International Day Of Cooperatives 2026: Cooperatives As Engines Of Economic Democracy

Nayanshi

Background

As economies become increasingly characterised by widening wealth disparities, market concentration, and the growing dominance of large corporations, the search for more equitable and participatory models of development has acquired renewed urgency. In this context, the International Day of Cooperatives, observed annually on the first Saturday of July, offers an opportunity to reflect on the continued relevance of the cooperative model in shaping more inclusive, resilient, and equitable economies. Established by the United Nations in 1992 and first observed in 1995, the observance highlights the contribution of cooperatives in addressing economic, social, and environmental challenges while fostering partnerships among governments, international organisations, and the cooperative movement.

This renewed global focus builds on the United Nations’ designation of 2025 as the International Year of Cooperatives under the theme “Cooperatives Build a Better World.” The initiative was launched to raise global awareness of the cooperative model, encourage governments to strengthen supportive policy and legal frameworks, and highlight the sector’s contribution to achieving the Sustainable Development Goals (SDGs) through inclusive growth, poverty reduction, decent work, food security, and community resilience. Consequently, the 2026 observance marks not merely the continuation of this momentum but an opportunity to translate renewed global recognition into concrete policy action.

The significance of the 2026 observance is particularly pronounced. The world continues to grapple with persistent inequalities, fragile supply chains, climate-induced vulnerabilities, and an unprecedented concentration of economic and digital power. Against this backdrop, cooperatives offer a development model rooted in democratic ownership, shared responsibility, and equitable distribution of benefits. By placing people before capital, they demonstrate that economic efficiency and social justice can be mutually reinforcing, making them increasingly relevant to contemporary policy debates on inclusive and sustainable development.

Evolution of the Cooperative Movement

The modern cooperative movement traces its origins to the Rochdale Society of Equitable Pioneers, established in England in 1844. The Rochdale Principles- later refined by the International Cooperative Alliance (ICA) laid the foundation for cooperatives worldwide by promoting voluntary membership, democratic governance, member economic participation, autonomy, education, cooperation among cooperatives, and concern for the community. Since then, cooperatives have expanded across sectors ranging from agriculture and finance to healthcare, housing, retail, renewable energy, and digital services. Recognising their growing contribution to sustainable development, the United Nations declared 2025 as the International Year of Cooperatives, reaffirming their role in building more inclusive, resilient, and people-centred economies.

India’s Cooperative Journey

India’s cooperative movement began with the Co-operative Credit Societies Act, 1904, aimed at addressing rural indebtedness, and expanded through the Co-operative Societies Act, 1912 into diverse sectors of the economy. Following Independence, cooperatives became a cornerstone of rural development, with institutions such as Amul, IFFCO, and KRIBHCO demonstrating the transformative potential of collective enterprise in agriculture, dairy, and allied sectors.

A major institutional milestone came with the 97th Constitutional Amendment Act, 2011, which accorded constitutional status to cooperatives by recognising them as an integral pillar of democratic governance and seeking to ensure their autonomous functioning, democratic elections, and professional management. The amendment reinforced the principles of transparency, accountability, and member participation, thereby strengthening the institutional foundation of the cooperative movement. More recently, the establishment of the Ministry of Cooperation in 2021 under the vision of “Sahkar se Samriddhi” has renewed policy attention towards strengthening the cooperative ecosystem through institutional reforms, improved governance, and technological modernisation.

Functioning

1. The Cooperative Model

The cooperative model differs fundamentally from conventional investor-owned enterprises by placing members rather than capital at the centre of economic activity. According to the International Cooperative Alliance (ICA), cooperatives are autonomous associations formed voluntarily to meet members’ common economic, social, and cultural needs through a jointly owned and democratically controlled enterprise.

Its functioning is guided by the following principles:

Democratic Ownership: Cooperatives are owned collectively by their members rather than external shareholders.
One Member, One Vote: Decision-making power is equally distributed irrespective of capital contribution, ensuring democratic governance.
Member Participation: Members actively participate in policy formulation, election of governing bodies, and institutional oversight.
Equitable Distribution of Surplus: Earnings are reinvested into the cooperative, allocated for community development, or distributed among members based on their participation rather than shareholding.
Community-Oriented Enterprise: Beyond profit generation, cooperatives promote social inclusion, local development, and long-term community resilience.

This governance structure makes cooperatives important instruments of economic democracy, balancing commercial viability with social welfare.

2. Institutional Architecture

Cooperatives today operate across diverse sectors, reflecting their adaptability to changing economic needs. Globally, over 3 million cooperatives serve more than 1 billion members and provide employment or livelihoods to nearly 280 million people, accounting for around 10% of the world’s employed population.

In India, the National Cooperative Database (2025) records over 8.5 lakh registered cooperatives, with around 6.6 lakh operational societies serving nearly 32 crore members across 30 sectors, covering almost 98% of rural India.

India’s cooperative ecosystem includes:

Cooperative Credit Institutions (PACS, District Central Cooperative Banks, State Cooperative Banks) that support rural credit and financial inclusion.
Dairy Cooperatives, led by the Amul model, which transformed India into the world’s largest milk producer.
Farmer Producer Organisations (FPOs) and producer cooperatives that enhance farmers’ bargaining power, market access, and value addition.
Housing, fisheries, consumer, labour, women’s, and emerging platform cooperatives, expanding the cooperative model into urban services and the digital economy.

3. Policy and Governance Framework

Recognising the strategic role of cooperatives in inclusive development, India has undertaken several institutional reforms in recent years.

Key initiatives include:

Establishment of the Ministry of Cooperation (2021) under the vision of “Sahkar se Samriddhi”.
Digitisation of Primary Agricultural Credit Societies (PACS) to improve transparency and efficiency.
Creation of the National Cooperative Database for evidence-based policymaking and improved governance.
Adoption of Model Bye-laws to diversify PACS into multi-service centres offering storage, processing, Common Service Centres, and other rural services.
Financial and capacity-building support through institutions such as National Cooperative Development Corporation (NCDC) and National Bank for Agriculture and Rural Development (NABARD).
Ongoing efforts to strengthen governance through professional management, greater accountability, and technological modernisation.

While these reforms have modernised the cooperative ecosystem, their long-term success will depend on ensuring institutional autonomy, professional governance, and meaningful member participation to preserve the democratic character of cooperatives.

Performance

1. India’s Cooperative Success Stories

India’s cooperative movement demonstrates how collective ownership can generate both economic value and social transformation. Some of its most successful examples include:

Amul and the White Revolution: Established in 1946, Amul transformed India from a milk-deficient nation into the world’s largest milk producer, contributing nearly 25% of global milk production. Today, the Gujarat Cooperative Milk Marketing Federation (GCMMF) represents over 36 lakh dairy farmers through approximately 18,600 village dairy cooperative societies.

Indian Farmers Fertiliser Cooperative Limited (IFFCO): Established in 1967, IFFCO has evolved into one of the world’s largest fertilizer cooperatives, serving over 3.5 crore farmers through more than 35,000 member cooperative societies, ensuring fertilizer security and improving agricultural productivity.

Krishak Bharati Cooperative Limited (KRIBHCO): With over 9,000 member cooperative societies, KRIBHCO has strengthened fertilizer production, farmer education, rural infrastructure, and sustainable agricultural practices.

Self-Help Groups (SHGs) and Women’s Cooperatives: Through NABARD’s SHG-Bank Linkage Programme, over 10 crore women have been mobilised into SHGs, promoting financial inclusion, entrepreneurship, livelihood generation, and grassroots leadership. Complementing this, the Self-Employed Women’s Association (SEWA) Cooperative Movement has demonstrated how women-led cooperatives can empower informal workers by improving access to credit, markets, social security, and collective bargaining, thereby strengthening both economic independence and social inclusion.

Cooperative	Key Achievement	Contribution to Economic Democracy
Amul	Led the White Revolution	Strengthened farmer ownership and ensured equitable distribution of value across the dairy supply chain.
IFFCO	One of the world’s largest fertilizer cooperatives	Reduced dependence on private intermediaries through collective ownership and improved access to agricultural inputs.
KRIBHCO	Rural agricultural support	Enabled cooperative-led agricultural modernisation and strengthened rural institutions.
SHGs & Women’s Cooperatives	Women’s financial inclusion	Expanded grassroots entrepreneurship, financial participation, and community-led development.

2. Economic Contributions

The cooperative sector continues to play a significant role in advancing inclusive and decentralised economic development through the following contributions:

Enhancing Agricultural Productivity: India has over 1 lakh Primary Agricultural Credit Societies (PACS), which provide affordable credit, quality inputs, storage, marketing support, extension services, and market linkages to millions of farmers, particularly small and marginal cultivators. PACS are also being diversified into multi-service centres under recent cooperative reforms.

Generating Rural Employment: According to the National Cooperative Database (2025), India has over 8.5 lakh registered cooperative societies, with around 6.6 lakh operational cooperatives serving nearly 32 crore members across 30 sectors, making the cooperative sector one of the country’s largest generators of rural livelihoods.

Promoting Financial Inclusion: Cooperative credit institutions- including PACS, District Central Cooperative Banks (DCCBs), and State Cooperative Banks (StCBs), constitute a critical pillar of rural finance, particularly for small and marginal farmers who often face barriers in accessing commercial banking services.

Strengthening Women’s Economic Participation: Through NABARD’s SHG-Bank Linkage Programme, more than 10 crore women have been mobilised into Self-Help Groups (SHGs), improving access to formal finance, entrepreneurship opportunities, livelihood diversification, and grassroots leadership.

Encouraging Local Entrepreneurship: By promoting decentralised production, value addition, community-owned enterprises, and producer collectives, cooperatives strengthen local value chains, enhance rural incomes, and contribute to balanced regional development while reducing dependence on external intermediaries.

3. Persistent Challenges

Despite their achievements, cooperatives continue to face several structural and institutional constraints that limit their full potential.

Political Interference: Excessive state control and politicisation often weaken democratic functioning and institutional autonomy.
Governance Deficits: Weak accountability mechanisms, irregular elections, and limited member participation undermine transparency and efficiency.
Limited Professional Management: Many cooperatives lack skilled managerial leadership, business planning, and technical expertise.
Technology and Financing Gaps: Smaller cooperatives continue to face constraints in adopting digital technologies, modern infrastructure, and affordable finance.
Competition from Large Corporations: Corporate consolidation and platform-based business models increasingly challenge cooperatives in procurement, processing, marketing, and digital commerce.
Regional Disparities: The cooperative movement remains uneven across India. States such as Gujarat, Maharashtra, Karnataka, and Kerala have developed strong and diversified cooperative ecosystems, while many other states continue to face weak institutional capacity, limited member participation, inadequate infrastructure, and lower levels of cooperative penetration, resulting in uneven developmental outcomes.
Weak Youth Participation: Ageing leadership, limited innovation, and low awareness have reduced the participation of young entrepreneurs in the cooperative movement.

While India’s cooperative movement has delivered remarkable socio-economic outcomes, sustaining its relevance in the twenty-first century will require strengthening institutional autonomy, improving governance standards, embracing digital transformation, and fostering greater youth and community participation.

Impact

1. Countering Concentrated Economic Power

As wealth, market power, and digital infrastructure become increasingly concentrated in the hands of a few corporations, cooperatives offer a viable institutional alternative by broadening ownership and strengthening local economic participation.

Decentralising Economic Power: By enabling producers, workers, and consumers to collectively own enterprises, cooperatives reduce dependence on monopolistic market structures and strengthen local economic resilience.

Broadening Wealth Creation: Unlike conventional corporations where wealth primarily accrues to shareholders, cooperatives distribute economic value across members and communities, promoting more equitable patterns of income generation and asset ownership.

Strengthening Collective Bargaining: Cooperative institutions enhance the negotiating power of farmers, artisans, workers, and micro-entrepreneurs, enabling better market access, fairer prices, and reduced reliance on intermediaries.

Retaining Wealth within Communities: Profits generated through cooperative enterprises are more likely to be reinvested locally, stimulating regional development and reducing economic leakages.

Global Economic Relevance: According to the World Cooperative Monitor, the world’s 300 largest cooperative and mutual enterprises generate an annual turnover exceeding US$2.8 trillion, demonstrating that cooperative enterprises are not merely social institutions but globally competitive economic actors.

2. Advancing Inclusive and Sustainable Development

The cooperative model integrates economic growth with social equity and environmental sustainability, making it a natural partner in achieving long-term development goals.

Advancing the Sustainable Development Goals (SDGs): Cooperatives contribute directly to SDGs 1 (No Poverty), 2 (Zero Hunger), 5 (Gender Equality), 8 (Decent Work and Economic Growth), 10 (Reduced Inequalities), 12 (Responsible Consumption and Production), and 13 (Climate Action).

Strengthening Social Cohesion: Collective ownership fosters trust, participatory governance, and social inclusion, particularly among marginalized and underserved communities.

Enhancing Community Resilience: Cooperatives often prioritise continuity of services and member welfare during economic crises, natural disasters, and supply-chain disruptions, making communities more resilient to external shocks.

Supporting Food Security: Agricultural and dairy cooperatives improve access to quality inputs, storage, processing, and markets, thereby strengthening food systems and enhancing farmers’ incomes.

Empowering Women: Women-led cooperatives and Self-Help Groups (SHGs) have expanded financial inclusion, entrepreneurship, leadership opportunities, and decision-making at the grassroots level.

Promoting Climate Resilience: Cooperatives increasingly support sustainable agriculture, renewable energy adoption, efficient resource management, and climate adaptation through community-led initiatives.

3. Cooperatives in the Digital Economy

The cooperative movement is evolving beyond its traditional sectors, adapting to technological transformation and emerging economic realities.

Platform Cooperatives: Worker and user-owned digital platforms offer an alternative to conventional gig economy models by ensuring fairer income distribution, democratic governance, and greater control over digital assets and data. International examples such as Stocksy United, a photographer-owned stock media platform, and Up & Go, a worker-owned home services platform in the United States, demonstrate how digital enterprises can combine technological innovation with collective ownership, ensuring that the economic value generated by digital platforms is shared more equitably among their members.

Renewable Energy Cooperatives: Community-owned renewable energy projects are expanding access to clean energy while enabling citizens to participate directly in the energy transition.

Care Cooperatives: Cooperatives in healthcare, childcare, and eldercare are improving access to affordable, community-based services while generating dignified employment.

Urban Housing Cooperatives: Collective ownership models continue to support affordable housing, planned urban development, and stronger community participation.

New-age Cooperative Entrepreneurship: The integration of digital technologies, fintech, artificial intelligence, and e-commerce is enabling cooperatives to improve efficiency, expand market access, and remain competitive in an increasingly digital economy.

The continued evolution of cooperatives demonstrates that they are no longer confined to traditional rural sectors. Instead, they are emerging as adaptable institutions capable of addressing some of the defining challenges of the twenty-first century— from rising inequality and economic concentration to digital disruption and climate change. Their enduring relevance lies in offering a development model that combines economic efficiency with equity, resilience, and shared prosperity.

The Way Forward

Strengthening the cooperative movement requires a comprehensive policy approach that modernises institutions while preserving the core principles of democratic ownership and collective participation. As India advances towards Viksit Bharat 2047 and the global community works to achieve the Sustainable Development Goals (SDGs), cooperatives must be positioned as strategic institutions for inclusive, resilient, and sustainable development.

1. Governance Reforms

Enhancing the credibility and competitiveness of cooperatives requires robust institutional governance.

Strengthen institutional autonomy by reducing excessive political interference while preserving democratic member control.
Professionalise cooperative management through merit-based appointments, leadership development, and continuous capacity-building programmes.
Enhance transparency and accountability by promoting regular audits, timely elections, digital record-keeping, and greater member participation in decision-making.
Adopt performance-based governance frameworks with measurable indicators for financial sustainability, member services, and social impact.

2. Policy Priorities

To unlock the full potential of the cooperative sector, policy interventions must move beyond traditional support mechanisms.

Strengthen the cooperative ecosystem through better convergence between the Ministry of Cooperation, NABARD, NCDC, State Cooperative Departments, and financial institutions.

Expand access to affordable finance by improving institutional credit, risk-sharing mechanisms, and dedicated investment support for emerging cooperatives.

Accelerate digital transformation by promoting digital governance, e-commerce integration, fintech solutions, and AI-enabled service delivery, particularly for rural cooperatives.

Promote innovation and market competitiveness through incubation centres, research collaborations, value-chain integration, and support for cooperative start-ups.

Invest in capacity building by strengthening cooperative education, digital literacy, financial management, and entrepreneurial skills among members.

Mainstream cooperatives into national development strategies by integrating them with programmes on rural development, agriculture, skilling, climate action, and local economic development, thereby contributing to the achievement of the SDGs.

3. Building the Next Generation of Cooperatives

The future of the cooperative movement depends on its ability to attract new participants and respond to emerging economic opportunities.

Encourage youth participation through entrepreneurship programmes, university incubation centres, start-up partnerships, and leadership opportunities within cooperatives.

Scale up women-led cooperatives by improving access to finance, markets, technology, and leadership positions, building upon the success of Self-Help Groups (SHGs).

Promote Green Cooperatives in renewable energy, sustainable agriculture, waste management, circular economy initiatives, and climate adaptation to support India’s environmental commitments.

Support Digital and Platform Cooperatives that provide democratic alternatives in the gig economy, digital marketplaces, and data-driven industries.

Align cooperative development with the vision of Viksit Bharat 2047 by positioning cooperatives as key institutions for inclusive growth, rural transformation, employment generation, food security, and sustainable local development.

The International Day of Cooperatives serves as a reminder that cooperative enterprises are not merely historical institutions but dynamic instruments for addressing contemporary developmental challenges. In an era marked by widening inequalities, technological disruption, climate uncertainty, and concentrated economic power, cooperatives demonstrate that economic growth can be both competitive and equitable.

Their strength lies not only in generating livelihoods or delivering essential services, but in democratising ownership, empowering communities, and ensuring that the benefits of development are more broadly shared. As India advances towards the vision of Viksit Bharat 2047 and the global community strives to achieve the Sustainable Development Goals, revitalising the cooperative movement is no longer simply a commemorative objective, it is a strategic policy imperative for building resilient, inclusive, and sustainable economies. By combining democratic governance with economic innovation, cooperatives have the potential to redefine development as a process driven not by the concentration of wealth, but by the collective prosperity of communities.

References

Amul. (n.d.). About us. https://www.amul.com/m/about-us

Government of India, Ministry of Cooperation. (2025). International Year of Cooperatives (IYC) 2025: Annual Action Plan. https://www.cooperation.gov.in/sites/default/files/2025-03/IYC%20Annual%20Action%20Plan-English.pdf

Government of India, Press Information Bureau. (2025, July 4). Cooperatives: Building a Better Tomorrow. https://www.pib.gov.in/PressNoteDetails.aspx?ModuleId=3&NoteId=154829

International Cooperative Alliance. (2025). Facts and figures. https://ica.coop/en/cooperatives/facts-and-figures

National Bank for Agriculture and Rural Development. (2024). Status of Microfinance in India 2023–24. https://www.nabard.org

Self-Employed Women’s Association. (n.d.). About SEWA. https://www.sewa.org

United Nations. (n.d.). International Day of Cooperatives. https://www.un.org/en/observances/cooperatives-day

About the Contributor

Nayanshi is a Research and Editorial Intern at IMPRI and a student of Economics and Political Science at St. Stephen’s College, Delhi. Her research interests lie in international political economy, monetary and financial systems, public policy, developmental economics, welfare economics, behavioural economics and sustainable development.

Reviewers

Riddhi Suthar and Pallavi Lad

Disclaimer

All views expressed in the article belong solely to the author and not necessarily to the organisation.

Acknowledgement

The author extends her sincerest gratitude to the IMPRI team for their expert guidance and constructive feedback throughout the process.