Limitations of Cooperativization

Limitations of Cooperativization

Economist Daniel Thorner, during his study of cooperatives between December 1958 and May 1959, identified several weaknesses within the movement. He categorized the cooperatives into two types:

• One group consisted of wealthy, landowning farmers who formed cooperatives to circumvent land reforms and access state incentives. These were essentially fake cooperatives where large farmers enrolled their labourers and ex-tenants as members.

• The second group was made up of state-sponsored cooperative farms, where government land was allocated to landless labourers and disadvantaged groups. These cooperatives failed to deliver the expected benefits of scale due to:

• The poor land quality, inadequate irrigation, and the fact that they were managed like government projects rather than genuine collective efforts. As a result, these cooperatives were often expensive and unsuccessful.

• Overall, service cooperatives performed better than farming cooperatives, though they still had significant drawbacks:

• Service cooperatives often reinforced caste-based hierarchies.

• Leaders of these cooperatives were primarily drawn from trader and money-lender communities.

• In the case of credit cooperatives, the landless were largely excluded from access to loans, as reported by the National Commission on Agriculture in 1971.

• Credit cooperatives also suffered from high loan defaults, with wealthy landowning communities being the largest defaulters, contrary to common belief that poor farmers were the primary offenders.

• A common issue with the cooperative movement was that it shifted away from encouraging grassroots participation and instead became a bloated government department filled with officials, clerks, and inspectors at various levels.

• This large bureaucracy, often disconnected from the cooperative ideals and influenced by local vested interests, ended up hindering the movement instead of fostering its growth.

Points To Remember

Factors that generated hopes for the revival of the Indian economy after centuries of colonial subjugation included:

• A mature indigenous entrepreneurial class.

A broad societal consensus on the nature and path of development to be followed after independence

Ideas of development

• On the eve of Independence, India had before it, two models of modern development: the liberal-capitalist model as in much of Europe and the US and the socialist model as in the USSR.

India adopted the mixed model of economic development, which has features of both the capitalist and socialist models.

Planning

• In 1938, under the leadership of Jawaharlal Nehru, National Planning Committee (NPC) was set up.

• Plan of Economic Development for India, popularly called the Bombay Plan, was authored by business leaders in 1945.

• The public sector would have to play a critical role in the development of capital goods industries and other basic and heavy industries, which required huge finances and had a long-time lag for returns.

• Formation of Planning Commission:

• Planning Commission was set up in March 1950 by a resolution of the Government of India.

• Functions:

• Formulate a plan for the most effective and balanced utilisation of the country’s resources.

• To indicate the factors that tend to retard economic development.

• Early Initiatives:

• As in the USSR, the Planning Commission of India opted for the five-year plan (FYP).

• Budget being divided into ‘plan’ and ‘non-plan’ budget.

• First Five-Year Plan (FYP): Based on the Harrod Domar Model, the Plan (1951–1956) sought to get the country’s economy out of the cycle of poverty. It addressed, mainly, the agrarian sector, including investment in dams and irrigation.

• Second Five-Year Plan: The Second FYP (1956-1961) stressed mainly heavy industries. It was drafted by a team of economists and planners under the leadership of P. C. Mahalanobis, thus also known as Nehru-Mahalanobis model.

• Third Five-Year Plan: Aimed at making India a ‘self reliant’ and ‘self-generating’ economy, the chief priority of this plan (1961-1966) was agriculture, both to enhance food supply and support exports and industry.

Green Revolution

• Prevailing conditions before the introduction of the green revolution:

Food shortages

• Massive Jump in population growth rates.

• Two successive monsoon failure

• Rate of inflation which was kept low (around 2%) rose sharply to 12%

• Two wars of 1962 (with China) and 1965 (with Pakistan) led to massive increase in defence expenditure.

• Initiatives before the green revolution to boost agriculture(During Nehru’s Era):

• There were massive large-scale irrigation and power projects like Bhakra Nangal.

• Various agricultural universities, research laboratories, and fertiliser plants were set up.

• Phases of Green Revolution:

• The first phase of the Green Revolution: This happened from 1962- 65 to 1970-73 with a sharp increase in the yield of wheat in the north-western region, which included Punjab, Haryana and Western Uttar Pradesh.

• The second phase of the Green Revolution: This happened from 1970-73 to 1980-83 with the extension of High Yielding Variety (HYV) seed technology from wheat to rice.

• The Third Phase of the Green Revolution: In the third phase, 1980-83 to 1992-95, the Green Revolution spread to the low growth areas like Orissa, West Bengal, Madhya Pradesh, and Rajasthan. During the last phase, the Southern region registered a higher rate of growth than the Northern region.

• Significant government initiatives during Green Revolution Period:

• Government investment in agriculture rose significantly.

• The Agricultural prices commission was set up in 1965.

The Green Revolution had a major impact on the rural poverty level, which declined sharply through food availability, and it resulted in a decline in relative prices of food, generating employment in the agricultural sector and agriculturally allied areas, rises in wages, etc.

Land Reforms in India

• The Colonial Impact and the Reasons for Land Reforms:

• Commercialization of agriculture

• An unbearable burden on the Indian peasantry.

• A high tax demand on agriculture.

• Small landholdings and fragmentation of land.

• Broad Objectives of the Land Reforms:

• To change the agrarian structure;

• To remove exploitative agrarian relations,

• To promote agriculture growth with social justice

• Land Reform measures: After Independence, the Indian National Congress appointed the Agrarian Reforms Committee under the Chairmanship of J.C. Kumarapppa, for making an in-depth study of the agrarian relations prevailing in the country. These reforms are:

• Abolition of Intermediaries: (Zamindari System)

• Tenancy reforms

• Ceilings on Land Holding

• Consolidation of Holdings

• Success/Achievements of Land Reforms:

• The most successful of all reforms was the abolition of intermediaries like zamindars.

• Absentee ownership had reduced much more in unirrigated areas, than in irrigated areas.

• Land reforms led to the collapse of the feudal structure.

• The reforms motivated the cultivators to invest and improve agricultural practices

• The Bhoodan Movement

• Acharya Vinoba Bhave launched this movement in the early 1950s in the Telangana region of Andhra Pradesh. He persuaded the larger landowners to donate at least one-sixth of their lands as Bhoodan or ‘land-gift’ for distribution among the landless and the land poor

• Meanwhile, by 1957 another movement known as Gramdan or ‘donation of village’ came into being

Cooperatives

• The Congress Agrarian Reforms Committee also known as Kumarappa Committee recommended in 1949 for the state to be empowered to enforce varying degrees of cooperation for different types of farming.

• The Success of Cooperatives: The Milk Cooperatives and Operation Flood

• White revolution from Kheda district, Gujrat spread all over India.

• Gandhian freedom fighter Tribhuvandas K. Patel, convinced the farmers to form milk cooperatives, later became its chairman and remained so for 25 years. Dr Verghese Kurien was CEO of this Union from 1950 to 1973.

• Operation Flood or White Revolution: NDDB launched “Operation Flood”, a programme to replicate the “Anand Pattern” in other milk sheds of the country. A Democratic mode of functioning of the cooperatives, was adopted

• Impact of operation flood:

• Considerable increase in milk supply and increase in income of milk producers. Milk cooperatives proved to be a significant anti poverty measure.

• SCs, STs and deprived sections were the major beneficiaries.

• Instrumental in empowerment of the women.

• Had a spillover effect in other cooperatives.

• Limitations of Co-operativization:

• Daniel Thorner, found many weaknesses in the cooperative movements. He observed two types of cooperatives movements: One was of rich and landowning farmers. The other, second type of cooperative was state-sponsored cooperative farms

• Cooperatives soon became a huge overstaffed government department with officials, clerks, inspectors, and the like, replicated at the block, district, division and state levels