Sixth Five Year Plan (1980-1985): Strengthening Primary Village Co-operatives

When India entered the 1980s, its cooperative movement was at a crossroads. Decades of planning had created a sprawling network of primary cooperative societies across the country, but the ground reality told a different story – many of these societies were financially weak, poorly managed, and unable to serve the very members they were created for. The Sixth Five Year Plan (1980-1985), launched under Prime Minister Indira Gandhi’s government, took direct aim at this gap. Rather than simply expanding the number of cooperative societies, the Plan focused on making existing primary village societies truly functional, financially robust, and professionally run. It was a crucial shift from quantity to quality.

The context: why primary village co-operatives needed strengthening
Core objectives of the Sixth Plan for co-operatives
Transforming primary societies into multi-purpose entities
Expanding credit flow to weaker sections
Enhancing share capital and financial viability
Developing professional manpower for co-operative management
Building commitment among office bearers
The NABARD connection: institutional support during the Sixth Plan
How the Sixth Plan’s cooperative agenda fit into the larger picture
Outcomes and limitations

The context: why primary village co-operatives needed strengthening

By the late 1970s, India’s cooperative credit structure was built around a three-tier model – Primary Agricultural Credit Societies (PACS) at the village level, District Central Cooperative Banks (DCCBs) at the intermediate level, and State Cooperative Banks (SCBs) at the apex. On paper, it was a comprehensive architecture. In practice, most primary societies were single-purpose, credit-focused institutions that struggled with mounting overdues, weak share capital, and poor governance.

The weaker sections of rural society – small and marginal farmers, landless labourers, Scheduled Castes, and Scheduled Tribes – found it especially hard to access cooperative credit. Larger landowners dominated the societies and often cornered the lion’s share of loans, leaving little for those who needed it most. Large overdues became a systemic problem, shrinking the pool of loanable funds and giving cooperative societies a reputation for inefficiency and default. Meanwhile, significant regional imbalances meant that some states had dense cooperative networks while others, particularly in the north-east and tribal belts, were barely covered.

The Sixth Plan recognized all of this and proposed a comprehensive overhaul – not through dismantling the existing structure, but by reorganizing and revitalizing it from the bottom up.

Core objectives of the Sixth Plan for co-operatives

Transforming primary societies into multi-purpose entities

The most significant conceptual shift in the Sixth Plan was the push to convert primary agricultural credit societies into multi-purpose village societies. Instead of limiting themselves to crop loans, these societies were expected to address the diverse needs of their members – supply of agricultural inputs like seeds and fertilizers, consumer goods distribution, marketing of produce, and even storage facilities. The Plan recommended steps for reorganizing primary agricultural credit societies into strong, viable, multifunctional entities capable of serving the full economic life of the village.

This was not an entirely new idea – the multi-functional character of PACS had been envisioned since the early planning era – but the Sixth Plan gave it renewed urgency and policy backing. A society that only disbursed loans could not hold a farmer’s interest year-round. A society that also helped him buy fertilizers at fair prices, sell his produce without middlemen, and access consumer goods at reasonable rates became genuinely indispensable to village economic life.

Expanding credit flow to weaker sections

One of the Plan’s most explicit goals was channeling more cooperative credit toward economically vulnerable groups. This aligned with the Plan’s broader poverty-alleviation philosophy, which gave birth to flagship programs like the Integrated Rural Development Programme (IRDP) and the National Rural Employment Programme (NREP). For these programs to reach their targets, cooperative societies at the grass roots had to be capable of delivering credit reliably and equitably.

The Plan specifically called for correcting regional imbalances in cooperative credit delivery. States and regions where cooperative penetration was low – particularly tribal areas and backward regions – needed dedicated attention. Structures like Large-sized Adivasi Multipurpose Societies (LAMPS) in tribal belts were part of this effort, designed to bring cooperative services to communities historically excluded from formal credit systems. LAMPS were organized in tribal and hill areas to provide all types of credit – short-term, medium-term, and consumption loans – along with marketing and consumer services, bridging a critical gap in these under-served regions.

A recurring problem with primary cooperative societies was their thin capital base. Many operated with negligible paid-up share capital, making them entirely dependent on borrowed funds from district and state cooperative banks. This dependency left them vulnerable and limited their lending capacity. The Sixth Plan proposed enhancing the share capital of primary societies to build a stronger financial foundation. Greater share capital would not only improve their creditworthiness but also deepen member stakes – financially invested members are more likely to participate actively in governance and repay their loans.

This push for financial strengthening also meant addressing the chronic overdues problem. Large overdues checked the circulation of loanable funds and reduced the borrowing and lending power of societies, creating a vicious cycle. Without resolving overdues, no amount of fresh capital infusion could make a primary society truly viable. The Plan therefore sought to improve recovery mechanisms alongside capital enhancement.

Developing professional manpower for co-operative management

Perhaps the most forward-looking aspect of the Sixth Plan’s cooperative agenda was its emphasis on human resource development. The plan planners recognized a hard truth: even well-funded, well-structured cooperative societies would fail if managed by untrained or uncommitted personnel.

The cooperative sector at that time suffered from a glaring deficit of professional managers. Most primary societies were run by elected office bearers who, despite their genuine commitment, often lacked the technical skills needed for modern financial management, credit appraisal, and member services. The Sixth Plan proposed developing appropriate cadres for managerial positions – essentially building a trained workforce that could run cooperative societies like professional institutions rather than informal community bodies.

This meant investment in cooperative training institutes, structured manpower planning for the cooperative sector, and creating career pathways that would attract capable individuals to work in cooperative management. The logic was straightforward: you cannot expect a sophisticated, multi-purpose cooperative society to function effectively without people who are trained to manage it. The economic circumstances of the rural poor could only be meaningfully improved if the cooperative institutions serving them were operationally competent.

Building commitment among office bearers

The Sixth Plan also turned its attention to the quality of leadership within cooperative societies. Office bearers – the elected chairpersons, secretaries, and committee members of primary societies – form the backbone of cooperative governance. Their integrity, commitment, and understanding of cooperative principles directly determines how well a society serves its members.

The Plan’s concern here was not purely theoretical. Political interference in cooperative elections had long been a problem in several states, leading to leadership that prioritized factional interests over member welfare. By emphasizing genuine commitment among office bearers and advocating for their capacity building, the Plan sought to restore the democratic and service-oriented character that cooperatives were supposed to embody. This was as much about culture and governance as it was about financial metrics.

The NABARD connection: institutional support during the Sixth Plan

A landmark institutional development during the Sixth Plan period directly impacted cooperative credit: the establishment of the National Bank for Agriculture and Rural Development (NABARD) in 1982. NABARD was set up based on the Shivaraman Committee’s recommendations, and it took over the agricultural credit functions that had previously rested with the Reserve Bank of India. NABARD became the principal refinancing institution for cooperative banks and Regional Rural Banks, providing them the financial resources needed to lend to the rural sector.

NABARD supervised cooperative banks, conducted statutory inspections, helped formulate district credit plans, and promoted agricultural research and education. For primary cooperative societies, NABARD’s creation meant a dedicated institutional champion – one whose mandate was specifically aligned with rural credit and cooperative development. This significantly strengthened the ecosystem in which primary village cooperatives were expected to grow and function.

How the Sixth Plan’s cooperative agenda fit into the larger picture

The Sixth Plan’s cooperative priorities cannot be understood in isolation. The Plan’s overarching goal was removal of poverty and achieving balanced regional development. Cooperatives were seen as essential delivery mechanisms for this larger mission – not merely financial institutions, but vehicles for social and economic inclusion at the village level.

The Plan emphasized inclusive growth by addressing social equity and rural development, and primary cooperative societies were expected to be key instruments in this effort. By ensuring that small and marginal farmers, tribal communities, and other weaker sections had meaningful access to cooperative credit and services, the Plan hoped to make cooperatives genuinely representative of village society rather than clubs dominated by the rural elite.

The Sixth Plan also laid groundwork for debates that would intensify in later plans. Questions about government control versus cooperative autonomy, the right balance between state support and self-reliance, and the challenge of making cooperatives accountable to members rather than to political patrons – all of these themes were visible during this period, even if they were more fully addressed in the reforms of the 1990s.

Outcomes and limitations

In aggregate, the Sixth Plan was considered economically successful – the target growth rate was 5.2% but the actual growth rate achieved was 5.7%, and several social indicators improved meaningfully. The cooperative sector saw expansion in reach and credit disbursement during this period, and the establishment of NABARD gave the sector an important institutional anchor.

However, structural weaknesses in primary societies did not disappear overnight. Overdues remained stubbornly high in many states. The goal of making every primary society truly multi-purpose took decades of further effort. Professional management of cooperative societies remained a challenge well into the following plans. These limitations did not invalidate the Sixth Plan’s approach – they underscored that transforming village-level cooperatives requires sustained, multi-decade commitment, not a single planning cycle.

What the Sixth Plan did achieve was a clear articulation of what primary village cooperatives needed to be: financially sound, member-inclusive, professionally managed, multi-functional, and genuinely committed to serving the weaker sections. That vision remained relevant – and contested – long after 1985.

What do you think? Given that overdues and weak share capital were recognized problems as far back as the Sixth Five Year Plan, why do you think these issues persisted for so many decades in India’s primary cooperative societies? And do you think the multi-purpose model for village cooperatives is better suited to addressing rural poverty than specialized credit-only societies?

References

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Table of Contents

The context: why primary village co-operatives needed strengthening 🔗

Core objectives of the Sixth Plan for co-operatives 🔗

Transforming primary societies into multi-purpose entities 🔗

Expanding credit flow to weaker sections 🔗

Enhancing share capital and financial viability 🔗

Developing professional manpower for co-operative management 🔗

Building commitment among office bearers 🔗

The NABARD connection: institutional support during the Sixth Plan 🔗

How the Sixth Plan’s cooperative agenda fit into the larger picture 🔗

Outcomes and limitations 🔗