Types of cooperative societies in India and cooperative Society Act

Cooperatives or cooperative societies are an autonomous association of people who come together for their socio-economic needs and goals. Cooperatives are democratically owned and each member has a single vote. A cooperative society may be:

  • Owned by people who use the services (Consumer Cooperative).
  • Owned by people who work there.
  • Owner from different stakeholder groups.
  • Platform cooperative that owned website through which sale of Good Occur.

Any Cooperative Society has the following principle:

  1. Membership is voluntary and open for all.
  2. Democratic in nature i.e. each member has one vote.
  3. Economic participation of members.
  4. Cooperatives are independent and autonomous.
  5. Cooperatives also cooperate among themselves.
  6. The main aim is concerned with the Society in which they live.
  7. Cooperatives also provide Education, training, and information to its member.


Types of Cooperative Societies in India:

Cooperative societies can be divided into various types based on their mode of operation, goal, and commitment. Basically in India, six major types of cooperative are exits, these are the following;

Types of cooperative societies

1. Consumer Cooperative Society:

These societies are primarily groups of consumers who wish to buy household goods at lower prices. The society buys the products from the seller in huge quantity at wholesale rate and distributes it to it’s member, thus there is no need of middlemen. Purchased things sold not only to its member but also to the non-member in cash. Capital for buying these goods is collected from it’s members and profit made by cooperatives also distributed among its members. These cooperative societies do not lie on advertisement but they have direct contact with the consumers. They set up stores or outlets so that they can buy in huge quantities which earns them discounts from sellers. Some of the best examples for Consumer Cooperative are Super Bazar, Apna Bazar, etc.

2. Producer Cooperative Society:

These are the cooperative societies which buy raw material from producer and sell it to the industries. In return, they buy final goods from industries and sell them to its member and non-member in cash. Capital for buying raw material collected from its member and benefit is also shared among its member. In these types of cooperative societies, the producers may be farmers, handloom or Handicraft producers and Ayurveda producers, etc. It provides a well-defined market to its producer hence saved from the capitalistic market. Best examples of such Cooperatives are Dairy, Fish, farmers, and tribal cooperatives.

3. Cooperative Credit Societies:

These cooperative societies provide loans to it’s members at low-interest rates and protect them from high interest from Moneylenders. These cooperatives basically act as a banking system. Capital in these Cooperatives are mainly raised by two methods; first, where they directly borrow money from the bank and lend its members at a lower rate and second is that money collected among its member and lend to one of its members. They have also deposit schemes in form of saving account, fixed Deposits, pension scheme, etc. These societies also get help from the center and state governments by providing subsidies in the interest of loans. Some examples are Nirmal ujjwal credit cooperative Societies.

4. Marketing Cooperative Societies:

The main aim of these cooperatives is to market any product. Mainly these cooperatives get associated with farmers to ensure a better price to farmer produce. It increased the bargaining strength of farmer produce and protect them to sell it,s products individually. The profit is distributed on the basis of the contributions made. They also educate farmers about market price, demand-supply mismatch help to get loans, building storage infrastructure, and sometimes also establish small processing units to ensure more profit to farmers. Some examples are milk cooperatives in Gujarat (AMUL), Cotton or sugar cooperatives in Maharashtra.

 5. Housing Cooperative Societies:

The housing cooperative’s main aim is to provide affordable housing to middle and low-income group people. If anybody wants to join it, members can but own share in entire cooperation which in return provide house them to reside in. these societies are mainly found in urban or semi-urban areas. These societies first made houses and then distribute among its member and collect money in installment. On other hand, they also provide land to its members for constructing houses on this land.

6. Cooperative farming societies:

Small landholder farmers are unable to buy new agricultural technology because their profit is not enough to meet it’s price. These cooperatives promote the consolidation of the land of these farmers and they sow such land as a single unit. Produce comes out through agriculture share among member as per the proportion of their land. This system also enhances the bargaining power of farmers and also ensures better use of technology in agriculture which resulted in high agricultural land. A farmer is a member for a lifetime and cannot remove their land but can transfer it to others.


What is the Need for Cooperative Societies?

  • A cooperative society promotes democratic nature in rural areas.
  • Also, play an important role in financial inclusion in rural and semi-urban areas.
  • These ensure better income for farmers.
  • Promote brotherhood and cooperation among people.
  • Ensure collective decision-making.
  • Also, help to women empowerment by providing more economic freedom and awareness about their right.


After Independence, Various committees were formed for the establishment and regulation of cooperative societies. These are:

  • All India Rural Credit Survey Committee report
  • Chaudhary Bhramprakash Committee (1990)
  • Mirdha Committee (1996)
  • Jagdish Kapoor Committee (2000)
  • Vikhe Patil Committee (2001)
  • S. Vyas Committee (2001 and 2004)


Various Law regulating Cooperative Society in India:

 Constitutional Provision:
  • Article 19 states that the Right to form Cooperative Societies is a fundamental right.
  • Article 43-B provides for the promotion of cooperative Societies as part of the Directive Principle of State Policy (DPSP) and states should promote voluntary formation, autonomous functioning, democratic control, and professional management of cooperative Societies.
Other laws to regulate cooperative Societies:
  • State Cooperative Societies Acts are individual for each state.
  • Multi-state Cooperatives Societies Act, 2002 for the multistate cooperative including the area of operation in more than one state.
Multi-state Cooperatives Societies Act, 2002:

It is an act to consolidate and amend the law related to cooperative societies, the objectives of this act is not confined to one state but work under various state. This bill specified the definition of cooperative societies and the various regulation parameter for a multistate cooperative. It also promotes democratic decision-making at the grass-root level. It provides a right to every individual to establish cooperative societies and operate all over India. Along with right base approach Act also shows guidelines regarding the establishment of Multi-state Cooperative Societies


At last cooperative Societies are the key players in the model of rural development where development is based on the model of “Development for the people, by the people and led by people”. Hence there is a need to strengthen cooperative societies to meet the goal of Atmanirbhar Bharat which is to move towards a self-sufficient India.


This article is written by;

Mr. Sachin

Selected as Assistant Commandant (UPSC CAPF 2019)

Also appeared for Civil Services Interview

Email: [email protected]