987 6683
Jharkhand 8781 1506 483 6592 18100 11231
Karnataka 10503 4327 9558 6153 30859 42068
Kerala 1740 58 1 1729 3587 15686
Madhya Pradesh 21915 9129 390 9014 40696 7384
Maharashtra 16184 6073 2909 10391 35954 64756
Manipur 342 62 9 51 789 2403
Meghalaya 887 23 21 365 1823 3093
Mizoram 35 6 1 16 328 1239
Nagaland 470 35 4 178 1419 3156
Orissa 12310 1190 1818 7127 23057 20600
Punjab 1777 5062 208 290 7408 10685
Rajasthan 12120 11092 11190 21503 56663 4946
Sikkim 135 0 3 92 270 157
Tamilnadu 11189 2009 7991 9275 30759 128108
Tripura 954 14 4 633 1869 3701
Uttar Pradesh 18883 23812 1188 14793 60272 8754
Uttaranchal 2235 1220 290 1335 5141 2602
West Bengal 19188 764 1577 15069 37419 86210
A & Nicobar 49 10 0 67 174 979
Chandigarh 7 20 0 1 28 129
Dadra & Nagar Haveli 57 4 0 25 87 170
Daman & Diu 3 1 0 3 7 26
Delhi 92 278 6 21 418 2
Lakshadweep 7 0 0 76 82 167
Pondicherry 84 3 4 69 162 387
All India 199075 105343 71558 140537 529698 648830
‘0’ Negligible with respect to thousands
Source: 18th Livestock Census, Dept. of Animal Husbandry, Dairying & Fisheries, MoA, GoI.

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 Table AH-2:
All India Decade-wise Production of Major Livestock Products

Year Milk Eggs Wool Meat

(Million Tonnes) (Million Nos.) (Million Kgs.) (Million Tonnes)
1950-51 17.0 1,832 27.5 -
1960-61 20.0 2,881 28.7 -
1980-81 31.6 10,060 32.0 -
1990-91 53.9 21,101 41.2 -
2000-01 80.6 36632 48.4 1.9
2011-12 127.9 66,449 44.73 5.5

‘-’ Not Available

Note: Meat production from commercial poultry farm is included from 2007-08.

FISHING

Importance, Types of Fishing, State-wise Fish Production, Economic

Benefits, Thrust Areas, Challenges Ahead

Importance:
Fishing is one of the oldest occupations of man and learnt fishing much before he
could learn something about agriculture. Fishing has assumed much importance in view
of the rapidly growing population and depleting land resources. There are about 30,000
species of fish in the world out of which about 18000 are found in India. Fish cultures in
India have been playing an important role in the economy of the country. As it helps in
augmenting food supply (protein rich food and big source of vitamin A, B, and D),
generating employment, raising nutritional level and earning foreign exchange by export.
Fisheries sector contributes significantly to the national economy while providing
livelihood to approximately 14.49 million people in the country. It has been recognized as
a powerful income and employment generator as it stimulates growth of a number of
subsidiary industries and is a source of cheap and nutritious food besides being a source
of foreign exchange earner.

Types of Fishing:
The fish catch in India is of two types:
(a) Marine fisheries:
It includes coastal, off-shore and deep sea fisheries mainly on the continental shelf
upto a depth of 200 meters.

(b) Inland fisheries:

It includes fishes from rivers, lakes, canals, reservoirs, ponds, tanks etc.

India has 8,118 kilometers of marine coastline, 3432 fishing villages, and 1537
traditional fish landing centers. India's fresh water resources consist of 1.95 lakh

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kilometers of rivers and canals, 2.9 million hectares of minor and major reservoirs,
2.4 million hectares of ponds and lakes, and about 0.8 million hectares of flood
plain wetlands and water bodies. The marine and freshwater resources offered a
combined sustainable catch fishing potential of over 4 million metric tonnes of fish. The
marine fish harvested in India consist of about 65 commercially important species/groups.
Pelagic and mid-water species contributed about 52% of the total marine fish. State-wise
Fish production data is depicted in following Table.

Table: State-wise Fish Production during 2004-05 to 2011-12

(In ‘000 tonnes)
State/ Union Territory 2004-05 2007-08 2011-12
Andhra Pradesh 853.05 1010.08 1603.17
Arunachal Pradesh 2.70 2.83 3.30
Assam 186.31 190.32 228.62
Bihar 267.51 319.10 344.470
Goa 990.44 33.43 89.96
Gujarat 635.21 721.91 783.72
Haryana 42.05 67.24 106.00
Himachal Pradesh 6.90 7.85 8.05
Jammu & Kashmir 19.10 17.33 19.85
Karnataka 251.53 297.69 546.44
Kerala 678.31 667.33 693.21
Madhya Pradesh 62.06 63.89 75.41
Maharashtra 548.02 556.45 578.79
Manipur 17.80 18.60 22.22
Meghalaya 5.64 4.00 4.77
Mizoram 3.68 3.76 2.93
Nagaland 4.90 5.80 6.84
Orissa 315.59 349.48 381.83
Punjab 77.70 78.73 97.62
Rajasthan 16. 39 25.70 47.85
Sikkim 0.14 0.18 0.28
Tamil Nadu 459.43 559.36 611.49
Tripura 19.84 36.25 53.34
Uttar Pradesh 277.07 325.95 429.72
West Bengal 1215.00 1447.26 1472.05
A & Nicobar 32.68 28.68 35.26
Chandigarh 0.08 0.21 0.10
Dadra & Nagar Haveli 0.05 0.05 0.05
Daman & Diu 12.51 26.36 17.43
Delhi 1.41 0.61 0.74
Lakshadweep 11.96 11.04 12.37
Pondicherry 36.75 39.01 42.40
Chhattisgarh 120.07 139.37 250.70
Uttarakhand 2.57 3.09 3.83
Jharkhand 22.00 67.89 91.68
Total India 6304.75 7126.83 8666.45

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Economic Benefits:
India is the second largest producer of fish in the world contributing to about
5.43% of global fish production. India is also a major producer of fish through
aquaculture and ranks second in the world after China. The total fish production during
2011-12 is at 8.67 million tones with a contribution of 5.30 million tonnes from inland
sector and 3.37 million tonnes from marine sector respectively. Fishery being one of the
promising sectors of agriculture and allied activities in India, a growth target rate of 6 per
cent was fixed so as to achieve the overall growth rate of 4.1 per cent for Agriculture
during the 11th Five year Plan. During 2010-11, the volume of fish and fishery products
exported from India was 8,13,091 tonnes worth Rs.12,901.47 crores and during 2011- 12
for the first time export earnings have crossed USD 3.5 billion. Export aggregated to 8,
62,021 tonnes in volume valued at Rs.16,597.23 crores. As per the estimates of Central
Statistical Organization (CSO), the value of GDP from fisheries sector at current price
during 2011-12 was Rs.76699 crores which is about 4.15% of the total GDP of
Agriculture and allied sectors.

Growth in fishery sub-sector is next only to poultry. The policy for fishery
development emphasizes inland fisheries, particularly aquaculture in recent years, which
has been instrumental in increasing production, enhancing exports and reducing the
poverty of fishermen.
Thrust Areas:
Fisheries are a State subject and as such the primary responsibility for its
development rests with the State Governments. However, in recognition of the important
role of fisheries in Indian economy the Government has been implementing various
production oriented, input supply and infrastructure development programmes directly or
through State governments besides formulating appropriate policies to increase
production and productivity in fisheries sector. But the main objectives of fisheries these
programmes are:-
i. Enhancing production & productivity of fishermen, fish farmers and fishing industry
in India.
ii. Increasing nutritional standard of people through fish production.
iii. Earning of foreign exchange from export of marine products.
iv. Improving socio-economic conditions of traditional fisherman.
v. Employment generation.
vi. Conservation of depleted species of fish, and
vii. Improving welfare of fishermen and their socio-economic status.

Challenges Ahead:
Despite rapid growth in total fish production, a fish farmers’ average annual
production in India is only 2 metric tonnes per person, compared to 172 tonnes
in Norway, 72 tonnes in Chile, and 6 tonnes per fisherman in China.
Fish harvest distribution is difficult within India because of poor rural road
infrastructure, lack of cold storage and absence of organized retail in most parts of the
country.
Besides that the other important challenges in fisheries development in the
country include development of sustainable technologies for fin and shell fish culture,
Fish Seed Certification, yield optimization, infrastructure for harvest and post-harvest
operations, landing and berthing facilities for fishing vessels and uniform registration of
fishing vessels. To improve returns to fishermen and provide better products for
consumers, several states have organized marketing cooperatives for fishermen.

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Nevertheless, most traditional fishermen rely on household members or local fish
merchants for the disposal of their catches. In some places, marketing is carried on
entirely by fisherwomen who carry small quantities in containers on their heads to nearby
places. Good wholesale or retail markets are rare.Higher productivity, knowledge transfer
for sustainable fishing, continued growth in fish production with increase in fish exports
have the potential for increasing the living standards of Indian fishermen.

References of chapter 11 & 12:

SN Title Author (s) Year Publisher
1 Handbook of Indian Council of 1997 and Director,
Agriculture Agricultural Research, various Directorate of
New Delhi Reprints Publication and
Information on
Agriculture, Krishi
Anusandhan
Bhavan,
Pusa, New Delhi
2 Principles of Agronomy Dr. T. Yellamanda 1998 Kalyani Publishers,
Reddy and G.H. New Delhi
Sankara Reddi
3 Infrastructure and L. Venkatachalam 2003 Agricultural
Agricultural Development &
Development in Rural
Karnataka State Transformation
(ADRT) Unit,
ISEC, Nagarabhavi,
Banglore
4 Report of the Working Anonymous 2012 Planning
Group on Animal Commission, Govt.
Husbandry and of India,
Dairying : 12th Five New Delhi
Year Plan (2012-2017)
5 Basic Animal Department of Animal 2013 Department of
Husbandry and Husbandry, Dairying Animal Husbandry,
Fisheries Statistics and Fisheries, MoA, Dairying and
(AHS Series-14) GoI, New Delhi Fisheries,
Ministry of Agri.,
Govt. of India,
Krishi Bhavan,
New Delhi
5 http://www.icar.org.in/en/information-resources.htm
6 http://agricoop.nic.in/documentreport.html
7 http://cacp.dacnet.nic.in/content.aspx?pid=32
8 http://en.wikipedia.org/wiki/Fishing_in_India
9 http://dahd.nic.in/dahd/statistics.aspx

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Model Questions

Q.1. State the economic importance of Animal Husbandry in Indian economy. What
are the challenges for Animal Husbandry?
Q.2. State the general and economic importance of Fishing in Indian economy. Explain
in detail the challenges for fisheries in India and enlist the thrust areas of various
fisheries development programmes of India.

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 CHAPTER-7
FORESTRY AND FOREST PRODUCTS
Introduction
Agricultural marketing is the critical link between agricultural production and
farm sector revenue percolating to the farmers. Apart from performing transferring
agricultural goods to consumers it transmits the price signals in the marketing chain.
Agricultural development not only should address growth of yield rate and production but
also address efficient marketing system.
The existing marketing system consists of four channels:
• Direct Marketing from producers to consumers
• Marketing through public agencies or cooperatives
• Through private whole- sellers and then retailers and finally to consumers.
• From producers to processors and from processors to consumers.
In such market transaction of goods take place in market yards and sub-yards and
periodic markets like hats or mandis. In fact, agricultural markets are highly fragmented
and unorganized. Direct link between farmers or producers and consumers is almost
absent due to increased number of intermediaries and also the market chain is long. To
eliminate intermediaries and encourage direct marketing several farmer's markets like
Apni Mandi (Punjab), Kisan Mandi (Rajasthan), Krishak Bazzar (Odisha), Rythu Bazzar
(Andhra Pradesh) have been set up in several sets. But these are not sufficient to meet up
the requirement. The marketable surplus has increased manifold and farmers are now
largely market-oriented.
Agricultural Marketing and its Limitations
Direct linkage always gives higher returns to the producers and the consumers are
also benefitted as they get the goods at reasonable price far less than the price paid
through other channels either through different sellers. Being unable to store their
products they are forced to sell their products at low price to the middlemen after the
harvest and cannot even cover the production cost. Due to lack of proper storage
facilities, adequate and cheap transport facilities, organized and regulated retail market,
correct information about the product price and market conditions, Indian system of
agricultural market does not operate efficiently and farmers do not get fair price for their
crops.
Limitations of the Present Set-Up
• Infrastructure
• Dominance of Intermediaries in the Value Chain
• Improper Public Distribution System (PDS)
FDI in Agricultural Retail Marketing In India
Over the last two decades, Indian economy has witnessed significant rise of FDI
flows as well as remarkable increase in growth rate with favorable consequences on
employment, infrastructure development and business climate. Fast growing Indian
economy accompanied by growing domestic consumer markets has raised the growth of
retail sector at a faster rate mostly in unorganized sector. Organized retail has huge
potentiality which is still at a nascent stage, compared to other developing economies.
Now in our country, FDI has been permitted under automatic route in Floriculture,
Horticulture, Development of seeds, Aqua- culture, cultivation of mushrooms with the

197
improved technology and in Tea plantation FDI up to 100 per cent is permitted with prior
approval and some restrictions. With the entry of FDI, the Indian organized retail market
has become more competitive in terms of implementing effective business models on
operational format, pricing, reinventing and improving the supply chain. FDI was
generally not allowed in agricultural retail marketing although it has enormous growth
potential in India particularly in agricultural marketing considering the limitations of the
present setup regarding infrastructure, communication network in rural economy and
inefficient supply chain.
The policy of allowing 100% FDI in agricultural retail can benefit both the
farmers and consumers in terms of better price. Village markets get linked with distant
consumer market domestic and international. Indian farmers can access global best
management practices, designs and technological knowhow. Permitting capital
investment in agricultural marketing system is likely to ensure adequate flow of capital
into rural economy which will promote the welfare of all sections of society particularly
farmers and consumers. It will bring about improvements in farmers income and
agricultural growth and assist in lowering consumer price inflation.
Agricultural Price Supports
Government intervene actively in the operation of agricultural produce marketing
activities. The ways they intervene and the reasons they do so depend in large part on the
wealth of the country. Basically, the farmers use their political power to seek higher and
more stable farm price by means of legislation or fiat. Generally, government intervene to
support farm prices that often are volatile. Weather conditions, over which farmers have
no. control, are an important determinant of how much a farmer harvests in a given year.
The resulting variability of production in the face of relatively stable demand causes farm
prices and farmer's incomes to vary from year to year. It may also cause farmers to -go
bankrupt because modern farming requires large investments in specialized facilities and
equipments.
Kisan Credit Card Scheme
Kisan Credit Card Scheme (KCC) aims at providing adequate and timely support from
the banking system to the farmers for their short-term credit needs for cultivation of
crops. This mainly helps farmers for purchase of inputs etc. during then cropping season.
Credit card scheme proposed to introduce flexibility to the system and improve cost
efficiency.
Following are the advantages of KCC scheme:
• Simplifies disbursement procedures
• Removes rigidity regarding cash and kind
• No need to apply for a loan for every crop
• Assured availability of credit at any time enabling reduced interest burden for the
• farmer
• Helps buy seeds, fertilizers at farmer's convenience and choice
• Helps buy on cash and avail discount from dealers
• Credit facility for 3 years- no need for seasonal appraisal
• Maximum credit limit based on agriculture income
• Any number of withdrawals subject to credit limit

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• Repayment only after harvest
• Rate of interest as applicable to agriculture advance
• Security, margin and documentation norms as applicable to agricultural advance
Approach to get Kisan Credit Card
• Approach to nearest public sector banks or authorized other banks for details
• Eligible farmers will get a KCC and a pass book. It has the name, address
• Particulars of land holding, borrowing limit, validity period, a passport size
photograph of holder which may serve both as an identity card and facilitate recording
of transactions on an ongoing basis.
• Borrower is required to produce the card cum pass book whenever he/she operates the
account.
Salient features of the Kisan credit Card (KCC) Scheme
• Assessment of crops loan component based on the scale of finance for the crop plus
insurance premium x Extent of area cultivated + 10% of the limit towards post-
harvest household consumption requirements + 20 % of limit towards maintenance
expenses of farm assets
• Eligible farmers to be provided with a Kisan Credit Card and a pass book or card
cum- pass book
• Revolving cash credit facility involving any number of drawals and repayments
• while the limit
• Limit to be fixed on the basis of operational land holding, cropping pattern and scale
of finance.
• Entire production credit needs for full year plus ancillary activities related to crop
production to be considered while fixing limit
• Sub- limits to cover short- term, medium- term as well as term credit are fixed at the
discretion of banks.
• Card valid for 3 to 5 years subject to annual review.
• As incentive for good performance, credit limits could be enhanced to take care of
increase in costs,
• Each drawal to be repaid within a maximum period of 12 months. Conversion/ re-
schedulement of loans also permissible in case of damage to crops due to natural
calamities
• Security, margin, rate of interest etc. as per RBI norms
• Disbursement through various delivery channels, including ICT driven channels like
A TM/POS/Mobile handsets
In order to spread the KCC base and to popularize the KCC amongst the farming
community and also to bring in a commonality amongst the banks in the technology
driven banking now this scheme is re-introduced to make it Smart Card- cum- Debit
Card.
Forest Products
A forest product is any material derived from a forest for commercial use, such as
lumber, paper, or forage for livestock. Wood, by far the dominant commercial forest

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product, is used for many industrial purposes such as the finished structural materials
used for the construction of buildings or as a raw materials in the form of wood pulp that
is used in the production of paper. All other non-wood products derived from forest
resources, comprising abroad variety of other forest products, are collectively described
as non- timber forest products.
Forest Products and their Uses
Trees are harvested to make a wide range of products used in daily life. Very little
is wasted and almost all logs that leave the forest are converted into a useful product.
Types of major forest product:-
1. Solid Timber Products relatively straight, solid logs are converted into high value,
solid timber products used in construction, furniture, flooring and fittings. These
logs can be sawn, sliced or peeled. .
2. Wood Fibre Products due to their shape or level of natural defect, many logs are
unsuitable for solid wood products and are converted into wood fibre products,
such as paper, cardboard, and particle board. Logs which are converted into
woodchips are used to make paper products, ranging from packaging material and
cardboard to newsprint and fine writing and printing papers.
Many forest management policies have been implemented that impact product
economics, including forest access restrictions, harvesting fees, and harvest limits.
Deforestation, global warming and other environmental concerns have increasingly
affected the availability and sustainability of forest products, as well as the economies of
regions dependent upon forestry around the world. In recent years, the idea of sustainable
forestry which aims to preserve crop yields without causing irreversible damage to
ecosystem health has changed the relationship between environmentalists and the forest
products industry. Stakeholders in the forest products industry include government
departments, commercial enterprises, NGO's, policy- makers and analysts, 'private
concerns and international organizations.
References:
1. Problems of Indian Agriculture by Dr. S. P. Dhondyal
2. Agriculture price policy in India by A. S. Kahlon and D. S. Tyagi
3. Agriculture marketing by Acharya
Questions:
1. How marketing of agricultural produce different from industrial commodities?
2. What do you mean by Marketable surplus and Marketed surplus?
3. What do you mean by distress sale? short note on commission for agriculture cost
and prices

200
 CHAPTER_8
ROLE OF COOPERATIVES IN AGRI. VALUE CHAINS - RETAIL CHAINS -
COOPERATIVES SOLUTIONS TO INTEGRATE WITH MARKET OUTPUT AS
WELL AS OUTPUT MARKETS, VALUE ADDED PROCESSING ACTIVITIES.
The Indian marketing in agro- food products has acquired new dimensions in the past few
years due to the changes in global trade, especially in agro- commodities and the
changing dynamics of trade in general. In this regard, community-based organizations
like agricultural cooperatives have considerable potential to fill e-value based processing
and marketing of agricultural products. Agricultural cooperatives to be effective need to
improve efficiency in the following key areas:
• Responding to the needs of the member’s thereby encouraging member
participation.
• Providing technical support in areas of marketing and supply
• Enhancing higher economic returns to members through value addition.
• Delivering adequate and timely credit facilities leading to higher productivity.
• Offering a high level of market information enabling better business decisions
• Managerial efficiency which leads to better" Good Will.
• Adopting open attitudes towards joint ventures and collaborations.
Marketing of Inputs and Outputs
In all the developing countries of Asia including India there is a tremendous
opportunity for cooperatives to increase their share in marketing of inputs and outputs.
Marketing activities by the cooperatives help the small farmers in three ways:
• Linking credit and input supplies with marketing of produce.
• Better price for farmer's produce.
• Extra earning to members due to sharing of profit earned in marketing business.
The Integrated Approach,
An integrated approach directed at activities and operations with member's needs
and requirement will directly helps members to increase their production and productivity
by providing an integrated package of services including extension, credit, inputs,
guidance and supervision.
Following factors needs to be implemented:
• Production enhancement activities.
• Cost- saving activities.
• Value- addition activities.
Agro- Processing Cooperatives - Value Addition
The term agro-processing means .establishing processing activities to handle the
local produce of the basic farmers with a view to generate additional or higher economic
returns to them. Naturally, it will reduce post- harvest losses, check outflow of rural
population to urban centres, offer remunerative prices to local producers, improved/
advanced technology to rural areas, industrialize the rural areas, generate employment
opportunities, help improve productivity, help develop specific commodities through
better soil treatment and appropriate application of fertilizer, establish recognition to the
progressive and . innovative initiatives of the farmers etc.

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 Value addition is achieved through an efficient marketing strategy. It means the
basic products need to be transformed into other products which are in high demand in
the market. Simple value-addition can be achieved through a careful and systematic
handling of the product and related activities like- grading, packaging and transportation.
Value addition is also achieved through attractive, informative, branding and its contents
and pricing clearly mentioned on the labels. Value -addition is also possible through a
proper marketing coordination.

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 CHAPTER-9
CONTRACT FARMING
Introduction
Contract farming is an agricultural production carried out according to an
agreement between a buyer and farmers. It establishes conditions for the production and
marketing of a farm product or products. In other words; the farmer agrees to provide
established quantities of a specific agricultural product, meeting the quality standards and
delivery schedule set by the purchaser. In turn, the buyer commits to purchase the
product, often at a pre-determined price. It is also termed as" out-grower schemes" ,
whereby farmers are linked with a large farm or processing plant which supports
production planning, inputs supply, extension advice and transport. Contract farming is
used for a wide variety of agricultural products.
Meaning of Contract Farming
Contract Farming can be defined as an agreement between farmers and processing
and/ or marketing firms for the production and supply of agricultural products under
forward agreement, frequently at pre-determined prices.
Benefits of Contract Farming
• Both partners engaged in contract farming can benefit.
• Farmers have guaranteed market outlet, reduce their uncertainty regarding prices
and often are supplied with loans in kinds as agri. inputs.
• Purchasing firms benefit from having a guaranteed supply of agricultural products
that meet their specifications regarding quality, quantity and timing of delivery.
• Improved access to local markets.
• Assured markets and prices especially for non-traditional crops.
• Assured and often higher return.
• Improved local infrastructure, such as roads and irrigation facilities in sugar can
grower areas, tea roads, dairy coolers / collection centres, etc.
• Lower transport costs due to coordinated and planned objectives.
Contract Farming - Concept
In an age of market liberalization, globalization and expanding agribusiness, it is
the need of the hour to protect small and marginal farmers. To ascertain this, agribusiness
firms, besides providing resources for productive investment, can benefit the locals in
employment, technology transfer, and incremental technical knowledge.
Thus contract farming provides institutional and organizational innovations in the rural
sector.
Types of Contract Farming
These are a few of the models of contract farming that are accepted globally:
• Centralized Model
• Nucleus Estate Model. Multipartite Model. Informal Model
• Intermediary Model
Centralized Model
In this model the contracting company provides support to the production of the
crop by small holder farmers, purchases the crop from the farmers, and then processes,
packages and markets the product, thereby ensuring control over its quality. This model

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can become effective for crops such as tobacco, cotton, paprika, sugar cane, banana,
coffee, tea, cocoa and rubber.
Nucleus Estate Model
This model is a variation of the centralized model. The promoter also owns and
manages an estate plantation generally close to a processing plant and the estate is often
fairly large in order to provide some guarantee of throughput for the plant. This model
can be used for tree crops, but can be ITO , e,g. fresh vegetables and fruits .
Multipartite Model
This model usually involves the government, statutory bodies and private
companies jointly participating with the local farmers. The model may have separate
organizations responsible for credit provision, production, management, processing and
marketing of the produce.
Informal Model
This model is basically run by individual entrepreneurs or small companies who
make simple, informal production contracts with farmers on a seasonal basis. Financial
investment is minimal. The crops usually require only a minimum amount of processing
and packaging for resale to the retail trade or local markets, example vegetables,
watermelons and fruits.
Intermediary Model
This model has formal subcontracting by companies to intermediaries ( collectors, farmer
groups, NGOs) and the intermediaries have their own informal arrangements with
farmers. The main disadvantages with this model are it disconnects the link between
company and farmer.

References:
1. Handbook of Agricultural Science by S. S. Singh
2. Problems of Indian Agriculture by Dr. S. P. Dhondyal
Questions:
Write the concept and meaning of contract farming and explain the benefits of contract
farming?

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