Types of Cooperative Society in India
Cooperative societies are a significant aspect of the socio-economic structure of India, enabling cooperative and sustainable practices between several strata of society. Given their potential for your community engagement, you can use cooperative societies for your overall/community betterment. In this blog, we will look at the different types of cooperative society in India, why they matter, and their significance in our lives.
Read on to see how various cooperative societies might affect your future, and help contribute to a better society.
What are Cooperative Societies?
Fundamentally, cooperative societies are independent and different from businesses. A cooperative society business exists through/for the purpose of voluntary association. People or entities persuade someone to join together to form a cooperative to meet common economic, social, or cultural needs. Ordinarily, traditional businesses operate within a legal framework which primarily emphasizes profit. But cooperative societies operate under founding principles emphasizing mutual aid and self-help responsibilities.
The features of cooperative society naturally lean into the principles of inclusion, cooperation, and community. Cooperative societies provide even more than an economic vehicle, they are an opportunity for good social change and the advancement of society. Cooperative societies have a set of principles that provide sustainable and equitable development; these principles are reflective of how they are a change movement for the contemporary world.
Also Read: Cooperative Society Accounting Made Simple: Issues & Best Practices
What are the Types of Cooperatives in India?
In India, cooperative societies are classified in many different ways to satisfy different needs located in different areas of society. Here are the types of cooperative societies in India:
Consumer Cooperative Societies: Serving Consumer Needs
Consumer cooperative societies are fairly uncomplicated; they have a singular purpose: to provide goods and services to their members at affordable, and competitive prices. Such cooperative society examples include grocery cooperatives and pharmacy societies.
Consumers often grapple with fluctuating prices and market uncertainties. Where consumers face many challenges, consumer cooperatives provide a mechanism for fulfilling their demands and needs in a secured way, with reasonable pricing.
In consumer cooperatives, the members are simultaneously customers and owners, ensuring that the goods or services are aligned to their preferences & needs. Their collective buying power gives them access to groceries and pharmacy services at a lower price based on negotiations with suppliers.
These cooperatives are implementers of ethics in their cultures and practices. These cooperative members continue to make decisions strongly aligned to being responsible and sustainable and in the best interest of the consumers/members.
Producer Cooperative Societies: Supporting Producers
Producer cooperatives are a group of people involved in a common production activity, usually farming or manufacturing. This type of cooperative societies empower individuals as central figures in their respective industries, often with smaller producers struggling in broader competitive environments.
By working together, this group of producers is able to market their goods together to larger audiences. Their costs of production are able to be reduced through sharing resources and gaining more profits to continue the sustainability of their ventures.
Producer cooperative societies provide helpful resources by offering ways of working together, saving money, reaching bigger market stages, along with being able to negotiate better pricing. Because of this model, not only do individual producers benefit, but the entire cooperative society business has a better chance of growing.
Cooperative Credit Societies: Linking to Credit
Cooperative credit societies (also known as credit unions) provide credit opportunities for individuals with credit needs, particularly for low-income earners or at-risk communities. These credit cooperatives are designed to be accessible, affordable, and inclusive, and they provide to people who otherwise would have no access to credit through the conventional banking system.
Credit cooperative societies are vital vehicles of financial inclusion and development, through providing higher access, lower cost, and more choice around credit where the members need it more than ever.
By reducing gaps in financial services, credit cooperatives help broaden access to appropriately priced lending, thereby contributing to the financial stability and well-being of underdeveloped individuals and communities and contributing to building conditions for inclusive prosperity.
Also Read: How to Prepare Income and Expenditure Account of Co-operative Society
Utilizing Marketing Cooperative Societies: Improving Marketing Capacity.
If marketing cooperatives perform a great service for small-scale producers it is by providing a competitive advantage for them in the marketplace.
Marketing cooperatives have the aim of improving market access for members as their members’ access to market would ordinarily have been limited to a local or regional market area.
Small-scale producers banding together can overcome marketing, distribution, and larger market access barriers through the pooling of resources, products, and ratio of expertise. This cooperation allowed small-scale producers to achieve some level of cost efficiency – economies of scale – that would make its products at least somewhat cost-competent with other products on the market or at the very least attractive to buyers.
Marketing cooperatives assist in facilitating market access for small-scale producers by offering a consolidated product base, improved returns as a result of collective bargaining, and market information sharing. In this way, marketing cooperatives can play a vital role in promoting sustainable success and growth of their small-scale producer members, allowing them to successfully compete in a difficult and competitive market.
Housing Cooperative Societies: A Response to Housing Crises
Housing cooperatives present an innovative response to ongoing issues with access to affordable & secure housing, particularly in highly populated urban areas. Housing cooperatives allow individuals to collectively own and manage residential properties which is an essential role of cooperatives in India.
Housing cooperative societies are able to develop housing options that are affordable by pooling costs through multiple members, and are ideal solutions for homeownership that can easily be realised for many low-to-moderate income individuals who may not have had the means to afford homeownership.
The cooperate process in housing is not only a practical way to resolve housing concerns in urbanised jurisdictions that have a deficit of housing, it also creates an aspect of working together and sharing in the ownership responsibility.
Cooperative Farming Societies: Collaboration in Agriculture
Cooperative farming societies are structured groups of farmers working together to be aware of many issues that agriculture confronts.
Cooperative farming societies will be formed to improve coordination, collaboration and sharing resources and knowledge has the potential to increase their productivity and income to produce a greater return for consumers within the agricultural producer industry.
Cooperative farming societies are able to secure better prices selling to wholesalers and retailers, while selling their product as a group through a more market reach and have more leverage as sellers when compared as individuals.
In addition to the financial benefits of rewarding engagement among their members, members benefit when they reach economies of scale, cut costs, achieve better financing terms, and have limited access to incentives or grants that may be available to a cooperative organised group.
Residential Cooperative Societies: Creating and Sustaining Community
Cooperative societies in a gated community are organized by residents or owners to cooperatively manage community assets, facilities, and services.
Cooperative societies allow the members to make decisions about common issues, including the maintenance of the common property, security, landscaping, waste disposal, etc. Most members in these cooperatives are owners; everything the cooperative society owns is owned collectively by the members who then become managers of the assets jointly composed of elected board or committee members representing the interests of the community.
Cooperative societies are involved in the miscellaneous common facilities and properties supported by gated communities, like parks, pools, recreational facilities, club houses, buildings, roadways, etc. They help maintain the key features of cooperative society. Funding for the maintenance is common with contributions made from the members who contribute to the cooperative society. Generally, this contribution is in the form of maintenance fees.
Members participate in making decisions for the community in a democratic manner, therefore each member has an equal say in matters concerning the community, or they agree and participate in decisions that represent the majority.
By managing the community as a cooperative society and remaining in a gated community, residents have more control over their shared surrounding environment. Cooperative societies in gated communities provide unique possibilities for efficient management of assets, economies in their asset management, and supportive sense of community. However, players including members in a gated community can have disagreements with one another, poor financial management positions, and varying importance or proportion of priorities and opinions on issues with finances and buildings in the community.
Cooperative societies are members that aim to enhance the well-being of themselves as individuals, while managing resources collectively, with respect to the governing documents and bylaws of the cooperative and gated community.
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Importance of Cooperative Society
The importance of cooperative society has been increasing rapidly. Cooperative societies are change agents in both urban and rural areas, and they can have a tremendous impact on poverty reduction, economic development, and social development. Cooperative societies facilitate self-help and cooperation among their members to improve their lives and promote the community as a whole.
Cooperative societies can stimulate economic activity and entrepreneurship through collective purchasing power of credit, owned productive assets, and access to markets to create job opportunity and income generating potential, which locally and nationally has positive spill over effect and multiplier effects in the economy.
Cooperative societies generally create knowledge and develop the capacity of their members. Members build new skills they wouldn’t have learned without being part of cooperative societies. Cooperative societies generate social development and sustainability of environmental quality. They help with inclusion, community building, and democratic decision making; and take an environmental sustainability approach to improve community resiliency and quality of life for a sustainable planet which helps in the role of cooperatives in India.
Distinctive Characteristics of Cooperative Societies
Cooperative societies have a distinctive form and structure and the cooperative provides several attractive features or benefits that contribute to your choices of community development. We will explore the characteristics and advantages of cooperative society.
1. Democratic Governance: A fundamental aspect of cooperative societies is their democratic governance structure. In a cooperative, every member has an equal voice in the decision-making process. The democratic nature of cooperatives ensures all members have a voice in guiding the cooperative. This provides a sense of inclusivity and representation. Each member is provided with an equal opportunity to shape the cooperative. Usually, decisions are made with a one-member, one-vote principle. This is designed to prevent concentration of power by a small number of members and to better serve the interests of the entire community.
2. Limited Return on Capital: Unlike traditional for-profit enterprises, cooperative societies aim for an equitable distribution of wealth, or the value of the cooperative, to members. Members share in the financial benefits of the cooperative based on their level of participation or involvement in the cooperative, rather than the amount of capital they invested to join the cooperative. As such, cooperative societies serve to improve the economic well-being of their members, not necessarily to accumulate wealth or riches from the resources of the cooperative by a few members.
3. Voluntary Membership: Cooperative societies favour voluntary membership, which means individuals or businesses can choose to join. Voluntary membership encourages a diverse community representation. For example, people from various backgrounds, communities, and social interest groups can freely organize, join, and work together to benefit themselves and participate fully in the cooperative. Voluntary membership promotes inclusiveness among a broad segment of people and ensures cooperatives reflect the needs and interests of the people they represent and serve.
4. Social Responsibility: Social responsibility is one of the primary values in cooperative societies. In business, it is possible for profit-driven enterprises to place their purpose above all else, focusing all the decisions they make on maximising financial gain; cooperative enterprises have less opportunity to operate with that thought process because the focus at the core of their business practices is on serving their members, the community and society at large. Promoting a strong sense of social responsibility, cooperative societies take their purpose to serve their members and provide services and products in a sustainable way to ensure and promote the well-being of their members and local communities.
These features of cooperative society have social and economic characteristics including democratic governance, equitable profit distribution, free membership, and a deep sense of social responsibility that contribute to strengthening the sense of community; as a result, cooperative societies are an effective model for community development.
Society Management System by NoBrokerHood
NoBrokerHood’s society management system reduces hassle and increases efficiency of a cooperative society through providing digital solutions for various key constructs such as billing, accounting, communication, and facility management. NoBrokerHood gives residents and committee members real-time updates, track maintenance, and accountability of funds transparently – all on a single dashboard view. For coops, where democratic participation and collective responsibility are paramount, NoBrokerHood provides smoother decision making, secure access controls, and efficient dealing with amenities, complaints, etc. NoBrokerHood delivers transparency and accountability and a better quality of life for co-operators.
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FAQs
1. What is a cooperative society and how is it different from a conventional business?
A cooperative society is an entity in which all members are equally owners and profit is normally distributed according to usage or participation. Cooperatives, unlike conventional businesses, are guided by principles of mutual aid, self-help, and community building.
2. What are the different types of cooperative society in India and what particular needs and sectors of society do these types of cooperatives address?
India’s cooperative societies are classified based on their purpose: There are consumer cooperatives, producer, credit, marketing, housing, farming, and residential cooperatives located in its various states and union territories. Each southern sector, fellowship of need, and whether it serves a local, regional or a national community of need.
3. What has been the role of housing cooperative societies in addressing access to affordable housing and security of income in urban areas?
Housing cooperative societies encourage collective ownership of residential properties and provide affordable housing by sharing each member’s cost over time. Therefore, cooperatives have an important role to play in urban living and in support of housing availability throughout India’s previous, present and future limitations.
4. What is the impact of cooperative societies on economic growth, poverty alleviation, and social development in India?
Cooperative societies also contribute to economic activity, creating jobs, and providing a path to individual empowerment with regard to increased income, alleviation of poverty, and stimulating economic growth by enabling better livelihood of each member, customer, and stakeholder, attributing towards social development and inclusion highlighting the importance of cooperative society
5. What is NoBrokerHood and how does it help residential cooperative societies?
NoBrokerHood is a society management application that creates seamless services, easy billing, safety security, and member-only benefits and rewards. NoBrokerHood helps improve residential cooperative societies’ quality of life and proper operational community management.