India After Independence: 1947-2000 (65 page)

The village poor, the landless, got little out of these institutions in the early years. An example at hand is the constant refusal to implement the elaborate recommendation made by the Reserve Bank of India in 1954 that rural credit cooperatives were to give credit to the cultivator as the producer of a crop and not as the owner of land. This refusal of the cooperatives to issue ‘crop loans’ or loans in anticipation of the crop being produced, and their insisting on credit being given against land as security, meant that the landless were essentially excluded from this scheme. In 1969, the Reserve Bank observed that tenant cultivators, agricultural labourers and others’ secured only 4 to 6 per cent of the total credit disbursed. The Report of the All-India Credit Review Committee, 1969, and the Interim Report on Credit Services for Small and Marginal Farmers produced by the National Commission on Agriculture, 1971, confirmed the virtual exclusion of the landless and added that the small and marginal farmers were also at a considerable disadvantage
vis-à-vis
the bigger cultivators in accessing credit from the cooperatives and even from the nationalized banks. As we shall see presently, it required a special targeting of these groups through programmes like the Marginal Farmers and Agricultural Labourers Scheme (MFAL) and the Small Farmers Development Agency (SFDA) under the broad rubric of the
garibi hatao
campaign launched by Indira Gandhi, for this bias to be considerably mitigated.

A common shortcoming of the cooperative movement was that instead of promoting people’s participation it soon became like a huge overstaffed government department with officials, clerks, inspectors, and the like, replicated at the block, district, division and state levels. A large bureaucracy, generally not in sympathy with the principles of the cooperative movement and quite given to being influenced by local vested interests, instead of becoming the instrument for promoting cooperatives, typically became a hindrance.

Yet, over time, the service cooperatives, particularly the credit cooperatives, performed a critical role for Indian agriculture. After all, while in 1951-52, the Primary Agricultural Credit Societies (PACS), which were village level cooperative societies, advanced loans worth only about Rs 23 crores (230 million), in 1960-61 about 212 thousand such societies disbursed nearly Rs 200 crores (2 billion). By 1992-93, these societies were lending as much as Rs 4,900 crores (49 billion).

As Table 30.1 below shows, in 1951-52, cooperatives supplied only 3.3 per cent of the credit requirements of the cultivator, whereas by 1981 they supplied nearly 30 per cent. It is found that in 1951 the cultivator was dependent on non-institutional and generally rapacious sources of credit such as the moneylender, trader or landlord for 92.7 per cent of his credit requirements. By 1981, however, low cost institutional credit
looked after over 63 per cent of the cultivator’s requirements. Nearly 30 per cent was met by the cooperatives and another nearly 30 per cent was met by the commercial banks which, after their nationalization in July 1969 by Indira Gandhi, were prevailed upon to provide credit to agriculture on a priority basis.

Table 30.1: Different Sources of Credit for the Cultivator 1951-1981

(figures in percentages)

The cooperative credit societies, however, suffered from a major drawback, that of failure to repay loans and, consequently, a very large percentage of overdues. Between 1960 and 1970, overdues of the primary societies rose from 20 to 38 per cent of the credit disbursed. The situation continued to deteriorate with the all-India average of overdues rising to 45 per cent in the mid-seventies and many provinces reaching totally unviable figures, like 77 per cent in Bihar. Quite significantly, it has been observed that the defaulters were not necessarily the poor and small farmers but more often the well-to-do ones. With the growing political and economic clout of the well-to-do peasant, the problem of overdues had reached dangerous proportions, affecting the viability and growth rate of rural credit institutions. Populist measures like the decision of V. P. Singh’s National Front government in 1990 to write-off all rural debts upto Rs 10,000 not only put a heavy burden on the national exchequer but further eroded the viability of rural credit institutions.

As already mentioned, a larger proportion of cooperative and bank credit started becoming available, particularly to the small and marginal farmers in the seventies. In 1979-80 about 34 per cent of the short-term loans given by scheduled commercial banks went to households holding less than 2.5 acres, when such households constituted only 33 per cent of the total households. Similarly, 57 per cent of such loans went to households owning up to 5 acres, while the proportion of households in that category was only 49 per cent. No longer was institutional rural credit the preserve of the rural elite. Policy initiatives were to follow which led to the rural banks giving a much higher proportion of the credit to the weaker sections. As for the cooperatives (PACS), those with holdings up to 5 acres received 34 per cent of the credit and those holding above 5 acres received 62 per cent. The situation of the landless however remained
the same, only 4 per cent of the credit went to them.
⁷

It is thus evident that service cooperatives had started to play a very important role in rural India. Their role in making available a much increased amount of cheap credit to a wider section of the peasantry was critical. They not only helped in bringing improved seeds, modern implements, cheap fertilizers, etc., to the peasants, they also provided them with the wherewithal to access them. And, in many areas they also helped market their produce. In fact, in many ways they provided a necessary condition for the success of the Green Revolution strategy launched in the late sixties, which was based on intensive use of modern inputs in agriculture. It is not surprising then that Wolf Ladejinsky, who was fully aware of all the shortcomings of the cooperative movement in India, was to record in his annual note to the World Bank in May 1972: ‘Millions of farmers have benefited from them (cooperatives) and rural India without this landmark is hard to visualise.’
⁸

The story of the cooperative movement in India, however, cannot be complete without a description of the most successful experiment in cooperation in India, which was a class apart from any other effort of the kind. This experiment, which started modestly in Kaira (also called Kheda) district of Gujarat eventually became the harbinger of the ‘White Revolution’ that spread all over India. Here, space permits only a brief description of the Anand experiment.
⁹

Peasants of the Kaira district, which supplied milk to the city of Bombay, felt cheated by the milk traders and approached Sardar Patel, the pre-eminent nationalist leader, who hailed from this district, for help. At the initiative of Patel and Morarji Desai, the farmers organized themselves into a cooperative union and were able to pressurise the Bombay govermuent, albeit with the help of a ‘milk strike’, to buy milk from their union. Thus, the Kaira District Cooperative Milk Producers’ Union Ltd., formally registered in December 1946, started modestly in Anand, a small town on the highway between Ahmedabed and Baroda, supplying 250 litres of milk everyday.

The Gandhian freedom fighter, Tribhuvandas K. Patel, who patiently roamed the villages on foot to persuade farmers to form milk cooperatives, became the first chairman of the union in January 1947 and continued to be elected to this position for over twenty-five years. Dr Verghese Kurien, the brilliant engineer from Kerala and later the heart and soul of the White Revolution in India, was the celebrated and proud employee of the Kaira farmers, and the chief executive of the union from 1950 to 1973, though he has continued his close association with the union till today. The union, which started with two village cooperative societies with less than a hundred members each, by 2000 had 1,015 societies with 574,000 members. From 250 litres of milk a day, it was by then handling nearly 1 million
litres of milk a day and had an annual turnover of Rs. 487 crores or Rs. 4.87 billion.

In the process of this rapid growth, the union greatly diversified its activities. In 1955, it had set up a factory to manufacture milk powder and butter, partly to deal with the problem of the greater yields of milk in winter not finding an adequate market. The same year the union chose the name of ‘Amul’ for its range of products. This was a brand name which was to successfully compete with some of the world’s most powerful multinationals like Glaxo or Nestle and soon become a household word all over India.

In 1960, a new factory was added which was designed to manufacture 600 tonnes of cheese and 2500 tonnes of baby food every year—the first in the world to manufacture these products on a large commercial scale using buffalo milk. In 1964, a modern plant to manufacture cattle feed was commissioned. Over time, sophisticated computer technology was used by the union to regularly, even daily, do a cost-benefit analysis of the prices of the various inputs which go into the cattle feed and their nutritional value to arrive at the ‘optimum’ mix of the balanced feed concentrate which was made available to the farmers. In 1994-5 the union sold 144,181 tonnes of cattle feed through its branches.

Any community development work necessarily involves an integrated approach. The Kaira Cooperative Union was a model case of how the union’s own activities kept expanding, and how it spawned other organizations, bringing within its scope wider and wider areas of concern to the ordinary peasant. An efficient artificial insemination service through the village society workers was introduced so that the producers could improve the quality of their stock. In 1994-5, about 670,000 such inseminations were performed through 827 centres. A twenty-four hour mobile veterinary service with twenty-nine vehicles fitted with radio telephones was available to the farmers at nominal cost. Cattle owned by cooperative members were provided with insurance cover should anything happen to this major source of their livelihood. High quality fodder seeds for producing green fodder were made available. Even manufacture of vaccines for the cattle was started, again taking on multinational pharmaceutical companies in a struggle over turf which had all the ingredients of a modern thriller. A regular newsletter was published in an effort to educate the peasants about modern developments in animal husbandry. A special effort was made to educate women who generally looked after the animals in a peasant household. At the other end of the spectrum, an Institute of Rural Management (IRMA) was founded in Anand for training professional managers for rural development projects, using the Amul complex and the Kaira Cooperative as a live laboratory. As the ‘Anand pattern’ gradually spread to other districts in Gujarat, in 1974, the Gujarat Cooperative Milk Marketing Federation Ltd., Anand, was formed as an apex organization of the unions in the district to look after the marketing.

The existence of the cooperative had considerably improved the
standard of living of the villagers in Kaira district, particularly the poor farmers and the landless. According to one estimate, as a result of the activities of the cooperative, in recent years nearly 48 per cent of the income of the rural households in Kaira district came from dairying. Some of the profits of the cooperative also went to improve the common facilities in the village including wells, roads, schools, etc.

A crucial feature of the cooperative movement associated with the ‘Anand Pattern’ was the democratic mode of functioning of the cooperatives, with a conscious effort being made by the management to keep its ear to the ground and not overlook the interest of the humblest of the cooperative members including the ‘low’ caste and the landless. In fact, the structure of the cooperative was such that it involved the direct producer in the planning and policy-making process. The only necessary condition for membership of a village cooperative society was of being a genuine primary milk producer who regularly supplied milk to the cooperative. The villager, irrespective of caste, class, gender or religion who queued up at the milk collection centre of the cooperative in the village, day after day, to sell milk and collect the payment for the sale made on the previous occasion
typically had one or two buffaloes
, not large heads of cattle like the big landlords. In fact, by one estimate, one-third of the milk producers were landless.

It is such producers who became members of the cooperative with a nominal entrance fee of Rs 1 and the purchase of at least one share of Rs 10. The members would elect a managing committee by secret ballot with each member having one vote irrespective of the number of shares owned by the him. The committee would elect the chairman and work for the cooperative in an honorary capacity. The work of the committee involved policy-formulation and supervision while paid staff was employed for the routine work of the cooperative. The chairman, along with a third of the committee by rotation, would retire every year and fresh elections would be held. The elections were eagerly contested with very high polling figures, reaching even up to 99 per cent. The district level union managed by a twelve-member board of directors had six members elected from among the chairmen of the village societies. The board would elect a chairman annually
from among the village representatives
and appoint a managing director who in turn would appoint supporting professionals etc. This cooperative was unique in effectively combining the initiative and control of the direct producer with the use of modern technology and the hiring of the most advanced professional help, managerial, technical or scientific that was available in the country. The structure of the cooperative engendered such a combination.