Cooperatives and Development: Lessons from the Punjab Experience

Traditionally, cooperatives have been expected to serve a broad set of sociopolitical and economic objectives ranging from self-help and grass-root participation to welfare and distribution, including economies of scale and social control over resource allocation and mobilisation. However, these various objectives are not mutually consistent. There exists substantial trade-off in the realisation of many of these goals. It is therefore necessary to weigh their relative importance in the felt needs and priorities of a particular community at any given point of time if performance of cooperatives is to be evaluated in an appropriate context. An attempt to fulfil a range of these conflicting objectives simultaneously has eventually led to a broad based disenchantment with the cooperative movement. This paper highlights two sets of issues with respect to cooperative development. First, it discusses the concept of cooperation and illustrates that the contradictions in the ideology and practice are more significant in explaining the limitations of cooperatives to serve as an instrument of development. Second, the paper points out that in the absence of various external and internal prerequisites, especially due to the lack of their recognition, cooperatives tend to be inefficient relative to other forms of traditional institutions even after receiving subsidies and other types of assistance, thus neither achieving efficiency nor development. By analysing the area of agricultural credit, in which cooperatives have traditionally been most active in the Punjab, this paper illustrates various dilemmas and contradictions and the preconditions necessary for credit cooperatives to reach the rural poor effectively. Finally, the paper points out the implications of the past experience for the future role of cooperatives in Punjab.