Cooperative Societies in India
Cooperative societies are member-owned, democratically controlled enterprises promoting self-help and mutual aid, governed by specific acts and overseen by t...
Strengthening of cooperative societies in Odisha
The article details government initiatives to strengthen cooperative societies in India, with a focus on Odisha. Key measures include the Central Sector project for Computerization of Primary Agricultural Credit Societies (PACS), which aims to bring all functional PACS onto a common ERP-based national software and link them with NABARD. The National Cooperative Development Corporation (NCDC) has also disbursed significant funds for cooperative sector development. The Ministry of Cooperation, established in 2021, is driving initiatives like converting PACS, Dairy, and Fisheries Cooperatives into Multipurpose cooperative societies for business diversification and financial sustainability. It has also set up a Co-operative Rehabilitation, Reconstruction and Development Fund under the Multi-State Cooperative Societies (Amendment) Act, 2023, for the revival of sick multi-State cooperative societies.
Syllabus mapping
Mains syllabus topics
Women Population Urbanization
Resources Industrial Location
Indian Constitution
Federal Structure
Parliament Legislatures
Prelims takeaways
- The Central Sector project for Computerization of PACS aims to integrate PACS with a national ERP software and link them to NABARD via StCBs and DCCBs.
- The Ministry of Cooperation's vision is 'Sahakar-se-Samriddhi' and it promotes converting PACS, Dairy, and Fisheries Cooperatives into Multipurpose cooperative societies.
- The Multi-State Cooperative Societies (Amendment) Act, 2023, established the Co-operative Rehabilitation, Reconstruction and Development Fund for sick multi-State cooperative societies.
- NCDC plays a crucial role in disbursing funds for the development of the cooperative sector.
- The National Cooperative Database (NCD) is used for identifying gaps and supporting new cooperative formations.
Elimination traps
- Specific financial outlays and disbursement figures (e.g., ₹2,516 crore, ₹2,925.39 crore, ₹3,352.03 crore).
- Exact dates of project launch (2022), Ministry inception (2021), or Odisha joining (2025).
- Specific number of PACS approved or sanctioned (e.g., 63,000, 79,630, 4,240).
Static concepts
- Cooperative societies
- Primary Agricultural Credit Societies (PACS)
- National Cooperative Development Corporation (NCDC)
- NABARD
- Enterprise Resource Planning (ERP)
- Multi-State Cooperative Societies Act
- Sahakar-se-Samriddhi
Probable question areas
Question areas
- Objectives and features of the Computerization of PACS project.
Question areas
- Role and functions of the Ministry of Cooperation and NCDC in promoting cooperatives.
Question areas
- Significance of converting PACS into multipurpose cooperative societies.
Question areas
- Key provisions and purpose of the Co-operative Rehabilitation, Reconstruction and Development Fund under the MSCS (Amendment) Act, 2023.
Question areas
- The 'Sahakar-se-Samriddhi' vision and its implications for cooperative growth.
Question areas
- The structure and linkages between PACS, DCCBs, StCBs, and NABARD.
UPSC concepts in this story
Durable syllabus ideas for revision — not article memory.
Previous year Prelims questions on overlapping themes and topics.
Which of the following grants/ grant direct credit assistance to rural households?
1. Regional Rural Banks
2. National Bank for Agriculture and Rural Development
3. Land Development Banks
Select the correct answer using the codes given below:
Explanation
Correct answer
C. 1 and 3 only
1. Regional Rural Banks (RRBs): RRBs are established to provide credit and banking facilities to rural areas, especially to small and marginal farmers, agricultural laborers, and rural artisans. They grant direct credit assistance to rural households. 2. National Bank for Agriculture and Rural Development (NABARD): NABARD primarily provides refinance facilities to banks and financial institutions for lending to rural sectors. It does not directly lend to rural households, except in very limited cases through pilot schemes. 3. Land Development Banks (LDBs): LDBs provide long-term credit to farmers for land development and agricultural improvements. They grant direct loans to rural households.
Indian Economy
Agriculture
Agricultural Policies & Supply Chains
Financial Markets & Instruments
Consider the following statements :
1. The Self-Help Group (SHG) programme was originally initiated by the State Bank of India by providing microcredit to the financially deprived.
2. In an SHG, all members of a group take responsibility for a loan that an individual member takes.
3. The Regional Rural Banks and Scheduled Commercial banks support SHGs.
How many of the above statements are correct?
Explanation
Correct answer
B. Only two
* Statement 1 is incorrect: NABARD began promoting self-help groups in 1991-1992. And it served as the actual launch pad for the SHG movement. The Reserve Bank of India additionally permitted SHGs to open savings bank accounts in 1993. * Statement 2 is correct: The Banks provide the loan to the Self-Help Group as a whole and it is the collective responsibility of the SHG to repay that loan. Hence all members of a group take responsibility for a loan that an individual member takes. Further, the SHG may decide to not provide any share in further loans to the defaulter member. * Statement 3 is correct: The Financial Inclusion Fund scheme to support Scheduled Commercial Banks (SCBs) and Regional Rural Banks (RRBs) for enabling Dual Authentication options in the micro ATMs for SHG transactions is being launched to provide an enabling eco-system for the SHGs to seamlessly operate at Business Correspondent points with the proposed Dual Authentication feature. Thus, it can be said that SCBs and RRBs support the SHGs in availing the credits as per their needs.
Indian Economy
Social Justice & Development
Financial Markets & Instruments
Welfare Schemes & Social Policies
Consider the following statements:
1. In terms of short-term credit delivery to the agriculture sector, District Central Cooperative Banks (DCCBs) deliver more credit in comparison of Scheduled Commercial Banks are Regional Rural Banks
2. One of the most important functions of DCCBs is to provide funds to the Primary Agricultural Credit Societies.
Which of the statements given above is/are correct?
Explanation
Correct answer
B. 2 only
Statement 1 is incorrect. In terms of short-term credit delivery to the agriculture sector, Scheduled Commercial Banks (SCBs) and Regional Rural Banks (RRBs) generally deliver more credit compared to District Central Cooperative Banks (DCCBs). SCBs and RRBs have a larger network and resources to provide credit to the agriculture sector. Statement 2 is correct. One of the primary functions of DCCBs is indeed to provide funds to the Primary Agricultural Credit Societies (PACS). DCCBs act as the intermediary between the Reserve Bank of India (RBI) and PACS, facilitating the flow of credit from the central bank to the grassroots level through cooperative credit institutions. Hence, option B is the correct answer.
Indian Economy
Agriculture
Agricultural Policies & Supply Chains
Reserve Bank Of India & Monetary Policy
With reference to India, consider the following pairs:
| Organization | Union Ministry |
|------------------------------------------|-------------------------------------------------|
| I. The National Automotive Board | Ministry of Commerce and Industry |
| II. The Coir Board | Ministry of Heavy Industries |
| III. The National Centre for Trade Information| Ministry of Micro, Small and Medium Enterprises |
How many of the above pairs are correctly matched?
Explanation
Correct answer
D. None
❌ Pair I: The National Automotive Board – Ministry of Commerce and Industry
* Incorrect. It functions under the Ministry of Heavy Industries, not Commerce and Industry. ❌ Pair II: The Coir Board – Ministry of Heavy Industries
* Incorrect. The Coir Board is under the Ministry of Micro, Small and Medium Enterprises. ❌ Pair III: National Centre for Trade Information – Ministry of MSME
* Incorrect. NCTI is linked to the Ministry of Commerce and Industry, not MSME.
Indian Economy
Indian Polity & Governance
Constitutional & Statutory Bodies
With reference to the Indian economy, "Collateral Borrowing and Lending Obligations" are the instruments of :
Explanation
Correct answer
C. Money market
* Collateral Borrowing and Lending Obligations (CBLO) are instruments of the: C. Money market * CBLO is a money market instrument that facilitates borrowing and lending operations on a collateralized basis. It is used by banks, financial institutions, and other entities to manage their short-term liquidity requirements.
Indian Economy
Financial Markets & Instruments
Consider the following statements
1. The quantity of imported edible oils is more than the domestic production of edible oils in the last five years.
2. The Government does not impose any customs duty on all the imported edible oils as a special case.
Which of the two statements given above is/are correct
Explanation
Correct answer
A. 1 only
Statement 1 is correct. Domestic production of edible oil in 2018 was around 100 Lakh Metric tons (LMT) while import was around 150 LMT. Statement 2 is incorrect. The Government of India does impose customs duties on imported edible oils. The rates of these duties may vary depending on various factors, including the type of edible oil, international market conditions, and government policies aimed at promoting domestic production or protecting domestic producers.
Indian Economy
Agriculture
Indian Polity & Governance
Agricultural Policies & Supply Chains
Public Finance & Taxation
Consider the following statements in respect of the International Bank for Reconstruction and Development (IBRD):
I. It provides loans and guarantees to middle income countries.
II. It works single-handedly to help developing countries to reduce poverty.
III. It was established to help Europe rebuild after the World War II.
Which of the statements given above are correct?
Explanation
Correct answer
C. I and III only
The International Bank for Reconstruction and Development (IBRD) is a key arm of the World Bank Group, originally created for post-war reconstruction and now focused on development in middle-income nations. ✅ Statement I: Correct The IBRD provides loans and guarantees to middle-income and creditworthy low-income countries. ❌ Statement II: Incorrect The IBRD does not work single-handedly; it collaborates with other arms of the World Bank Group like IDA, IFC, etc. ✅ Statement III: Correct It was established in 1944 to help Europe rebuild after World War II.
Indian Economy
International Relations
International Financial Institutions
External Sector & Capital Flows
With reference to the Government of India, consider the following information:
| Organization | Some of its Functions | It Works Under |
|--------------------|------------------------|--------------------------------|
| Directorate of Enforcement | Enforcement of the Fugitive Economic Offenders Act, 2018 | Internal Security Division-I, Ministry of Home Affairs |
| Directorate of Revenue Intelligence | Enforces the provisions of the Customs Act, 1962 | Department of Revenue, Ministry of Finance |
| Directorate General of Systems and Data Management | Carrying out big data analytics to assist tax officers for better policy and nabbing tax evaders | Department of Revenue, Ministry of Finance |
In how many of the above rows is the information correctly matched?
Explanation
Correct answer
B. Only two
The question relates to the correct mapping of key investigative and analytical bodies under the Government of India and their parent ministries or departments. ❌ Row I: Incorrect The Directorate of Enforcement does implement the Fugitive Economic Offenders Act, 2018, but it functions under the Department of Revenue, Ministry of Finance, not the Ministry of Home Affairs. ✅ Row II: Correct The Directorate of Revenue Intelligence (DRI) enforces the Customs Act, 1962 and works under the Department of Revenue, Ministry of Finance. ✅ Row III: Correct The Directorate General of Systems and Data Management aids in big data analytics for tax enforcement and operates under the Department of Revenue, Ministry of Finance.
Indian Polity & Governance
Indian Economy
Constitutional & Statutory Bodies
Public Finance & Taxation
With reference to the sectors of the Indian economy, consider the following pairs:
| Economic activity | Sector |
|---------------------|--------|
| 1. Storage of agricultural produce | Secondary |
| 2. Dairy farm | Primary |
| 3. Mineral exploration | Tertiary |
| 4. Weaving cloth | Secondary |
How many of the pairs given above are correctly matched?
Explanation
Correct answer
B. Only two
* Storage of agricultural produce | Secondary (Incorrect) - Storage is a tertiary activity. It falls under the service sector, facilitating the smooth flow of goods from producers to consumers. * Dairy farm | Primary (Correct) - Dairy farming involves the direct extraction of raw materials (milk) from natural resources (animals). Hence, it's a primary activity. * Mineral exploration | Tertiary (Incorrect) - Mineral exploration is a primary activity. It involves extracting raw materials from the earth. * Weaving cloth | Secondary (Correct) - Weaving cloth transforms raw materials (cotton, silk, etc.) into a finished product (cloth). This transformation signifies a secondary activity. Therefore, only two pairs are correctly matched.
Indian Economy
What is the purpose of setting up of Small Finance Banks (SFBs) in India?
1. To supply credit to small business units
2. To supply credit to small and marginal farmers
3. To encourage young entrepreneurs to set up business particularly in rural areas.
Select the correct answer using the code given below:
Explanation
Correct answer
A. 1 and 2 only
Statement 1 is Correct: Small Finance Banks (SFBs) are niche banks specifically designed to cater to the underserved and unbanked sections of the population, including small businesses, marginal farmers, and micro-industries. Statement 2 is Correct: SFBs focus on financial inclusion by providing credit facilities to small businesses and marginal farmers. Statement 3 is Incorrect: In conclusion, While SFBs might indirectly contribute to rural development by providing credit to small businesses in rural areas, their primary objective is not explicitly to encourage young entrepreneurs to set up businesses there (option 3). Hence, option A is the correct answer.
Indian Economy
Social Justice & Development
Financial Markets & Instruments
Reserve Bank Of India & Monetary Policy
Previous year Mains questions mapped to overlapping GS syllabus topics.
Does tribal development in India centre around two axes, those of displacement and of rehabilitation? Give your opinion.
Salient features of Indian Society and Diversity
Women, population, poverty, urbanization and development
View Mains PYQ
Achieving sustainable growth with emphasis on environmental protection could come into conflict with poor people’s needs in a country like India – Comment.
Salient features of Indian Society and Diversity
Women, population, poverty, urbanization and development
View Mains PYQ
How do you account for the growing fast food industries given that there are increased health concerns in modern society? Illustrate your answer with the Indian experience.
Salient features of Indian Society and Diversity
Women, population, poverty, urbanization and development
Effects of globalization on Indian society
View Mains PYQ
Discuss the distribution and density of population in the Ganga River Basin with special reference to land, soil and water resources.
Salient features of world's physical geography
Distribution of natural resources and industrial location
Women, population, poverty, urbanization and development
View Mains PYQ
How can Artificial Intelligence (AI) and drones be effectively used along with GIS and RS techniques in locational and areal planning?
Salient features of world's physical geography
Distribution of natural resources and industrial location
View Mains PYQ
Give a geographical explanation of the distribution of off-shore oil reserves of the world. How are they different from the on-shore occurrences of oil reserves?
Salient features of world's physical geography
Distribution of natural resources and industrial location
View Mains PYQ
Consider the following statements regarding the Central Sector project for Computerization of Primary Agricultural Credit Societies (PACS): 1. The project was launched in 2022 with the aim of bringing all functional PACS onto a common ERP-based national software. 2. It facilitates the linking of PACS directly with NABARD. 3. The project has been expanded to cover nearly 80,000 PACS across the country. Which of the statements given above is/are correct?
Explanation
Statement 1 is correct: The project was launched in 2022 and aims to bring all functional PACS onto a common ERP-based national software. Statement 2 is incorrect: The project links PACS with NABARD through State Cooperative Banks (StCBs) and District Central Cooperative Banks (DCCBs), not directly. Statement 3 is correct: The project has been expanded to cover 79,630 PACS, which is nearly 80,000.
With reference to the Ministry of Cooperation, consider the following statements: 1. It was established in 2021 with the vision of "Sahakar-se-Samriddhi". 2. It promotes the conversion of Primary Agricultural Credit Societies (PACS) into Multipurpose cooperative societies for business diversification. 3. It has set up a Co-operative Rehabilitation, Reconstruction and Development Fund under the Multi-State Cooperative Societies (Amendment) Act, 2023. How many of the above statements are correct?
Explanation
Statement 1 is correct: The Ministry of Cooperation was established on 06.07.2021, with the vision of “Sahakar-se-Samriddhi”. Statement 2 is correct: The Ministry has taken proactive measures to convert PACS, Dairy, and Fisheries Cooperatives into Multipurpose cooperative societies for business diversification. Statement 3 is correct: The Ministry has set up a Co-operative Rehabilitation, Reconstruction and Development Fund under section 63A of the Multi-State Cooperative Societies (MSCS) (Amendment) Act, 2023.
Which of the following is NOT a key initiative undertaken by the government to strengthen cooperative societies, as mentioned in the article?
Explanation
Options A, B, and C are explicitly mentioned in the article as key initiatives: the Central Sector project for Computerization of PACS, NCDC's disbursements, and the establishment of the Ministry of Cooperation. Option D, providing direct interest subvention to individual cooperative members, is not mentioned in the provided article as a government initiative to strengthen cooperative societies.
"The establishment of the Ministry of Cooperation and subsequent initiatives mark a significant push towards realizing the vision of 'Sahakar-se-Samriddhi'." In light of this statement, discuss the key government initiatives aimed at strengthening cooperative societies in India and their potential to foster inclusive growth.
Approach: Introduce the vision and the Ministry, then detail the key initiatives from the article, and finally analyze their potential impact on inclusive growth.
Model Answer Framework
Introduction
The Ministry of Cooperation, established in 2021, embodies the vision of 'Sahakar-se-Samriddhi' (Prosperity through Cooperation), aiming to revitalize India's cooperative sector as a crucial pillar for rural development and inclusive growth.
Key Answer Dimensions
Establishment of Ministry of Cooperation
- Dedicated ministry to provide a distinct administrative, legal, and policy framework for strengthening the cooperative movement.
- Focuses on enhancing cooperative growth and realizing the 'Sahakar-se-Samriddhi' vision across the country.
Computerization of Primary Agricultural Credit Societies (PACS)
- Central Sector project launched in 2022 to bring 79,630 PACS onto a common ERP-based national software.
- Aims to improve efficiency, transparency, and accountability in PACS operations, linking them with NABARD via StCBs and DCCBs.
- Facilitates better data management, financial inclusion, and access to services for farmers.
Conversion to Multipurpose Cooperative Societies
- Initiative to transform PACS, Dairy, and Fisheries Cooperatives into multipurpose entities.
- Promotes business diversification, strengthens financial sustainability, and prevents closures by enabling a wider range of economic activities.
- Utilizes the National Cooperative Database (NCD) to identify gaps and support new society formation.
Co-operative Rehabilitation, Reconstruction and Development Fund
- Established under the Multi-State Cooperative Societies (Amendment) Act, 2023.
- Aims to revive sick multi-State cooperative societies and provide assistance for infrastructural requirements, ensuring stability and trust.
Financial Support through NCDC
- National Cooperative Development Corporation (NCDC) disburses significant funds for cooperative sector development, as seen with ₹3,352.03 crore cumulatively disbursed in Odisha.
- Supports various activities like marketing, dairy, fisheries, FPOs, and computerization, fostering economic activities at the grassroots.
Data, Articles & Case Studies
The PACS computerization project has a revised financial outlay of ₹2,925.39 crore, covering 79,630 PACS.
In Odisha, 4,240 PACS have been sanctioned under the project, receiving ₹25.07 crore assistance.
NCDC's cumulative disbursement in Odisha reached ₹3,352.03 crore as on 30.06.2026, supporting diverse cooperative activities.
Conclusion / Way Forward
These comprehensive initiatives by the Ministry of Cooperation are pivotal in modernizing, diversifying, and financially strengthening cooperative societies. By empowering these grassroots institutions, the government is laying a robust foundation for equitable and inclusive growth across rural India, truly embodying 'Sahakar-se-Samriddhi'.
Cooperative societies are crucial for rural development but often face challenges related to governance and financial viability. Examine how recent government initiatives, particularly the conversion of PACS into multipurpose societies and the establishment of a rehabilitation fund, aim to address these issues.
Approach: Start by briefly acknowledging the importance of cooperatives and their challenges. Then, detail how the mentioned initiatives directly tackle these challenges.
Model Answer Framework
Introduction
Cooperative societies are vital for rural economic upliftment, promoting self-help and mutual aid. However, they frequently grapple with issues of limited business scope, weak governance, and financial instability, hindering their full potential.
Key Answer Dimensions
Challenges Faced by Cooperative Societies
- Limited Business Diversification: Many PACS primarily focus on credit, making them vulnerable to agricultural fluctuations and limiting revenue streams.
- Governance Deficiencies: Issues like lack of professional management, transparency, and accountability often plague cooperative operations.
- Financial Viability: Single-purpose cooperatives struggle with financial sustainability, leading to sickness and closures.
- Lack of Modernization: Outdated operational methods and lack of digital integration impede efficiency and competitiveness.
Conversion of PACS into Multipurpose Cooperative Societies
- Addressing Diversification: Enables PACS to engage in a wider range of economic activities beyond credit, such as marketing, storage, dairy, and fisheries.
- Enhancing Financial Sustainability: Diversified income streams reduce dependence on a single activity, making societies more resilient to market shocks and improving their financial health.
- Preventing Closures: By expanding business opportunities, this initiative aims to strengthen the economic base of cooperatives, thereby preventing their closure and ensuring their continued service to members.
Co-operative Rehabilitation, Reconstruction and Development Fund
- Revival of Sick Societies: Specifically designed to provide financial and infrastructural assistance for the revival of sick multi-State cooperative societies.
- Strengthening Infrastructure: Supports meeting essential infrastructural requirements, which is crucial for modernizing operations and improving service delivery.
- Restoring Trust: By addressing the distress of ailing cooperatives, the fund helps restore public and member confidence in the cooperative movement, ensuring its long-term stability.
Complementary Initiatives
- PACS Computerization Project: Improves governance through enhanced transparency, efficiency, and data management.
- National Cooperative Database (NCD): Aids in identifying gaps and promoting healthy competition through a Cooperative Ranking Framework.
Data, Articles & Case Studies
The Multi-State Cooperative Societies (Amendment) Act, 2023, provides the legal framework for the Co-operative Rehabilitation, Reconstruction and Development Fund.
The objective of converting PACS into multipurpose societies is explicitly stated as enhancing business diversification and strengthening financial sustainability.
Conclusion / Way Forward
The government's strategic initiatives, particularly the push for multipurpose cooperatives and the rehabilitation fund, directly tackle the core challenges of financial viability and governance. These measures aim to transform cooperatives into robust, diversified, and self-reliant entities, thereby ensuring their continued contribution to inclusive rural development.