India is right on track with Co-op ideas

Last month, Gareth Thomas, Minister for International Development and Co-op Party Chair, visited India with Chancellor Gordon Brown to follow a UK-funded co-op development programme, which has injected confidence into villages. Here, the Minister reports on what he found.

DESPITE the economy growing by eight per cent a year over the last three years and enormous optimism in the country, poorer Indians still face many challenges. 

Around the world, 300 million people live on less than 50 pence a day, 13 million children do not go to primary school and almost half of all children under five are malnourished.

One of the biggest obstacles the poor face is the lack of legal and political rights. As is so often the case, women suffer even greater disadvantage than men. Co-operatives are one good way of tipping the balance in favour of the poor and powerless.

This is why the UK, through the Department for International Development, has been supporting a scheme run by the charity CARE India, which has led to more than half a million women banding together to form self help groups, many of which have joined with other groups to form
co-operatives. 

The initiative was started in 1999 as a small savings scheme for poor women living in the states of Andhra Pradesh, West Bengal, Orissa and Madhya Pradesh which account for a quarter of the entire Indian population. 

With the help of a £10m grant from the UK, more than 590,000 women have taken advantage by pooling their savings and becoming eligible to open a group bank account which allows them to save and borrow money. These small savings now exceed £11m and the credit flow from banks is greater than £21m.

Another result of the scheme was the formation of 70 women’s co-operatives. These developed when several self help groups funded by the UK and CARE decided to collaborate and champion the rights of poor women. One such was formed in the village of Kunuinpata in Orissa, eastern India, after 15 self help groups came together to provide a more powerful way for dealing with local issues. The co-operative got involved when a former landowner threatened members of the group. 

The state government had made a decision to help the landless poor by giving them some surplus land in the area and issuing them with ownership certificates. 

Feeling scared after the landowners reaction the members decided to complain to the local land revenue officer. 

Thanks to the confidence and status the co-operative gave them they managed to get the officer to bring a police officer with him to the village to distribute the ownership documents to the new rightful owners.

Last month I met some members of the UK/CARE backed Credit and Saving for Household Enterprise scheme during a visit to Delhi with Gordon Brown and spoke to some women who lived in rural areas. 

All of the women I met were involved in the running of co-ops, and their determination to set up their own small businesses in order to support their families, and the self confidence this gave them, was impressive. 

Despite these successes the Government of India acknowledges that there are problems with the co-operative structure in the country. In 2006 it proposed reform of the rural credit co-operative system. 

These proposals include reforming their legal status, significant financial restructuring, transferring control from state government to the membership and a new managerial structure. 

The programme will change the way India’s vast rural credit co-operative structure works. At the grass roots village level there are over 110,000 Primary Agricultural Co-operative Societies (PACs) serving 600,000 villages with a total membership of over 135 million farmers. These are mostly small farmers, (average loan size being £75). 

Unfortunately, many PACs are in financial trouble – nearly half of them are loss making. The causes can be traced back to the co-operatives not being member driven, holding infrequent elections and ineffective state dominated management.

The Indian Government has pledged financial support to those states who decide to implement the proposals and the Asian Development Bank agreed to a £500m contribution after carrying out research in rural co-operatives part funded by the UK. 

Further money is expected from the World Bank and the reforms should start coming into effect later this year.

Co-ops have an important role to play if India is to eliminate poverty. However, they need to be run by their members for the benefit of their members. We want the reforms proposed by the Government of India, which the UK supports, to empower the poor to have a greater say in decisions that affect their lives.