Eleventh Five Year Plan Recommendations for Indian Co-operatives (2007-2012)

The Eleventh Five Year Plan (2007-2012), formulated under the leadership of Prime Minister Manmohan Singh and prepared by C. Rangarajan, carried a central theme of faster and more inclusive growth. For Indian co-operatives, this plan was a defining moment. It moved beyond routine policy statements and placed specific, actionable recommendations on the table – covering agricultural credit, collective marketing, dairy development, and deep structural reforms in cooperative law and governance. Understanding these recommendations helps us appreciate both the challenges co-operatives faced at the time and how they continue to shape the cooperative landscape in India today.

The context: why co-operatives needed a push in 2007 🔗

By the time the Eleventh Plan was being drafted, India’s cooperative movement had existed for over a century. Yet, the sector was burdened with well-documented problems – mounting overdues, political interference, bureaucratic control, poor governance, and over-dependence on government assistance. Dormant membership, lack of professional management, and predominance of vested interests had prevented benefits from reaching ordinary farmer-members – the very people for whom co-operatives were originally created. The Eleventh Plan acknowledged that despite impressive economic growth in the Tenth Plan period, growth had not been sufficiently inclusive, particularly for small and marginal farmers, Scheduled Castes, Scheduled Tribes, and minorities. Co-operatives – with their grass-root presence – were seen as critical vehicles to bridge this gap. The plan, accordingly, addressed cooperative development across several fronts.

Increasing direct credit flow to agriculture 🔗

One of the most pressing concerns the Eleventh Plan addressed was the inadequate flow of institutional credit to farmers, especially to small and marginal landholders. The Plan indicated that agricultural development was a core component of inclusive growth, and that the credit flow to agriculture – while growing in absolute terms – had serious structural problems in reaching those who needed it most.

The Plan recommended that co-operatives significantly increase the direct credit flow to agriculture. The cooperative credit structure – with State Cooperative Banks at the apex, District Central Cooperative Banks at the district level, and Primary Agricultural Credit Societies (PACS) at the village level – was identified as the most effective delivery mechanism for rural credit, particularly given its deep reach into villages where commercial banks had limited presence. The target was to make this three-tier structure a reliable, timely, and affordable source of credit for farming communities.

Special focus on small and marginal farmers 🔗

The Eleventh Plan paid particular attention to small and marginal farmers – those holding less than two hectares of land. This was not incidental. In India, small and marginal farmers account for the vast majority of agricultural holdings, yet their access to institutional credit has historically been limited due to both socio-economic barriers and institutional bottlenecks. The Plan pushed for co-operatives to direct credit specifically toward these farmers, with simplified processes and flexible assessment criteria. Institutions like NABARD were expected to refine refinance schemes and instruments like the Kisan Credit Card (KCC) to ensure ground-level disbursements reached the most vulnerable farm households. The cooperative channel was considered particularly well-suited for this because, even with a smaller share of total agricultural credit, cooperatives covered a disproportionately larger number of small farmers compared to commercial banks.

Promoting collective marketing and institutional innovations 🔗

Agricultural credit alone was not sufficient if farmers continued to face exploitative conditions in the marketplace. The Eleventh Plan therefore recommended active promotion of collective marketing through co-operatives as a strategy to enhance farmers’ bargaining power and ensure better price realization.

Co-operative marketing societies allow farmers – especially smaller producers who individually have little leverage – to pool their produce, access storage infrastructure, and negotiate with buyers collectively. This concept had been stressed repeatedly since the establishment of NAFED in 1958 as the apex body for co-operative agricultural marketing, and the Plan sought to revitalize this approach with stronger institutional support.

Beyond conventional marketing co-operatives, the Eleventh Plan encouraged institutional innovations – new models of cooperative organization that could respond to market realities more effectively. This included encouraging co-operatives to enter into value chain activities, agro-processing, and input supply, thereby becoming multipurpose entities rather than single-function credit bodies. The idea was to make co-operatives financially viable enough to sustain themselves and relevant enough to meaningfully improve farmer incomes.

Strengthening dairy co-operatives 🔗

Dairy co-operatives have long been among the most successful examples of cooperative enterprise in India. The story of Amul and the Kaira District Cooperative Milk Producers’ Union in Gujarat – which transformed milk procurement, processing, and marketing for millions of small milk producers – demonstrated what a well-run dairy cooperative model could achieve. The Eleventh Plan aimed to replicate and scale up this success across states.

The Plan recommended strengthening dairy co-operatives by expanding their reach to milk producers who remained outside the cooperative fold, improving milk collection infrastructure, and ensuring better price support for primary milk producers. The underlying concern was that private dairies could exploit small and marginal milk suppliers in the absence of a strong cooperative counter. NABARD’s Credit Facility to Federations (CFF) was one of the institutional mechanisms intended to support state-level dairy cooperatives and milk unions with short-term credit for procurement, processing, and marketing. Strengthening the National Dairy Development Board (NDDB) model and extending it geographically was central to the plan’s dairy strategy.

Co-operative reforms: legislative and structural changes 🔗

The most consequential recommendations of the Eleventh Plan related to co-operatives were arguably in the domain of governance and law. The plan identified that many of the problems plaguing Indian co-operatives were not just operational but fundamentally structural – rooted in outdated laws and government control that undermined the autonomous and democratic character of co-operatives.

Adopting the Model State Co-operative Societies Act 🔗

State cooperative laws varied widely across India and many contained provisions that allowed governments to interfere in the internal management of societies – superseding elected boards, appointing administrators, and exercising discretionary control over day-to-day decisions. The Central Government had prepared a Model State Co-operative Societies Act to serve as a template for states to modernize their cooperative legislation. The Eleventh Plan strongly recommended that states adopt this model law, which was designed to promote democratic functioning, member control, professional management, and financial transparency within co-operatives.

Adopting a model act was also seen as a way of ensuring that cooperative societies function as voluntary, democratic, and autonomous organisations controlled by their members – consistent with internationally accepted cooperative principles. The move toward legislative uniformity was expected to improve the investor and member confidence in co-operatives and make them more accountable.

Removing duality of control 🔗

One of the most debilitating structural problems facing cooperative banks in India has been duality of control – a situation where cooperative banks are simultaneously subject to the regulatory framework of the Reserve Bank of India (under banking laws) and the administrative control of state governments (under cooperative laws). This dual accountability often creates confusion, delays, and conflicts that hamper efficient functioning.

The Eleventh Plan recommended resolving this duality clearly. State Cooperative Banks and District Central Cooperative Banks come under the regulatory purview of RBI through the Banking Regulation Act, with NABARD empowered to conduct inspections – but state governments still exercised considerable administrative authority under cooperative statutes. Resolving this overlap was essential for making cooperative banks function with the discipline and efficiency of proper financial institutions while retaining their cooperative character. The recommendation was to rationalize jurisdiction so that banking functions were clearly regulated by banking authorities and cooperative governance was governed by updated cooperative law – without overlap or conflict.

Repositioning the role of the Registrar of Co-operative Societies 🔗

Perhaps one of the most important governance reforms recommended by the Eleventh Plan was a fundamental shift in the role of the Registrar of Co-operative Societies. Traditionally, the Registrar wielded extensive powers – approving elections, superseding boards, appointing administrators, approving bye-law changes, and in many cases, effectively running co-operatives from outside. This heavy-handed oversight was a primary reason for the loss of democratic character and member engagement in cooperative societies.

The Plan recommended repositioning the Registrar from being a controller of co-operatives to a facilitator. The National Cooperative Policy had already signaled this direction – redefining the Registrar’s role as that of a facilitator for cooperative societies rather than a regulator or administrator. The Eleventh Plan reinforced this approach, aiming to allow co-operatives to govern themselves democratically, hold timely elections, manage their own finances, and be accountable to their members rather than to government officials. This shift, if effectively implemented, would bring Indian co-operatives closer to the globally recognized cooperative principles of autonomy and democratic member control.

Significance of the Eleventh Plan recommendations in the larger cooperative journey 🔗

The Eleventh Plan’s recommendations for co-operatives did not emerge in a vacuum. They built on decades of committee reports, working group findings, and policy experiments. Many of these recommendations – particularly on legislative reform and removal of government control – had been made before and only partially implemented. What the Eleventh Plan did was give them renewed urgency within the broader framework of inclusive growth.

Some of these reforms eventually led to significant legislative changes. The Constitution (97th Amendment) Act, 2011, passed toward the end of the Eleventh Plan period, inserted Part IX-B into the Constitution, giving constitutional status to cooperative societies and mandating free, fair, and timely elections to cooperative boards, fixed board tenures, and representation of women and weaker sections. This was a direct legislative response to the kinds of governance concerns the Eleventh Plan had raised. Today, institutions like the Ministry of Cooperation, established in 2021, continue to advance many of the same goals – strengthening cooperative governance, expanding reach to rural communities, and making co-operatives truly member-controlled enterprises.

What do you think? Given that many of the Eleventh Plan’s recommendations – like removing duality of control and repositioning the Registrar as a facilitator – have been pending or only partially addressed for years, what structural changes do you believe are most urgent to unlock the real potential of Indian co-operatives? And with cooperative banks still disbursing far less agricultural credit than their targets, is the three-tier credit structure still the right model, or does it need a fundamental redesign?

References

1. https://vajiramandravi.com/current-affairs/five-year-plan-in-india/
2. https://andhrapradesh.pscnotes.com/appsc-group-1-mains/paper-iv/indian-economy-paper-iv/agricultural-credit/
3. https://www.ijcrt.org/papers/IJCRT1135583.pdf
4. https://financialservices.gov.in/beta/en/agriculture-credit
5. https://pmfby.gov.in/compendium/General/2002%20-%20Agricultural,%20Credit,%20Cooperation%20and%20Crop%20Insurance.pdf
6. https://www.nabard.org/content.aspx?id=4
7. http://eagri.org/eagri50/AECO242/pdf/lec05.pdf
8. https://www.rfilc.org/wp-content/uploads/2020/08/Cooperatives.pdf
9. https://www.drishtiias.com/loksabha-rajyasabha-discussions/perspective-the-multi-state-co-operative-societies-amendment-bill-2022
10. https://www.slideshare.net/slideshow/cooperative-society-65925701/65925701
11. https://crcs.gov.in/constitutional_provisions
12. https://www.pib.gov.in/PressNoteDetails.aspx?NoteId=153419&ModuleId=3
13. https://www.indiancooperative.com/from-states/ministry-nabard-chart-revival-plan-for-co-operative-banks-in-agri-credit/