Cooperatives are the most important tool for a self-reliant India. They empower the economically vulnerable sections of society. By joining cooperatives, people manage their economic activities through collective efforts and mutual cooperation, earning reasonable profits. Cooperatives are a boon for rural India. Through cooperatives, not only financial management but also production, mining, processing, transportation, and marketing are effectively managed. Cooperatives provide affordable and certified goods to their members. The operations of cooperative organizations and institutions are fully transparent. Cooperatives also create employment. In an agricultural state like Chhattisgarh, the utility of cooperatives is crucial for the upliftment of farmers.
Before the formation of Chhattisgarh, i.e. before 2000, this region of undivided Madhya Pradesh was considered economically backward. Due to frequent famines and droughts, millions of families were deprived of even two square meals a day. As a result, migration occurred every year. The cooperative sector in Chhattisgarh was also neglected during that period. The strong will of the then Prime Minister, Shri Atal Bihari Vajpayee, led to the creation of the state of Chhattisgarh in 2000. Only then did a new era for the agricultural and cooperative sectors begin. At the time of the state’s formation, the cooperative movement in Chhattisgarh was in a very weak state. Cooperative institutions and cooperative societies were in a state of disrepair. Most cooperative societies in the Scheduled Areas had become defaulters due to rising NPAs. At that time, public interest in the cooperative movement had waned.
At the time of the state’s establishment, there was an apex bank in the field of agricultural finance, along with seven central banks, which provided financing through 1,333 cooperative societies (PACS and LAMPs). Across Chhattisgarh, there were only 213 branches of cooperative banks, which have now grown to 345. This is the result of serious efforts to advance agricultural cooperatives after the Bharatiya Janata Party government came to power in 2003. Similarly, facilities and services were continuously expanded, attracting small and marginal farmers to cooperative institutions. It is pertinent to mention here that within the first three years of the state’s formation, the Reserve Bank of India revoked the license of the Central Cooperative Bank of Raigarh due to its default. Consequently, the number of Central Cooperative Banks in the state decreased from seven to six. This was a major blow to those involved in the cooperative movement. The cooperative movement in undivided Madhya Pradesh had already suffered a major setback when the Digvijay Singh government took away the PDS from cooperative societies and handed it over to private hands, preventing the poor from properly benefiting from the Public Distribution System. The Dr. Raman Singh government reassigned the distribution of food grains and other commodities under the Public Distribution System to cooperative societies. This improved the public distribution system and also increased the flow of common people to the distribution centers of cooperative societies. The Dr. Raman government implemented the recommendations of the Prof. Vaidyanathan Committee, formed by the Central Government for the development of cooperative institutions. In September 2007, an MoU was signed between the State Government, NABARD, and implementing agencies. Under this agreement, a total of ₹225 crore was provided to cooperative societies, giving life to the dying cooperative societies.
It is said about farmers that they are born in debt, live on debt, and die leaving behind debt. The main reason for this was the exorbitant interest charges on agricultural loans. During the era of the moneylending system, loans were difficult to obtain even at a monthly interest rate of 3 percent, or 36 percent annually. Farming was not a profitable business that people could afford to pay such exorbitant interest rates. Therefore, farmers were forced to become slaves to moneylenders under the burden of debt. Over time, the cooperative movement expanded. Primary Agricultural Credit Cooperative Societies (PACS) were formed to meet farmers’ financial needs and provide fertilizers and seeds at affordable rates. These societies, known as PACS in general areas and LAMS in scheduled areas, began providing loans to their member farmers, but the interest rate was no less than 16 percent. The societies also charged compound interest from members who failed to repay their loans on time. There are many reasons for farmers not repaying their loans on time, but one of the main reasons is the vagaries of the weather. Whether it’s excessive rainfall, drought, or lack of timely rainfall, this adversely affects agricultural production. After crop failure, farmers are unable to repay their loans. Such farmers are classified as defaulters by the societies, and their agricultural land is auctioned. Concerned about the plight of farmers, Dr. Raman Sarkar reduced the interest rate on agricultural loans to zero percent, which proved to be a boon for them. This means that farmers now have to repay only the principal amount; the government pays the interest amount to the committees in the form of an interest subsidy. This was a very relieving decision for farmers struggling with drought year after year. The result was this.
