Why in News The Government of India launched the National Cooperation Policy (NCP) 2025 on July 24, 2025 — the first dedicated national policy for the cooperative sector in decades. Built on 6 strategic pillars and 83 recommendations, it aims to transform India’s 8.5 lakh+ cooperatives from dormant entities into engines of rural economic growth.
Background: India’s Cooperative Sector
India has one of the largest cooperative movements in the world, yet its potential remains severely underutilised:
| Indicator | Data |
|---|---|
| Registered cooperatives | 8.5 lakh+ |
| Total membership | 29 crore+ |
| Primary Agricultural Credit Societies (PACS) | 1.07 lakh |
| PACS with losses | ~30% (dormant or defunct) |
| Share in agricultural credit | ~16% (NABARD data) |
Core problems plaguing cooperatives:
- Elite capture by local political and economic interests
- Poor governance and lack of professional management
- Weak audit and accountability mechanisms
- Most cooperatives limited to a single activity (credit or dairy or sugar)
- Digital exclusion — most PACS had no computerised records
Constitutional Framework for Cooperatives
97th Constitutional Amendment Act, 2011
A landmark amendment that gave cooperatives constitutional status:
| Provision | Content |
|---|---|
| Article 43B (new DPSP) | State shall endeavour to promote voluntary formation, autonomous functioning, democratic control of cooperatives |
| Article 19(1)© (amended) | Added “cooperative societies” to right to form associations |
| Part IXB (new) | Articles 243ZH to 243ZT — detailed provisions on cooperative elections, audits, membership, and supersession |
Note for Prelims: Part IXB (cooperative societies) was challenged in courts. The Supreme Court in Union of India v. Rajendra N. Shah (2021) struck down certain provisions of Part IXB as they applied to state cooperatives (as cooperatives are a State List subject — Entry 32, List II), but upheld the rest.
National Cooperation Policy 2025 — Key Features
6 Strategic Pillars
- Governance Reform — Professional management boards, independent directors, standardised audit
- Financial Strengthening — NABARD linkage, credit guarantee mechanisms, micro-lending via PACS
- Technology Integration — PACS computerisation, digital transactions, real-time data on cooperative health
- Market Linkage — FPO-cooperative convergence; National Cooperative Export Limited (NCEL) for agri-exports
- Organic & Natural Farming — National Cooperative Organics Limited (NCOL) to mainstream organic produce
- Human Resource Development — Training cooperatives’ leadership; cooperative education in universities
Key Numbers
| Feature | Data |
|---|---|
| Strategic pillars | 6 |
| Policy objectives | 16 |
| Recommendations | 83 |
| PACS computerisation budget | ₹2,925 crore |
| New bodies created | NCEL (exports), NCOL (organics) |
| Target | Multipurpose cooperatives in every panchayat |
Ministry of Cooperation — A New Institution
The Ministry of Cooperation was created in August 2021 — the first time a separate ministry was dedicated exclusively to the cooperative sector. Previously, cooperatives were handled by the Agriculture Ministry.
Significance:
- Signals political will to revive cooperatives as instruments of rural development
- Enables focused policy attention, separate budgetary allocation
- Facilitates coordination between Centre and states (cooperatives are State List but multi-state cooperatives are Central)
PACS Computerisation — Digital Backbone
PACS (Primary Agricultural Credit Societies) are the grassroots units of the three-tier cooperative credit structure:
National Level → NABARD (apex)
State Level → State Cooperative Banks (StCBs)
District Level → District Central Cooperative Banks (DCCBs)
Village Level → PACS (1.07 lakh units)
The ₹2,925 crore PACS computerisation project aims to:
- Create a national software for all PACS (one common platform)
- Enable real-time financial reporting and audit
- Link PACS to DBT (Direct Benefit Transfer) for government schemes
- Reduce cash-based transactions and elite capture
Multi-State Cooperative Societies (Amendment) Act 2023
| Change | Impact |
|---|---|
| Strengthened Central Registrar powers | Better oversight of multi-state cooperatives |
| Electoral reforms | Timely elections, reduced political interference |
| Concurrent audit | Mandatory concurrent audit for large cooperatives |
| Board composition | Functional directors (experts) mandated |
UPSC Angle
- GS2 — Governance: Cooperative federalism, 97th Amendment, Centre-State division on cooperative regulation (State List vs multi-state), Part IXB judicial controversy.
- GS3 — Economy: Rural credit, PACS, NABARD, agricultural marketing, Amul model of cooperative success.
- GS2 — Social Justice: Cooperatives as instruments of rural inclusive growth, women’s SHG-cooperative linkage.
- Mains Q: “The 97th Constitutional Amendment was a necessary but insufficient step for cooperative revival. Discuss in light of NCP 2025.”
Prelims-ready facts:
- NCP 2025 launched: July 24, 2025
- Ministry of Cooperation created: August 2021
- PACS computerisation: ₹2,925 crore
- New bodies: NCEL (exports), NCOL (organics)
- 97th Amendment: Article 43B (DPSP) + amended Article 19(1)© + new Part IXB
- Cooperatives in State List: Entry 32, List II
Facts Corner
- NCP 2025 launch date: July 24, 2025
- Framework: 6 pillars | 16 objectives | 83 recommendations
- India’s cooperatives: 8.5 lakh+ registered; 29 crore+ members; 1.07 lakh PACS
- PACS computerisation: ₹2,925 crore project for digital transformation
- New bodies: National Cooperative Export Limited (NCEL) + National Cooperative Organics Limited (NCOL)
- Ministry of Cooperation: Created August 2021 — first separate ministry for cooperatives
- 97th Amendment (2011): Article 43B (DPSP) + Article 19(1)© + Part IXB (Articles 243ZH–243ZT)
- Cooperative subject: State List Entry 32 (multi-state cooperatives: Union List)
- Amul model: Anand Pattern — three-tier cooperative in dairy — the gold standard for cooperative success
- NABARD: Apex body for cooperative credit financing at national level
