Policy Update
Diva Bhatia
Background
Since its establishment on 6th July 2021, the Ministry of Cooperation has been headed by Union Home Minister Shri Amit Shah,, with administrative leadership by Secretary Dr. Ashish Kumar Bhutani, IAS (Ministry of Cooperation, 2025).
Introduction
The Ministry of Cooperation has been set up as a separate administrative, legal and policy arm of the Government framework in relation to cooperatives in India from the Ministry of Agriculture and Farmers’ Welfare, as a dedicated approach to the distinct needs associated with India’s cooperative movement and the founding vision of the Ministry, “Sahkar Se Samriddhi” (Prosperity through Cooperation), is clear in the Government of India’s commitment to strengthen the cooperatives at the primary, district, state and multi-state levels, in a way which will facilitate and promote inclusive socio-economic development (Press Information Bureau, 2022).
Cooperatives in India date back to more than a century ago (in the early twentieth century) with the registration of the first credit society in 1904, close to Chennai. Participation in cooperatives has been under challenge, in that time and place, from issues associated with limited legislative frameworks, digitization, and economies of scale. The introduction of a Ministry as a dedicated unit aims to address and advance challenges with cooperatives facing a clearer legislative landscape, promoting digitisation, and ensuring professional governance.
Features and Functions
At its core, the Ministry of Cooperation serves five principal functions:
1. Policy Development and Legal Framework
The ministry develops and revises cooperative legislation, which includes amending the Multi-State Cooperative Societies Act, 2002. It develops model bye-laws to help standardize the governance of cooperatives with respect to all states to provide transparency, democratic elections and procedural and financial integrity. (Press Information Bureau, 2023).
2. The Ease of Doing Business for Cooperatives
The National Cooperative Database (NCD) creates a single-window portal for registration and performs real-time monitoring of the multi-state cooperative societies. This has enabled the computerized set up of over 60,000 PACS and registrar offices to reduce the time needed for approvals from a number of months to a matter of days. (Ministry of Cooperation, 2025).
3. Fiscal and Technical Assistance
In conjunction with the National Cooperative Development Corporation (NCDC), the Ministry of Cooperation offers low-interest loans, grants and insurance products that are tailored for cooperatives. The notable schemes include “Dirghavadhi Krishak Sahkar” for long term agricultural credit and “Dairy Sahakar” for dairy cooperatives, where the NCDC disbursed ₹41,025 crore in 2022 – 23 marking 20 percent growth from the previous year. (Press Information Bureau, 2024).
4. Capacity Building and Institutional Development
In collaboration with apex bodies, like VAMNICOM, and the National Institute of Co-operative Management, the ministry is running training programs on various topics including governance, auditing, and a common tool kit for digital tools. The Ministry of Cooperation has conducted national workshops and e-learning modules for cooperative functionaries and has reached out to 50,000 cooperative functionaries in two years (Ministry of Cooperation, 2025).
5. Regulatory Framework and Grievance Redressal
The Central Registrar of Cooperative Societies acts on malpractices, has mechanisms for whistle-blowers, and can suspend or dissolve societies for fraud or inactions. There are grievance portals where members can track complaints and track progress online, which gives account-ability right at the grassroot.
Performance and Impact
The ministry has produced tangible results in financial inclusion, digital transformation, and institutional strengthening in its first three years, including:
1)Digital Transformation: More than 1 million cooperative societies have enrolled on the NCD portal by March 2025 to provide policymakers with access to live data about cooperative society membership, finances, and compliance status. (Ministry of Cooperation, 2025).
2)Financial Inclusion: Despite challenges, Primary Agricultural Credit Societies (PACS) service expansion into Aadhaar-enabled direct benefit payments, micro-ATMs and doorstep banking, as well as the provision of digital transaction and savings products, has connected more than 10 million rural households through digital transactions since 2020 (Press Information Bureau, 2024).
3)Economic Strengthening: The NCDC’s growth in disbursements from ₹34,221 crores in 2021–22 to ₹41,025 crores in 2022–23 illustrates the role of co-operative societies in strengthening investment in agricultural, fisheries and rural enterprises (Press Information Bureau, 2023).
4)International Exposure: The design and project initiatives that led India to host the ICA Global Cooperative Conference in 2024, the first time the International Co-operative Alliance had met in global cooperation for 130 years, provided an opportunity for India to highlight its cooperative innovations, as well as to launch the United Nations International Year of Cooperatives 2025 (Press Information Bureau, 2024).
Case Study: Fisheries Cooperatives in Maharashtra
As part of the deep-sea trawler assistance scheme which NCDC is managing, fisheries cooperatives in Maharashtra received ₹20.30 crore in fiscal 2022–23 to purchase 14 deep-sea trawlers. The intervention resulted in a 25 percent increase in catch volumes, and 18 percent rise in fisher incomes within the year, illustrating the multiplier effect of well targeted financing to cooperatives (Press Information Bureau, 2024).
Emerging Issues
However, challenges remain, including:
1)Federalism: Some state governments see central engagement as intrusion into their constitutional jurisdiction; Kerala Cooperation Minister V. N. Vasavan went on record stating the newly-formed Ministry undermined state autonomous rights (Press Information Bureau, 2022).
2)Digital Divide: Where digital systems have been implemented, remote areas of limited access to the internet have lagged in PACS digitization making service provision patchy and data gaps remain as a result of lack of fill-processes.
3)Governance Deficits: Smaller cooperatives lack trained board members and a good internal audit process, and as a result financial irregularities become a recurring theme.
4)Financial Sustainability: Emerging non-performing assets in public sector cooperative banks indicate a lack of a capacity to add risk-management frameworks.
5)Fragmentation with other sectoral regulators: The need to coordinate with RBI (for cooperative banks) and FSSAI (for dairy cooperatives) creates complications to select and formulate, let alone implement seamless enduring policies.
Way Forward:
To respond to the issues outlined above, we recommend that the ministry pursue the following actions:
1)Permissioned blockchain for cooperatives: The ministry should introduce a blockchain-based integrated registry for multi-state cooperatives, which could facilitate immutable recording of transaction records, improve traceability and auditing of transactions, and increase transparency to mitigate fraud risks. We can consider doing a pilot with the National Cooperative Dairy Federation to provide real-time tracing of milk procurement and record-keeping of dividend disbursals.
2)Rural digital innovation hubs: Establish 1,000 block-level hubs that provide internet access, IT resources and digital literacy training for PACS members to enhance operational efficiencies and PACS computerisation.
3)Independent cooperative credit rating agency: Set up an independent and specialist credit rating organization for cooperatives – to assess credit worthiness and enable access to capital markets, and allow a due diligence requirement for governance best practice.
4)Incentivised federations: Direct funding to provide matching grants to equally help incentivize the merger of small PACS to form larger (district/zone)-level societies, which will facilitate further procurement efficiencies from bulk purchasing, marketing (trading) and auditing services.
5)Cooperative governance fellowship: Work with some of the top management institutions in the country to provide an honorable fellowship program for cooperative board members, with the prospectus being all-industry (in focus) e.g. financial management, ethics, digital strategy etc.
6)Regulatory sandbox: To allow cooperatives to innovate with products (e.g. blockchain enabled crop insurance) and engage new technologies (e.g. drones for logistics) for trialing as locally intended pilots and trialed before extending them nationally.
Conclusion
In a short span of existence, the Ministry of Cooperation has instigated an unprecedented digital and financial growth trajectory in India’s cooperative sector, including comprehensive PACS computerization and record disbursements by NCDC. The successful loans to deep sea trawlers and hosting of the ICA Global Cooperative Conference highlight the ministry’s nascent success. The ministry will have issues with state sensitivities, rural digital divides, and governance gaps. If the ministry adopts innovative applications of modern technology and increasing institutional capacities, the ministry starts a long way on its journey to reach “Sahkar Se Samriddhi” and enable the cooperative movement to drive inclusive and sustainable growth in India.
References:
Ministry of Cooperation. (2025). Annual report 2023–24. Government of India.
https://www.cooperation.gov.in/sites/default/files/2025-03/Annual%20Report%202023-24_English.pdf
Ministry of Cooperation. (2025). About the Ministry of Cooperation. Government of India. https://www.cooperation.gov.in/en/ministry-cooperation
Press Information Bureau (2022). Under the leadership of Prime Minister Shri Narendra Modi, a new Ministry of Cooperation was set up on 06 July 2021. Government of India. https://www.pib.gov.in/Pressreleaseshare.aspx?PRID=1858195
Press Information Bureau. (2023). Year‑End Review 2023: Promotion of cooperative movement & financial assistance by NCDC including Deep Sea Trawlers. Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=1991953
Press Information Bureau. (2024). New schemes for Co-operatives – Dirghavadhi Krishak Sahakar, Dairy Sahakar, Nandini Sahakar, etc. Government of India. Retrieved from https://www.pib.gov.in/PressReleasePage.aspx?PRID=2042685
Press Information Bureau. (2024). Expansion of e‑governance services through Primary Agricultural Credit Societies (PACS) and Common Service Centres (CSCs). Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2083299
Press Information Bureau. (2024). Computerization and strengthening of Primary Agricultural Credit Societies (PACS). Government of India. https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=2080081
About the Contributor
Diva Bhatia is a research intern at IMPRI and currently pursuing a major in Political Science from Jesus and Mary College, University of Delhi. Her research interests include gender studies, international relations and exploring the socio-political intricacies of North East India.
Acknowledgement
The author sincerely thanks Ms. Aasthaba Jadeja and IMPRI fellows for their valuable contribution.
Disclaimer
All views expressed in the article belong solely to the author and not necessarily to the organisation.
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