UPSC DAW Mains Answer Writing 9th July 2025

UPSC DAW Mains Answer Writing 9th July 2025

Question

‘Cooperatives serve as vital instruments for the mobilization of rural resources, fostering inclusive growth and sustainable development.’ In this context, examine the recent policy measures taken by the Government of India to modernize and empower the cooperative sector. (10 marks, 150 words)

Model Answer

Introduction:  

  • Cooperatives are member-owned, democratic institutions that mobilize local financial, human, and natural resources to generate economic and social returns. According to the UN and ICA, over 3 million cooperatives worldwide engage more than 12% of humanity, including 280 million workers. In India, with 8.42 lakh cooperatives, they form a cornerstone of rural credit, dairy, housing, and agriculture. 

 Importance of Cooperatives:  

  • According to NITI Aayog, cooperatives reduce dependence on exploitative credit and enhance resource pooling and risk-sharing in agriculture. 

  • As per the RBI and NABARD, PACS serve over 13 crore farmers, making reforms vital for rural financial resilience. 

  • The National Cooperative Policy 2025 (in pipeline) aims to align cooperatives with Viksit Bharat 2047 goals through structural, fiscal, and institutional reforms. 

 Policy Measures to Empower and Modernize Cooperatives: 

  • Institutional Strengthening and Governance Reforms:  

  • The government introduced Model Bye-Laws to bring uniformity and improve transparency, accountability, and democratic functioning in Primary Agricultural Credit Societies (PACS) across states. 

  • Establishment of Tribhuvan Sahkari University (2025) marks a major step in building human capital and professionalizing cooperative leadership and management. 

  • Technology and Digital Integration: 

  • To enhance operational efficiency and financial inclusion, a national initiative to computerize PACS and Agriculture and Rural Development Banks (ARDBs) has been undertaken, integrating ERP systems and micro-ATM deployment at the grassroots. 

  • This supports real-time transactions, better credit tracking, and linkage with core banking. 

  • Financial Deepening and Fiscal Incentives: 

  • Tax reforms such as reduction in MAT (18.5% → 15%) and income tax surcharge (12% → 7%) aim to create a level playing field between cooperatives and companies. 

  • Enhanced credit limits, cash handling thresholds, and TDS exemption ceilings provide greater financial flexibility for cooperative operations. 

  • Product and Service Diversification:  

  • The government has supported expansion into new sectors like ethanol production, decentralized grain storage, LPG and fuel retailing, and Jan Aushadhi Kendras to ensure cooperatives serve as multi-functional community enterprises. 

  • Inclusive Rural Development:  

  • Establishment of Multipurpose PACS in every panchayat fosters last-mile delivery of agricultural inputs, health services, and digital services. 

  • Cooperatives are increasingly leveraged for schemes like PM-Kisan Samridhi Kendras, Common Service Centers, and the White Revolution 2.0, aimed at increasing milk procurement by 50% over 5 years. 

  • Cooperative Credit Reforms and Banking Access:  

  • Expansion of RuPay Kisan Credit Cards, doorstep banking by Urban Cooperative Banks (UCBs), and establishment of entities like the Shared Services Entity (SSE) under NABARD indicate a structural transformation of cooperative credit delivery. 

  • Policy & International Engagement:  

  • The draft National Cooperation Policy 2025 and India’s leadership during the UN-declared International Year of Cooperatives 2025 reflect strong policy focus on leveraging cooperatives for inclusive, sustainable economic development aligned with the UN SDGs. 

 Conclusion:  

  • Recent reforms underscore India’s commitment to making cooperatives modern, inclusive, and self-sustaining, aligning with the vision of “Sahkar se Samriddhi”. By integrating technology, improving governance, and broadening financial access, cooperatives are poised to mobilize rural resources for an equitable and sustainable future.