Role of the Department of Agriculture and Cooperation in Cooperative Policy

India’s cooperative movement didn’t grow in a vacuum. Behind every milk cooperative, credit society, and farmer producer organisation, there’s a policy framework that shapes how cooperatives are formed, funded, and governed. At the centre of this framework – historically – sits the Department of Agriculture and Cooperation (now reconstituted as part of the Department of Agriculture and Farmers Welfare and the separate Ministry of Cooperation). This department has been the primary engine behind formulating cooperative policies, administering key legislation, and connecting India’s cooperative sector with global markets.

The department’s role in cooperative policy formulation 🔗

The Department of Agriculture and Cooperation has long served as the apex body responsible for designing and implementing cooperative policies across India. It operates through multiple divisions spread across the country, coordinating with state-level agencies and executing Central Sector Schemes in agriculture, rural development, and cooperation. The department oversees autonomous bodies, public sector undertakings, and national-level cooperative organisations that collectively drive the cooperative ecosystem.

Its policy-making role covers a wide range – from setting the direction for agricultural credit cooperatives and marketing federations to laying down the rules for how multi-state societies operate. The department has historically been the custodian of India’s National Policy on Cooperatives (2002), which was the first formal policy document articulating how the government would support cooperative autonomy, democratic governance, and economic viability. This policy recognised cooperatives as autonomous associations of persons united voluntarily to meet common economic, social, and cultural needs through jointly owned and democratically controlled enterprises.

The shift to a dedicated Ministry of Cooperation 🔗

A major institutional change occurred in July 2021 when the Ministry of Cooperation was created as a separate ministry. This was done by transferring cooperation-related functions from the erstwhile Ministry of Agriculture, Cooperation and Farmers Welfare. The new ministry is tasked with providing a distinct administrative, legal, and policy framework for strengthening the cooperative movement. Its stated goal is to deepen cooperatives as a grassroots, people-based movement and develop a cooperative-based economic model. This separation gave cooperatives a dedicated voice at the Union Cabinet level – something they hadn’t had before.

Key legislation overseen by the department 🔗

The department’s influence on the cooperative landscape is most visible through the legislation it administers. Two Acts, in particular, form the backbone of cooperative regulation at the national level.

The National Cooperative Development Corporation Act, 1962 🔗

The National Cooperative Development Corporation (NCDC) was established on 14 March 1963 under this Act of Parliament. NCDC is a statutory corporation whose primary purpose is to plan, promote, and finance programmes related to the production, processing, marketing, storage, export, and import of agricultural produce through cooperative principles. It also covers foodstuffs, industrial goods, livestock, and other notified commodities.

The NCDC Act has been amended multiple times to expand the corporation’s reach. A 1974 amendment brought in activities like fishery, poultry, dairy, handloom, and sericulture. A further amendment in 2002 extended the scope to include livestock, cottage and village industries, handicrafts, rural crafts, and services such as water conservation, irrigation, micro-irrigation, agri-insurance, agro-credit, rural sanitation, and animal healthcare. This 2002 amendment also allowed NCDC to directly fund cooperative projects under its various schemes, instead of routing all assistance exclusively through state governments.

NCDC’s management is vested in a 51-member General Council that sets policy direction, and a 12-member Board of Management that handles day-to-day operations. It currently operates through 18 regional directorates located at state capitals across India. Through schemes like Yuva Sahakar, Dairy Sahakar, Nandini Sahakar (for women cooperatives), and the Integrated Cooperative Development Project (ICDP), NCDC has become one of the most important institutional channels through which cooperative policy is translated into on-the-ground action.

The Multi-State Cooperative Societies Act, 2002 🔗

While state cooperative laws govern societies operating within a single state, cooperatives whose membership and operations span multiple states fall under the Multi-State Cooperative Societies (MSCS) Act, 2002. This Act replaced the earlier 1984 legislation and provides the legal framework for registering, managing, and dissolving multi-state cooperative societies.

The MSCS Act aims to facilitate voluntary formation and democratic functioning of cooperatives as people’s institutions based on self-help and mutual aid. Under this Act, the Central Registrar of Cooperative Societies (CRCS) is the statutory authority responsible for registration and regulatory oversight of all multi-state cooperatives. The Act covers everything from membership rights and duties to governance structures, fund management, dispute resolution, and winding up of societies.

In recent years, the government has used this Act to set up several national-level apex cooperative societies. These include a National Multi-State Cooperative Seed Society for quality seed production and distribution under a single brand, a National Multi-State Cooperative Organic Society for organic product certification and marketing, and a National Cooperative Export Society (NCEL) dedicated to boosting exports from the cooperative sector. Each of these was established under the MSCS Act, 2002, as part of the broader Sahakar-se-Samriddhi (prosperity through cooperation) vision.

Promoting agricultural exports through cooperatives 🔗

One of the department’s most impactful – and often overlooked – roles is connecting cooperatives with international markets. Agricultural exports are not just about earning foreign exchange; they directly affect the prices farmers receive for their produce and the economic viability of cooperative marketing structures.

The role of APEDA and cooperative export linkages 🔗

The Agricultural and Processed Food Products Export Development Authority (APEDA), a statutory body established under the APEDA Act, 1985, is responsible for promoting the export of 14 categories of agricultural and processed food products. While APEDA functions under the Ministry of Commerce and Industry, its work intersects deeply with the cooperative sector.

In 2021, APEDA signed a Memorandum of Understanding with the National Agricultural Cooperative Marketing Federation (NAFED) to strengthen export linkages for cooperatives and Farmer Producer Organisations (FPOs). The key areas of cooperation included facilitating access to government export assistance schemes, addressing technology and quality challenges, and building capacity of cooperative societies to meet international standards. APEDA and NAFED also agreed to work together on sustainable cluster development under the Agri Export Policy announced in 2018.

More recently, NCEL (the National Co-operative Exports Limited) and APEDA signed another MoU to further elevate cooperative-led agricultural exports. This partnership focuses on capacity building and training in global quality standards, food safety, and export documentation. It also covers participation in international trade fairs, branding and market positioning, data analytics, and commodity-specific export strategy formulation. The collaboration covers products like fruits, vegetables, spices, processed foods, cereals, and animal products – essentially the full range of India’s agricultural export basket.

Why export promotion matters for cooperatives 🔗

For cooperatives, accessing export markets can mean the difference between subsistence and genuine prosperity for their members. When a cooperative can sell processed spices or organic products internationally at premium prices, those earnings flow back to the farmer-members. The department’s role in facilitating these international linkages – through policy support, trade agreements, and institutional partnerships – adds a critical dimension to its cooperative policy mandate.

International cooperation and engagement 🔗

India’s cooperative policy framework doesn’t operate in isolation from the global cooperative movement. The department has historically engaged with international bodies like the International Cooperative Alliance (ICA), whose principles – voluntary membership, democratic control, member economic participation, autonomy, education, inter-cooperative collaboration, and concern for community – form the ideological foundation of India’s cooperative laws.

The National Policy on Cooperatives (2002) explicitly referenced the ICA’s Manchester Congress declaration of 1995 as the basis for India’s cooperative principles. The government committed to ensuring that cooperatives function based on these internationally recognised values while also recognising the need to protect cooperatives in the context of globalisation and liberalisation. The policy also acknowledged the government’s role in ensuring that the benefits of economic liberalisation extend to cooperatives on an equal footing with other enterprise forms.

Strengthening Primary Agricultural Credit Societies (PACS) 🔗

No discussion of the department’s cooperative policy role is complete without mentioning Primary Agricultural Credit Societies (PACS) – the grassroots backbone of India’s cooperative credit structure. PACS operate at the village level, providing farmers with access to short-term and medium-term agricultural credit, input supply, and marketing services.

The Ministry of Cooperation has launched multiple initiatives to strengthen PACS. These include preparing model bye-laws that allow PACS to undertake more than 25 different business activities (adopted by 27 states and union territories), a large-scale computerisation programme covering 63,000 PACS with an outlay of ₹2,516 crore, and a plan to set up 2 lakh new multipurpose PACS or primary dairy/fishery cooperatives to cover every panchayat in the country. PACS have also been enabled to function as Common Service Centres (CSCs), Jan Aushadhi Kendras for affordable generic medicines, and Pradhan Mantri Kisan Samriddhi Kendras for fertiliser distribution.

These reforms are significant because they transform PACS from single-purpose credit societies into multipurpose rural service delivery platforms – directly tied to the cooperative policy objectives set at the departmental level.

Financial and fiscal support for cooperatives 🔗

The department’s policy influence also extends to the financial and fiscal treatment of cooperatives. In recent years, the government has introduced several measures to improve the financial health of cooperative societies. These include reducing the income tax surcharge for cooperatives with incomes between ₹1 crore and ₹10 crore from 12% to 7%, lowering the Minimum Alternate Tax (MAT) from 18.5% to 15%, fixing a flat lower tax rate of 15% for new cooperatives starting manufacturing operations, and increasing the cash withdrawal limit for cooperatives from ₹1 crore to ₹3 crore per year without TDS deductions.

NCDC itself has substantially increased its financial assistance to cooperatives. Total disbursements rose from ₹24,733 crore in FY 2020-21 to over ₹41,000 crore in FY 2022-23 – a clear indicator of expanding policy ambition backed by actual financial commitment.

Challenges and the road ahead 🔗

Despite the robust institutional and legislative framework, India’s cooperative sector faces persistent challenges. Many cooperatives still struggle with excessive bureaucratic controls, dormant memberships, political interference in management, and a lack of professional human resources. The National Policy on Cooperatives itself acknowledged these issues back in 2002, noting that restrictive regulatory provisions, resource constraints, poor post-harvest infrastructure, and erosion of democratic governance were weakening the cooperative movement.

The formation of a dedicated Ministry of Cooperation and the formulation of a New National Cooperative Policy – for which a 49-member expert committee has been constituted – signal the government’s intent to address these long-standing issues. The focus on digital transformation, export competitiveness, and diversifying the functions of primary cooperatives suggests that cooperative policy in India is evolving from a purely welfare-oriented approach to one that treats cooperatives as competitive economic enterprises.

What do you think? Can a dedicated Ministry of Cooperation truly deliver the policy autonomy that India’s cooperative sector needs, or will the fundamental challenges of governance and political interference require deeper structural reforms at the state level?

References

1. https://agricoop.gov.in/
2. https://www.cooperation.gov.in/en
3. https://www.cooperation.gov.in/sites/default/files/inline-files/National-Cooperation-Policy-2002.pdf
4. https://www.indiacode.nic.in/handle/123456789/1462?view_type=browse
5. https://ncdc.in/documents/act/2118090419NCDCAct.pdf
6. https://www.indiacode.nic.in/handle/123456789/1914?view_type=browse
7. https://crcs.gov.in/
8. https://www.pib.gov.in/PressReleasePage.aspx?PRID=1946745
9. https://apeda.gov.in/about-us
10. https://www.commerce.gov.in/press-releases/apeda-inks-mou-with-nafed-for-strengthening-export-linkage-of-farmer-cooperatives-fpos/