National Cooperative Policy 2025 – 2045

Context: Union Home Minister Amit Shah unveiled a new national cooperative policy on 24 July 2025, replacing the 2002 policy by Vajpayee government, marking another milestone for the cooperative department whose role has been expanding under the Narendra Modi government.

What is a cooperative?

A cooperative is a business or organization owned and run jointly by its members, who share in its profits and benefits. It’s a form of business where people with shared needs or interests come together to achieve common goals through a jointly owned and democratically controlled enterprise. 

Constitutional provisions – 97th CAA

Article 19(1)(c):

This fundamental right grants citizens the freedom to form “associations or unions or co-operative societies”. 

Article 43B:

This Directive Principle of State Policy, added by the 97th Amendment, encourages the State to promote the voluntary formation, autonomous functioning, democratic control, and professional management of cooperative societies. 

Part IXB (Articles 243ZH to 243ZT):

This part, also introduced by the 97th Amendment, provides a constitutional framework for cooperative societies, covering aspects such as their incorporation, democratic functioning, election of board members, and audit of accounts. 

• The Cooperative Societies with objects not confined to one State are governed by Entry 44 of the List I – Union List of the Seventh Schedule to the Constitution and provisions of centrally administered Multi-State Co-operative Societies Act, 2002.
  • The Multi-State Co-operative Societies Act, 2002 is administered by the Central Registrar of Cooperative Societies (CRCS) who is appointed as per clause (f) of article 243ZH of the constitution read with sub section (1) of section 4 of the Act. 

• The Cooperative Societies with objects confined to one State are governed by Entry 32 of the List II – State List of the Seventh Schedule to the Constitution and provisions of respective State Cooperative Societies Act.
  • The respective State Cooperative Societies Act is administered by the concerned State Registrar of Cooperative Societies.

Supreme Court of India, in the case of Union of India vs. Rajendra N. Shah (2021) held that Part IXB of the Constitution of India is operative only insofar as it concerns Multi-State Co-operative Societies.

Status of Cooperatives in India

• 8.4 lakh cooperative societies, connecting about 31 crore people.
• The cooperative sector gives 20% of the total agri-cultural credit of the country, 35% of the fertilizer distribution is done by the cooperative sector, 25% of fertilizer production, 31% of sugar production, and more than 21% of the fisher-men’s business is done by coop-erative societies.

The New Policy

The vision of the new cooperation policy is to build a Viksit Bharat by 2047 through ‘Sahkar Se Samriddhi’. 

Goals

• By 2034, the National Cooperation Policy aims to triple the cooperative sector’s contribution to GDP, 
• Bring 50 crore active members into the fold, and connect youth with employment opportunities
• 30 per cent increase in the number of cooperative societies.
•  the establishment of at least one cooperative society in every village.
• Developing five model cooperative villages in every tehsil

6 Pillars

1. Strengthening the foundation
2. Promoting vibrancy
3. Preparing cooperative societies for the future
4. Enhancing inclusivity and expanding reach
5. Expanding into new sectors
6. preparing the younger generation for cooperative development

Why cooperatives?

• Rural Development and Empowerment: Cooperatives are the backbone of the rural economy, ensuring sustainable livelihoods  addressing the employment challenge in the economy  and income for vast sections of society, particularly the 85% small and marginal farmers, women, and the poor.
• Financial Inclusion: Cooperative banks and societies provide essential credit facilities to individuals and small entrepreneurs, including loans, overdrafts, and cash credits, extending financial services beyond the reach of traditional banks. 
• Economic Growth and Stability: Cooperatives foster economic development by aggregating individual power, reducing risk in economic activities, and encouraging shared productivity and problem-solving. They contribute to the nation’s economy through increased exports, especially in sectors like agriculture, fishing, handicrafts  and dairy. 
• Social Benefits: Cooperatives are considered institutions of mutual help and sharing, which can help soften class conflicts and reduce social cleavages. They are also seen as a means to instill moral values like unity, trust, and honesty, contributing to social stability. 
• Alternative Economic Model: Cooperatives offer a “third alternative” to free-market and state-owned organizations, providing a successful and sustainable economic model for equitable growth in the age of globalization and liberalization.

Initiatives

• The Multi-State Cooperative Societies Act, 2023, ushered in three new cooperative bodies, including National Cooperative Exports Limited (NCEL) to open the export sector for cooperatives.
• Plans for “the world’s largest grain storage scheme” and 2 lakh new Primary Multi-Purpose Agricultural Credit Societies.
• The Home Minister laid the foundation stone of India’s first national cooperative university, Tribhuvan Sahkari University in Anand, Gujarat and advocated that cooper-ative education be included in the secondary school curricula.
• As part of the International Year of Cooperatives (IYC) 2025 declared by the United Nations, the Ministry of Cooperation has launched a comprehensive National Action Plan to position Indian successful cooperatives like AMUL, IFFCO and KRIBHCO on the global stage through international exhibitions, documentation of best practices, and digital outreach.

Challenges

• Governance and Management: Inadequate transparency, accountability, and democratic decision-making processes are prevalent. This often leads to mismanagement and a concentration of power within a few individuals. Lack of professional management and skills, including technical and managerial capacities, also hinders efficiency and operational effectiveness. 
• Financial Issues: Cooperatives frequently struggle with limited access to capital, financial irregularities, especially for those serving marginalized communities. Some cooperative banks have experienced high levels of stressed assets, and a lack of focus on capital formation impacts overall viability. 
• Political Interference and Politicization: Over-reliance on government support can lead to external control, and cooperatives are sometimes used for political objectives at the expense of community welfare. 
• Socio-Economic and Inclusivity Barriers: Caste-based divisions and other structural inequalities can limit inclusivity and member participation, undermining the cooperative spirit. 
• Infrastructural and Technological Gaps: Poor connectivity and outdated infrastructure can restrict outreach and operational efficiency. Many cooperatives also lag in adopting modern technology and innovative practices. 
• Limited Member Participation and Awareness: A lack of awareness about cooperative objectives, rules, and regulations can lead to dormant membership and reduced active participation. There is a general lack of awareness among the public about the operations and benefits of cooperatives.
• Lack of uniformity among states: creates policy challenges at national level and prevents  State level cooperatives from expanding nationally.

Way Ahead

1. Strengthening Grassroots Participation:

• Establishment of new Primary Agricultural Credit Societies (PACS) at the Panchayat level: This aims to empower local communities by providing access to resources, fair pricing, and technical support, especially for farmers and small entrepreneurs. 
• Involving local communities in decision-making: This fosters a sense of ownership and accountability among beneficiaries and ensures that cooperatives meet local needs effectively. 

2. Enhancing Efficiency and Transparency:

• Digitization of PACS: This includes the computerization of PACS and Agriculture and Rural Development Banks (ARDBs) to improve record-keeping, financial transparency, and service delivery, reducing transaction costs. 
• Creation of a National Cooperative Database: This will provide authentic and updated data for policy-making and program implementation related to cooperatives. 
• Including more Cooperatives as ‘buyers’ on the GeM portal: This allows cooperatives to procure goods and services economically and transparently. 

3. Fostering Value Addition and Diversification:

• Focusing on value-added services: Encouraging PACS to venture into areas like food processing, cold storage, and export facilitation to boost farmer incomes and diversify cooperative activities. 
• Establishing new National Cooperative Societies: This includes creating apex national multi-state cooperative societies for specific sectors like seeds, organic products, and exports to enhance production and market access. 
• Revitalizing Cooperative Sugar Mills and expanding LPG distributorships for PACS: These initiatives aim to increase employment and economic opportunities in rural areas. 

4. Capacity Building and Education:

• Promoting training and awareness: Increasing the reach of organizations like the National Council for Cooperative Training (NCCT) to provide training on management and skills for cooperative members and leadership. 
• Cooperative education : should be included in school curriculum.

The government has taken a step in the right direction by launching the National Policy on Cooperatives. Its timely implementation and alignment of the laws and rules by states to the national policy should be ensured to make Cooperatives the new growth vehicle of India towards becoming Viksit Bharat by 2047.