Status of Cooperatives in India: Declining Performance, Regional Gaps, and Structural Challenges

The central government has informed Parliament that nearly half of India’s cooperatives are defunct, loss-making or under liquidation.

Status of Cooperatives in India

• Overall Distress: Nearly 47% of cooperatives are defunct, in loss, or under liquidation, indicating widespread institutional crisis.
• Profitability Levels: Only around 41% (3.49 lakh of 8.48 lakh) cooperatives are profitable, reflecting weak financial sustainability.
• Non-functional Units: Nearly 1.41 lakh cooperatives are non-functional, highlighting governance and structural failures.
• Liquidation Status: Around 47,688 societies are under liquidation, pointing to severe financial and legal distress.
• Regional Disparities: Western and southern states perform better, while northern and eastern regions show higher failure rates.
• Data & Transparency Issues: Profit/loss data unavailable for ~99,000 societies, indicating weak monitoring and accountability systems.

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Sector-wise Issues in Cooperatives

• Dairy Cooperatives: Large numbers are non-functional or under liquidation due to falling milk prices and rising input costs.
  • Climate shocks and global disruptions have increased procurement costs, reducing profitability.
• Housing Cooperatives: Facing financial stress due to cooperative bank scams and loss of depositor confidence.
  • Issues of non-payment of dues, fund mismanagement, and delayed redevelopment persist.
• Credit & Thrift Societies: Weak regulatory oversight leads to poor lending practices and financial instability.
  • High-risk lending and scams have eroded trust and increased defaults.
• Labour Cooperatives: Limited presence but affected by mismanagement, taxation issues, and bankruptcy risks.
  • Policy and contractual issues reduce their competitiveness and sustainability.
• Women Welfare Cooperatives: Generally stable but constrained by limited access to finance and low scheme utilisation.
  • Social barriers and lack of institutional support hinder their growth, especially in weaker states.

Key Reasons for Poor Performance 

• Financial mismanagement and corruption in cooperative institutions.
• Weak regulatory oversight, especially in small credit societies.
• External economic shocks like price fluctuations and climate events.
• Low member participation and governance issues.
• Limited access to credit, markets, and technology, especially for women and small cooperatives.

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Government Initiatives & Policy Response

• National Cooperation Policy, 2025: Aims to revitalise the cooperative sector and expand its reach to 50 crore people across India.
• Inclusive Growth: Prioritises participation of women, Dalits, and Adivasis to make cooperatives more equitable and grassroots-driven.
• Expansion into New Sectors: The Government is promoting cooperatives in emerging areas like taxi services (Bharat Taxi), insurance, and green energy.

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