Source: The post National Cooperative Policy 2025 has been created, based on the article “Cooperatives at a Crossroads” published in “The Hindu” on 27th August 2025. National Cooperative Policy 2025.
UPSC Syllabus Topic: GS Paper -2- Development processes and the development industry —the role of NGOs, SHGs, various groups and associations, donors, charities, institutional and other stakeholders.
Context: Recently, Union Home Minister Amit Shah introduced the new National Cooperative Policy 2025, replacing the framework that had been in effect for 23 years.
Cooperatives are the backbone of India’s rural and participatory economy, with over 8.44 lakh societies and more than 30 crore members. The National Cooperative Policy 2025 aims to rejuvenate the sector under the vision of “Sahkar-se-Samriddhi”, making cooperatives central to achieving Viksit Bharat 2047.
Key features of the National Cooperative Policy 2025
- Legislative & Institutional Reforms: It amend cooperative laws for transparency, autonomy, and ease of business; digitise registrar offices; build real-time databases; revive sick cooperatives.
- Financial Empowerment: It strengthens PACS–DCCB–SCB credit structure; expands cooperative banks’ roles; allows handling of government transactions.
- Business Ecosystem: It promotes model cooperative villages, rural product clusters (honey, spices, tea), and cooperative branding under Bharat.
- Technology & Future-Readiness: It develops a national Cooperative Stack with Agri-Stack; integrates with ONDC/GeM; sets up incubators and Centres of Excellence.
- Inclusivity: It ensures participation of women, youth, SC/STs, differently-abled; adopt model bye-laws; run awareness drives in schools/colleges.
- Sectoral Diversification: It encourages cooperatives in renewable energy, waste management, healthcare, education, organic farming, biogas, ethanol, and digital aggregator services.
- Youth Capacity Building: It launches cooperative courses in higher education, creates a digital cooperative job exchange, promotes digital and financial literacy.
Rationale Behind the Policy
- Economic Modernisation: Cooperatives need to align with new-age sectors like renewable energy, shipping, and technology.
- Financial Inclusion: To expand credit reach to farmers, artisans, and rural communities where banking penetration is weak.
- Uniform Standards: Addressing governance gaps and scam-related credibility issues by standardising rules across states.
- Employment Generation: Tapping cooperative structures to create entrepreneurial opportunities for youth in a rapidly urbanising economy.
Concerns & Challenges
- Federalism Issues – Cooperative societies fall under the State List (Entry 32) of 7th Schedule of Constitution; central policy intervention raises fears of unconstitutional overreach.
- Political Suspicions – States like Kerala allege that the policy is a move by the Centre to wrest control over their strong cooperative networks.
- Scam & Credibility Crisis – Many cooperative banks face allegations of embezzlement and mismanagement, undermining depositor confidence.
- Example – Scam allegations related to the Karuvannur Service Cooperative Bank in Thrissur district of Kerala.
- Grassroots Alienation – Over-centralisation may weaken the trust and localised character of cooperatives that thrive on community participation.
Way Forward
- Respect Federal Principles – Ensure Centre–State collaboration by giving states autonomy in cooperative governance.
- Transparent Regulation – Introduce safeguards, audits, and depositor protection mechanisms to restore trust in cooperative institutions.
- Capacity Building – Train cooperative leaders in professional management, digital literacy, and modern financial practices.
- Diversification with Inclusivity – Encourage cooperatives in sunrise sectors while retaining their grassroots orientation, ensuring farmers, workers, and rural communities remain central.
Question: Critically analyse the National Cooperative Policy 2025 — its rationale, key challenges, and the way forward in balancing central intervention with state autonomy.
