BANKING, TRADE AND COMMERCE

CO-OPERATIVE SOCIETIES

The co-operative movement was started in India at the beginning of the present century. The idea to form a co-operative society to wipe out rural indebtedness was first suggested by Frederick Nicholson in 1895—97. The Famine Commission of 1901 also stressed the need of starting credit societies in India. A real beginning of the co-operative movement was, however, made with the passage of the Co-operative Credit Societies' Act of 1904. The object of this Act was to encourage thrift, self-help and co-operation among agriculturists, artisans and the like. Societies formed under this Act were given legal status and were authorised to raise funds and carry on business in a corporate capacity. They were classified as rural and urban. The former were bound to accept the principle of unlimited liability whereas the latter had the option of limited or unlimited liability. This Act, however, had many drawbacks. To remove them the Act of 1912 was passed. It regularised certain practices of doubtful legal validity, provided for further expansion under proper safeguards, and removing the distinction between urban and rural societies, it classified them according to the availability of members with limited or unlimited liability. It also allowed co-operative societies other than credit to be formed. Registration of unions and federal bodies like central banks was expressly legalised and a number of minor improvements were introduced. The simplicity and elasticity of the old Act were at the same time preserved and a wide law-making power was left to provinces to enable them to develop on their own lines.

In Bhir district the beginning of the co-operative movement could be traced to the year 1914. Two special features marked the early growth of this movement. In the first instance, unlike other districts the movement in Bhir district was led by the old veteran servants of the State. Secondly, the movement was restricted to the credit operations only. There was, therefore, little scope for the movement to expand. Ignorance of the people and lack of industrial development in the district were other factors hampering the growth in the co-operative field. There was. therefore, no society of non-agricultural or industrial workers. Over 90 per cent of the population was engaged in agriculture in the district and was in a backward state. In these circumstances the co-operative movement did not make much headway. The circumstances continued to he more or less the same till the re-organisation of States in 1956 when Marathwada and consequently Bhir district became a part of the erstwhile State of Bombay. The movement took a step forward with the implementation of various schemes by the Cooperative Department. Today, it covers over 60 per cent of the rural population and 94 per cent of the total number of villages in the district. From the credit movement of the early period it has now assumed a multi-purpose character. It has number of apex institutions at the district level such as the district central co-operative bank, the district co-operative marketing society and the district co-operative board.

The following table gives details of the growth of the co-operative movement in the district for the period from 1960 to 1963.

TABLE No. 2

Growth of Co-operative Movement in Bhir District
from 1960-61 to 1962-63.

Agricultural Credit Societies.— The co-operative movement in Bhir district is primarily a credit movement.  It was initiated with the object of granting loans to farmers for productive purposes.  The agricultural co-operative credit societies which perform this function consist of the small-size and large-size ctedfit societies and the rural banks.  Together they cover about 95 per cent of the villages and 51 per cent of the rural population of the district.

In the main, these societies supply short-term and intermediate-term finance to agriculturists. Short-term loans are granted for meeting expenses on seed, manure, weeding, etc., while intermediate-term loans are granted for the purchase of bullock-carts and iron implements and for other purposes such as payment of old debts or works of land improvement (where the period of loan is five years). Loans are given mostly on personal security of the borrowers supplemented by two good sureties who are members of the society. The society may also take mortgage of immovable property or of crops as collateral security. The following table gives the progress of the different types of agricultural credit societies in Bhir district.

TABLE No. 3

Statistics of the Working of Agricultural Co-operative Credit Societies in Bhir District During 1960-61 and 1961-62

1960-61

TABLE No. 3-cont.

1961-62

In order to attract a larger number of customers the need was felt to convert the existing societies into multi-purpose ones. Most of the agricultural credit societies in this district are, there-fore, being converted into seva societies. These societies under-take such services as supply of seeds and manures, distribution of foodgrains, supply of domestic requirements such as cloth, sugar, rice, wheat, etc., and supply of agricultural implements.

Gram Banks.—The grain banks is a peculiar feature of the co-operative movement in Marathwada. From time immemorial the ordinary cultivator used to borrow grains for productive and consumption purposes, from local money-lenders for a short-term and repaying the same in kind at an exhorbitant rate of interest at the time of harvest. This system of credit in grain was commonly known as savai. Grain banks were organised to facilitate easy credit of grain to the agriculturists and to save them from the clutches of money-lenders. They nourished in the days of levy. After 1956, when the controls were removed, a number of grain banks were found either defunct or dormant. The Co-operative Department, therefore, decided to liquidate them. Accordingly, steps were taken and the number of grain banks was reduced to 382 by 1961-62. Some of these banks were converted into seva societies. The following table gives the position of these banks in Bhir district from 1959 to 1962.

Statistics of the working of the Grain Banks (1959-60 to 1961-62), Bhir District.

Land Development Co-operative Bank.—This bank was registered in January 1956. It has established branches at Ashti. Manjlegaon, Ambejogai and Georai. The bank is concerned chiefly with the supply of capital for the long-term needs of the cultivators for such purposes as debt redemption, investment on profitable but costly improvements, etc. These needs are such that they cannot be met by the co-operative societies or ordinary commercial banks, because of their unwillingness to lock-up their funds for longer periods. The bank advances loans for sinking new wells, repairs to old wells, purchase of oil-engines, etc. The following statistics give the amounts advanced to members during 1962-63: —

Table No. 4 gives the working of the Land Development Bank in the district.

Central Financing Agency.—The Bhir District Central Cooperative Bank, Ltd., Bhir, is the financing agency for the primary co-operative societies in Bhir district. It was reorganised in 1958 with the amalgamation of other local cooperative banks in the district. The bank has now branches in all the tahsils of the district. The membership of the bank comprises 110 individuals and 819 societies. The liability of the members is limited.

TABLE No. 4

Working of Land Development Bank, Bhir (1960-61 to 1961-62)

The funds of the bank consist of share capital, reserve and other funds, deposits from societies and the public and loans or overdrafts from banks. Of these the share capital and reserve and other funds form the bulk of the owned capital, on the basis of which deposits are tapped and loans are raised. The major portion of the working capital of the bank is obtained from short-term deposits. Deposits from local bodies are accepted by the bank on certain conditions. Besides deposits, the central bank can obtain loans from the apex bank. It has overdraft arrangements with the apex bank or the State Bank of India to be drawn upon for the purposes of exchange business or for its other needs.

The main function of the Bhir District Central Co-operative Bank, Ltd., is to finance the agricultural co-operative credit societies, most of which are in need of financial assistance. Besides, the bank undertakes all banking business, i.e., collection and discounting of bills, opening of current accounts, purchase and sale of securities and issue of cheques and drafts, etc. At times the bank has to make arrangements for the sale of agricultural produce particularly of agriculturists who come within the purview of the Agricultural Debtors' Relief Act and who are allowed to become nominal members for obtaining crop finance.

Table No. 5 gives the working of the Bhir District Central Co-operative Bank from 1959-60 to 1962-63.

The Government also sanctioned during 1963, Rs. 80,000 as block loan for financing industries. Of this Rs. 62,000 were advanced to industrial societies.

TABLE No. 5

Statistics of the working of the Central Financing Agency in Bhir district

(1959-60 to 1962-63)

Consumers' Co-operatives.—When the Government pursued the policy of controls, consumers' co-operatives were formed. They could not, however, function effectively after the relaxation of controls. In 1961-62 attempts were made to revive such societies They are kept in charge of elected officials. There is, for example, a consumers' co-operative society recently registered for the employees of the T. B. sanatorium at Ambejogai. The society has already started provision stores and grain-shops, catering to the need of the employees and persons staying nearabout the sanatorium. The management also has an ambitious programme of starting drug stores and serving the multi-purpose requirements of the patients. Attempts are also made to organise consumers' stores at schools and colleges. There are also co-operative purchase and sale societies at each of the tahsil level. These societies undertake the distribution of sugar, iron, steel, etc. Some of them arc engaged in the sale of agricultural produce on commission basis. Efforts are also made to link credit with marketing.

Co-operative farming societies.—Co-operative farming is advocated by government as one of the means to relieve the pressure of increasing population on land. There are four types of farming societies, viz.,

(1) Co-operative better farming societies,

(2) Tenant farming societies,

(3) Joint farming societies, and

(4) Collective farming societies.

Of these societies, the work of the first two types of societies is now undertaken by the service co-operatives which are now being established in every village. As such the present policy is not to encourage the organisation of these types of societies. In the joint farming societies the objective is to bring together small tracts of land and to expand the output as a result of joint efforts.

In collective farming societies, persons, who are not land owners are brought together and are given cultivable land in the name of the society on lease either from private landlord or from government. All the members cultivate the land on collective basis in respect of the use of labour and implements and get the return in proportion thereof.
Pilot Area.—The notable feature of the entire scheme is the selection of the Bhir Block for pilot project co-operative farming. This project is expected to serve as catalytic agent for the further expansion of co-operative movement in Bhir district. By 1962 there were seven collective farming societies organised in Bhir district, mostly by persons from scheduled castes and backward classes or by those who were mostly landless labourers.

These societies together had a membership of 213 individuals and they commanded land measuring 564.14 hectares (1,394 acres). Of this area 338.31 hectares (836 acres) of land has already been brought under cultivation by these societies.

Besides these societies there were ten joint farming societies organised in the block under pilot project. They received financial assistance from the government. The following table gives the details of the assistance in 1962: —

Non-pilot Area.—In the "non-pilot" area of Bhir district there were in 1962 lour joint co-operative farming societies and ten collective farming societies. They had together a total membership of 266 and they commanded over 672.98 hectares (1,663 acres) of land.

It may be noted here that the scope for the organisation of the joint farming societies depends on the extent to which the psychological prejudices of small holders can be overcome, and suitable and compact blocks can be formed of land which they may be prepared to pool voluntarily. In case of collective farming societies, there should not be much difficulty in regard to availability of land for, apart from surplus land which may be available for allotment to such societies, a sizeable area of fallow and waste lands can also be brought by them under cultivation after carrying out the necessary development and improvement work. In either case, however, availability of land is only one of the several factors which govern the organisation of farming societies.
Financial assistance granted by the government to the cooperative farming societies in the non-pilot area is given below: —

The success of these societies depends, firstly, upon the use of its financial resources by the members; secondly, upon the nature and expeditiousness of the financial and technical assistance contemplated, and finally, upon the availability of necessary funds.

District Co-operative Marketing Society.—Co-operative marketing is, perhaps, the most distinguishing feature of the co-operative movement. It saves the producer the trouble of individual bargaining and at the same time reduces the number of middle-men. In Bhir district, marketing society was first organised in 1958. It had 499 individuals and 230 societies as members. The society had its adat shop in the market yards at Bhir and Georai. In the absence of a large number of centres of trade in Bhir district, the scope of work for the marketing society has become limited. The society has started fair price grain shops at various places in the district. Besides dealing in grain, the society also deals in commodities such as sugar, spirit, kerosene and Swastik Products' oil. It also functions as an agent for the distribution of fertilisers, iron, cement, etc., for the entire district.

During 1961-62 the financial position of the Bhir district marketing society was as under: —

The total business recorded by the society during the year was as under:—

The society had also purchased two baby expellers. The net profit earned by the society amounted to Rs. 12,511.

Industrial co-operatives.—Although Bhir is primarily an agricultural district, there are a number of small-scale and cottage industries in the district. They include weaving, leather-tanning, brick and potteries making, rope-making and oil ghanis. Workers in most of these industries have formed their own cooperative societies. During 1961-62 there were 89 various types of industrial co-operatives in Bhir district. The accompanying statement gives the working of these societies from 1959-60 to 1961-62.

TABLE No. 6

Working of the Industrial Co-operatives in Bhir District
from 1959-60 to 1961-62

Of these co-operatives, those in the field of weaving, particularly handloom, are more important as they employ a large number of persons. The industry was selected for intensive development in pursuance of the recommendations made by the Fact-Finding Committee appointed by the Government of India in 1941. The All-India Handloom Board was set up in 1952 for adopting measures for bringing about an all round development of this industry on an All-India basis. The Board makes funds available to State Governments for the schemes of handloom development. Under these schemes the organisation of hand-loom weavers' co-operative societies and their intensive development through grant of financial assistance in the form of loans, subsidies and rebate on the sale of handloom cloth are contemplated. The details of the scheme are given in the sections on the state-aid to industries in this chapter.

District industrial co-operative association.—The above-mentioned industrial co-operatives are affiliated to the district industrial co-operative association. This association was registered in November 1958. In 1962, its membership consisted of 50 affiliated societies and 41 individuals. The association supplies raw material and other necessary articles to the government industrial schools and offices, as also to the affiliated industrial co-operatives. The association also helps the co-operatives in the marketing of their finished products. The stocking of oilseeds scheme of the Khadi and Village Industries Board, is being implemented through the Association and Rs. 50,000 have been placed at the disposal of the central co-operative bank for this purpose.

The government also sanctioned a non-recurring grant of Rs. 3,035 and a recurring grant of Rs. 600 in 1961-62. The association supplied goods worth Rs. 10,077. It now proposes to undertake some of the schemes such as the inauguration of a leather-sale depot, a bone-crushing unit and a building material unit of the Khadi and Village Industries Board.

During 1962-63 the disrict central co-operative association had a share capital of Rs. 7,519 of which Rs. 6,779 were contributed by the societies and Rs. 740 by individual members.

Co-operative housing societies.—The Co-operative Department implements co-operative housing schemes of various types to suit the public need. These schemes can be broadly divided under the following heads: —

(1) Low-income group housing scheme,

(2) Subsidised industrial housing scheme,

(3) Backward class co-operative housing scheme (PWR 219),

(4) The housing scheme for nomadic and semi-nomadic tribes,

(5) Housing programme of the Government of Maharashtra.

In Bhir district, however, co-operative societies, belonging to the 1st and 3rd categories are functioning at present. Of these, the low-income group housing scheme is sponsored by the Government of India and is being implemented in the district through the Collector. Under this scheme persons with an annual income of less than Rs. 6,000 are eligible for financial assistance to the extend of 70 per cent of the total cost of construction and land, subject to maximum of Rs. 8,000 in each case. In Bhir district, by the end of 1961 there were 3 societies of the low-income group category in urban area and one in the rural area.

The backward class housing scheme was started with the object of giving better housing accommodation to the backward classes It was first sanctioned in 1949 and was continued afterwards and was later included in the Second Five-Year Plan. Under the scheme, a subsidy is given at prescribed rates for purchase of acquisition of land. The societies are given 75 per cent of the prescribed estimated per tenement cost of Rs. 3,000 to Rs. 4,000 in industrial areas and Rs. 2,000 in municipal areas and Rs. 800 to Rs. 1,000 and Rs. 1,500 in the remaining areas in two instalments. However, the backward class housing societies are allowed to adopt higher estimates not exceeding 25 per cent of the prescribed cost on account of the rise in prices of material provided. The financial assistance granted to these societies is in the form of both loan and subsidy. After the completion of the housing programme, each society gets Rs. 10 per completed house, as management cost, for the first two years and thereafter Rs. 5 per house for every two years in all or till the repayment of the loan, whichever is earlier. From 1959 government has also been giving interest-free loan to co-operative housing societies in the municipal areas to enable them to meet the cost of land development. This loan is given at the rate of 15 per cent of the total cost of the housing programme sanctioned under the backward class housing scheme. In Bhir district there were three backward class housing societies in urban and five backward class housing societies in rural areas. During 1960, the backward class society at Lokhandi-Sawargaon constructed 60 tenements. It received during the same year financial assistance to the extent of Rs. 67,500. Of this an amount of Rs. 16,875 represented subsidy.

The following statement gives the working of the housing societies in Bhir district from 1959-60 to 1961-62: —

Processing societies.—These societies undertake the work of processing of agricultural produce (other than sugarcane) belonging to the members of the co-operative societies. The organisation of processing societies, however, is of recent origin in Maharashtra where processing has practically been the monopoly of private firms and individual traders. The commodities, which are processed by these societies are cotton, gul and khandsari.

The following table gives the working of the processing societies in Bhir district:—

TABLE No. 7

Statistics of the working of Processing Societies in Bhir District
in 1960-61 and 1961-62.

The government did not extend any financial assistance during the year. Recently the society at Monjachiwadi in Ambejogai tahsil has started crushing cane and producing gul. The society was extended financial assistance by the Khadi and Village industries Board for the purchase of tools, equipment and oilengines and to serve as working capital.

Tahsil supervising unions.—The tahsil supervising unions exercise supervision over the primaries through the government supervisors attached to them. The unions also appoint group secretaries for maintaining the books of accounts, etc. In Marathwada, prior to the re-organisation of states, supervision was done by the central financing agencies and government supervisors. By 1959, tahsil unions had been organised in all the districts.

In Bhir district all the tahsils have their own supervising unions. 732 societies of different types are affiliated to these unions. At present the senior supervisors work as the secretaries of the tahsil co-operative supervising unions.

During 1959-60, the supervising unions in Bhir district received grants from the government to the extent of Rs. 8,226. The expenses of the unions are met from their joint fund account The rate of joint expenditure contribution is l½ per cent of the working capital of primary societies. In 1960 there were 32 super-visors attached to the various tahsil co-operative supervising unions.

The main functions of these supervising unions are: —

(1) To advise, guide, rectify and control their constituent societies by effective and regular supervision, and

(2) To provide means of assessing the credit of their constituent societies and to make recommendations in this behalf to the financial agency.

The supervisors are placed under tahsil co-operative supervising unions. At the district level there is a district supervision committee, which is an ad hoc body created by the administrative order of the government. The committee works as a link between tahsil co-operative unions and the state board of supervision. It has only recommendatory powers. Its main function is to review the working of the supervising unions and the work of supervisors periodically. The supervisors are expected to visit and inspect every society. They are also expected to see that normal credit statements of the societies are regularly submitted and to make arrangements for crop finance.

Fisheries societies.—There is little scope for the development of fisheries in Bhir district. At present there is only one society of fishermen which is engaged in the development of fisheries. It had 21 members in 1961-62 and a share capital of Rs. 5,000. It received during the same year a management subsidy of Rs. 500 from the Co-operative Department. The activities of the members are limited to Bendsura dam which is at a distance of six miles from Bhir. During 1961-62 the total catch of the fish was valued at Rs. 2,396 and the sales effected at Rs. 3,393.

The society is eligible for financial assistance from the government under the scheme for the development of co-operative fisheries societies as approved by and sanctioned under the Second Five-Year Plan Schemes. The scheme was extended to the district from 19th May, 1959. The scheme provides for government financial assistance as under: —

(1) Grant of managerial subsidy at the rate of Rs. 500 for each of the first two years and Rs. 250 for the third year of the first three years of the working of the society, and

(2) Grant of short-term advances to the co-operative fisheries societies, through the apex and district financing agencies, for purchase of fishing accessories etc.

Dairy societies.—The development of the dairy industry or co-operative lines is of recent origin. The scheme for organisation of milk producers' societies and union was sanctioned under the Second Five-Year Plan and was originally restricted to the districts of the old Bombay State. Later it was extended to all the integrated areas of the State on account of the public demand from these areas. The government milk supply scheme has not been applied to Bhir so far.

There were nine dairy co-operative societies in Bhir district in 1960-61. During 1961-62 two more milk unions at Bhir and Ambejogai, respectively, and three milk supply societies were organised. The following table gives the working of the co-operative milk unions and dairy societies in Bhir district. Societies were organised at Ambejogai, Kada and Parali and they supplied milk at concessional rates: —

TABLE No. 8

Co-operative Milk Unions and Dairy Societies in Bhir District
1961-62.

District co-operative board.—The District Co-operative Board in Bhir district works under the guidance of the Maharashtra State Co-operative Union, Bombay. It was registered on 29th December, 1953. The main function of the Board is to impart education and training in co-operation to the people in the district. It has also to carry on the propaganda work for the spread of co-operative movement. The membership of the Board consists of two classes, viz., of the co-operative societies in the district and. the associates consisting of individuals. During 1962-63 the Board had a membership of 275 co-operative societies and 93 individuals. The Board of management consisted of one nominee from the Maharashtra State Co-operative Union, one from the central financing agency and representatives from societies which are not affiliated to the supervising unions, representatives of co-operative institutions having jurisdiction over the district and representatives of the Divisional Co-operative Board for Marathwada. Besides, one or two representatives of individual member were also included.

Three co-operative training instructors were attached to the Board by the Maharashtra State Co-operative Union, Bombay During 1962-63 the Board held secretary training classes at Ashti, Umapur, Manjlegaon and Kaij and trained 71 secretaries. The Board also conducts managing committee classes. During 1962-63 it conducted 36 classes of this type and imparted training; to 2,880 members.

In rural areas, in the programme of member education, it is necessary to give due emphasis on co-operative activities leading to increased agricultural production. For this purpose concentrated efforts are necessary in areas where intensive efforts are being made for increasing agricultural production. It is also necessary that the co-operative institutions should avail of the facilities for training their employees in the co-operative training centres in an increasing measure. Co-operative union, however, experiences difficulty in respect of timely release of funds for member education.