The history of co-operative movement in India is broadly divided into two phases. That means co-operative movement has passed into two phases. They are-

1) Co –operative movement in pre-independence era.

2) Co-operative movement in post–independence era.

These two phases are briefly discussed below:


i) Co-operative Movement in pre-independence era:

The pages of Indian history cite many evidences of co-operative activities from earliest times. However, the first recorded activity began in 1904 when this movement was officially set up by the British Government. Before that in the year 1892, Derrick Nicholson, tried to find out ways and means to establish institutions so as to help the agricultural sector. He gave the suggestions for setting of co-operative societies. Within that decade, India faced a terrible famine in 1899.

The Government appointed the Second Famine Commission 1901 to suggest measures for the victims. The commission recommended for a number of development activities and setting up of new institution. The most important among them was the strong recommendation for organisation of co-operative societies. The Government had accepted many of the recommendations and in 1904 “co operative societies Act” were passed. The aim was to help the rural farmers and artisans by providing short term and long term loans.

These credit societies were organised on the basis of two models, one for rural area and other for urban area. For the former these were organised on Reinfusion Model while for the latter it was Schulze Delitzsch Bank Model. Due to this Act a number of Co-operative Societies grew up in rural area, but they could not function effectively. The major defects were.


i) There was no provision for setting up of Non credit Co-operative Societies in rural area.

ii) No special Central agency was created for financing and supervising the activities of these societies.

iii) The division of the Credit Co-operative Societies into two types rural and urban stood as a barrier since no specific arrangements could be done for either due to the overlapping nature of such classification.

The year 1928 saw a world wide economic depression. The prices of agricultural commodities fell down to a great extent and unemployment along with other economic crisis grew up. The creditors had no way to repay the loan. This brought many co-operative societies in to a stand still position.


In year 1933, the Reserve Bank of India was set up. The bank took some initiative to recognise the co-operative movement. It had a separate department for a co-operative credit. It helped to keep the movement alive which was gradually decaying.

In 1937, the popular Congress Government came to power in several states. The popular leaders took much more initiative in organising and extending this movement. But much progress could not do due to outbreak of Second World War. During this time, the ministry resigned. It was left in the hands of British Government again. But the war itself gave a boost to co-operative societies. The war brought a sudden increase in the prices of agricultural products and other food grains.

The rural farmer got extra economic gains. Non credit societies grew up. The working capital of co-operative societies also increased. The number of different credit and non credit co-operatives increased rapidly. The co-operative movement gathered momentum. The all India Co-operative planning Committee in 1945 also worked al lot in this direction.

ii) Co-operative movement in Post independence Era:


After independence for the first 3 years i.e. up to no significant development could be made. It was mainly due to the problem created by partition and absence of concrete programme for national re-organisation. However, the leaders of free India could the importance of co-operative movement for a successful democracy importance was given to strengthen co-operative structure of country and various provisions were made through different Five Year Plan.

The co-operative movement completed its 50 years dump the first plan. The Golden Jubilee was celebrated throughout the country with much excitement. This made the people feel the importance of such a movement. Attention was given to utilise the credit in productive activities.

The First Plan also recommended for training of personnel’s and setting up of Co-operative Marketing Societies.

The Second Plan laid down proposals for extending co operative activity into various fields. It gave special emphasis on the warehousing co operatives at the State and Central level.


The Third Plan brought still new areas under Co operative societies. The co operative society for sugarcane, cotton, spinning, milk supply was proposed. Some concrete steps were taken to train the personnel’s. The co operative training College at Pune and many regional centers were established to train the workers.

The Fourth Plan emphasised for consolidation of co operative system. The new programme for high yielding crops was started. Different credit societies were organised to serve these programmes.

The Fifth Plan made special provisions for improvement of Central Banks and no viable primary agricultural societies, re organising marketing as well as consumer societies. It also recommended for establishment of Farmer’s Service Societies.

The Sixth Plan laid down a point programme for co-operative societies. It aimed at transforming the primary village societies to multipurpose societies.


i) To reconstruct the policies and of co-operative so that it can bring about economic development of people.

ii) To extend co-operative activities to the fields of food processing, poultry farming, dairy farming, fishery and many other related fields.

iii) To give necessary training and guidance for developing skilled the efficient personnel’s.

The Seventh Plan has also given more importance on the growth and expansion of co operative societies to ensure public participation to achieve its main objective i.e. the movement towards social justice has to be faster and there must be a sharper focus on employment and poverty alleviation.