Co-operative societies are voluntary organizations where individuals come together to achieve economic and social benefits through mutual cooperation.
👉 Part IX-B (Articles 243ZH to 243ZT) of the Indian Constitution deals with Co-operative Societies.
👉 Introduced by the 97th Constitutional Amendment Act, 2011, which granted constitutional status to Co-operative Societies.
What is a Co-operative Society?
✅ A self-governing, voluntary organization formed by people with common economic interests.
✅ Members contribute capital and share profits/losses.
✅ Operates based on democratic principles (one member, one vote).
✅ Examples: Amul, IFFCO, Indian Farmers Fertilizer Co-operative, Cooperative Banks.
Types of Co-operative Societies
| Type | Function | Example |
|---|---|---|
| Consumer Co-operatives | Buy goods in bulk and sell at lower prices. | Kendriya Bhandar |
| Producer Co-operatives | Help small producers sell products collectively. | Amul (Dairy Co-op) |
| Marketing Co-operatives | Help farmers get better prices for crops. | NAFED (National Agricultural Cooperative Marketing Federation) |
| Housing Co-operatives | Provide affordable housing. | Mumbai Housing Co-operative |
| Credit Co-operatives | Offer loans to small businesses & farmers. | Cooperative Banks |
Constitutional Provisions for Co-operative Societies
| Article | Provision |
|---|---|
| Article 243ZH | Definition of Co-operative Societies |
| Article 243ZI | Formation of Co-operative Societies |
| Article 243ZJ | Composition of the Management Committee |
| Article 243ZK | Conduct of elections |
| Article 243ZL | Audit of accounts |
| Article 243ZM | State Government’s control over Co-operatives |
| Article 243ZN | Tenure of the board (5 years) |
| Article 243ZO | Access to information |
| Article 243ZP | Power to make laws on co-operatives |
| Article 243ZT | Continuation of existing laws on co-operatives |
Salient Features of the 97th Amendment (2011)
✅ Added Part IX-B to the Constitution, making Co-operative Societies a fundamental governance structure.
✅ Article 19(1)(c) was modified, allowing people the right to form Co-operative Societies as a Fundamental Right.
✅ Added Directive Principle (Article 43B), encouraging states to promote Co-operatives.
✅ Fixed a 5-year term for elected bodies in Co-operatives.
Powers and Functions of Co-operative Societies
✅ Encourage self-help and mutual aid.
✅ Provide financial assistance (low-interest loans, credit).
✅ Promote fair trade practices in agriculture, dairy, and finance.
✅ Help small-scale businesses grow.
Challenges Faced by Co-operative Societies
❌ Political interference – Many Co-operatives are controlled by politicians.
❌ Financial mismanagement – Lack of transparency leads to corruption.
❌ Lack of awareness – Many citizens do not understand their benefits.
❌ Bureaucratic delays – Co-operatives face red tape in decision-making.
Landmark Judgment on Co-operative Societies
Union of India vs. Rajendra Shah (2021)
- The Supreme Court struck down Part IX-B for violating federalism.
- Ruled that states have exclusive power to legislate on Co-operative Societies, except for Multi-State Co-operative Societies (MSCS), which remain under Central control.
MCQs on Co-operative Societies
1. Which Constitutional Amendment gave Co-operatives constitutional status?
A) 73rd Amendment
B) 74th Amendment
C) 97th Amendment
D) 86th Amendment
Answer: C) 97th Amendment
2. Which Article defines Co-operative Societies?
A) Article 243ZH
B) Article 243ZT
C) Article 19(1)(c)
D) Article 51A
Answer: A) Article 243ZH
3. What is the tenure of the board of a Co-operative Society?
A) 3 years
B) 4 years
C) 5 years
D) 6 years
Answer: C) 5 years
4. Which Supreme Court case declared Part IX-B unconstitutional for state-level Co-operatives?
A) Minerva Mills Case
B) Kesavananda Bharati Case
C) Union of India vs. Rajendra Shah
D) Golaknath Case
Answer: C) Union of India vs. Rajendra Shah
5. Which of the following is an example of a Co-operative Society?
A) SBI Bank
B) Amul
C) ONGC
D) Indian Railways
Answer: B) Amul
Conclusion
✅ Co-operative Societies promote self-sufficiency and economic development.
✅ The 97th Amendment (2011) granted them constitutional recognition.
✅ However, the Supreme Court ruled that only Multi-State Co-operatives remain under Central control.
✅ Challenges like corruption and political interference need reforms.
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