Telangana Cooperatives Act 2016

The Andhra Pradesh Mutually Aided Cooperative Societies Act, 1995 came in response to an understanding  in the state government, that the policy and legislative environment for investment sensitive, investor owned and controlled business was being increasingly opened, while usage-sensitive, user owned and controlled business continue to be very tightly controlled. In order for rural producers and others to engage with labour, financial, commodity markets effectively, it was understood that disadvantages communities needed a more liberal cooperative law.

However, the G.O.28 significantly takes away the spirit of autonomy available in the AP Mutually Aided Cooperative Societies Act, 1995. The G.O. assuming that cooperatives as “peoples” institutions – Cooperatives are not peoples’ organisations; they are their members’ institutions. The GO restores some of the key provisions to the department of cooperation (excluded in APMACS Act 1995) that have been used over decades to control cooperatives. These provisions include:

  1. The Government is competent authority to make provisions, from time to time, take necessary steps for making provisions with respect to the incorporation, regulation and winding up of co-operative societies based on the principle of voluntary formation, democratic member control, member economic participation and autonomous functioning as deemed necessary – which goes against the spirit of the right to form cooperatives. The bylaws of the cooperative could be compulsorily amended, again, even against the general body’s resolution to the contrary. Earlier this provision was almost always used to exempt the government or the registrar from fulfilling responsibility, such as the timely conduct of elections, audit.
  2. The powers given to the Registrar for registration and renewals which is against the spirit of the right to form cooperative. If Cooperatives are filing returns, it is the responsibility of registrar to verify and take measures at their level. Why do they go for renewal? The department as well as cooperatives would develop a vested interest.
  3. Admission of members and removal from membership and intimation to Registrar within 30 days: Government can make effort to ensure that the registrar would play its role in enable the cooperatives, and then regulate only where regulation was imperative. But keeping these types of provisions would undermine the functions and role of the management of cooperative societies.
  4. Size and term of the Board: The 1995 Act has sought, through this provision, to prevent to the extent possible, any vacuum in management, which has been experienced under the 1964 Act, to bring in the dreaded “Person-in-Charge” for the interregnum. By having less than half the directors retiring at any time, the 1995 Act has tried to ensure that there is always a quorum, and a democratically elected body is in position.
  5. Functional directors in the Board: Coopt persons as the functional directors to the Boards of cooperatives, and resolutions of the board could be annulled, if the nominated directors were uncomfortable with them. This means, all the cooperatives are in the hands of “professionals”. These people will have influence on decision making of the board without having membership responsibilities, ownership on the affairs of cooperative, accountability and liability of financial results of the cooperatives
  6. Conduct of elections: Based on experience, It is simply not possible for any third party to organize elections to all tiny and large cooperatives when their elections fall due.  It is also not possible for them to print ballot papers with specific symbols chosen by candidates of each cooperative – the result is that ballot papers are printed en mass; common election dates are fixed for similar type of cooperatives; the fixing of common dates requires the deliberate withholding of elections where those have become due, for ease of management by the external party; politicisation takes place as media and parties begin to get involved in the results of a large number of cooperatives going to elections on the same day. In fact, the cost of elections shoots up as centralized printing, security arrangements, TA/DA of officers, etc, are all to be borne by the cooperatives. Further, centralized elections reinforce the misconception that cooperatives are state agencies.
  7. It is responsibility of every cooperative society to conduct member education programs based on their activities, need and importance. What way TSCU is concerned about it. Who will bear the certification cost? Who is benefiting from this clause???
  8. All amendments to bye-laws require registration in this GO. The company law requires registration only to changes in the memorandum (which provides the ‘identify’ of a company). Amendments to articles only required filing of the amendment for record. This is why, in the 1995 Act, amendments to only key provisions were listed for registration- the rest were to be sent for taking on record only.
  9. Registrar’s role to fix the staffing pattern, qualifications, pay scales and other allowances to the employees of the society; this will undermine  functions & role of management. If registrar is involved, staff of cooperatives, feel more privileged in society than accountable to the cooperatives that they work with.
  10. Supersession of the Board and appoint the official Administrator(s) to manage the affairs of the society: Elections to cooperatives were not their own business – they are conducted by the registrar, under government fiat. Where other provisions had rendered the cooperative impotent in its business, provisions related to elections made the cooperative a potent political instrument in the hands of the party in governance, for accommodating party workers who could not be made legislators. Elections were withheld for years in most states, and often held under court directions.Elected boards could be superseded by the government/registrar on any  number of times either for serious or frivolous charges, based on ‘the opinion of the registrar’. In this case, restraining the board for not conducting elections on time as per their bye-laws is contradicting.
  11. Dissolution by Registrar: A  cooperative is a creature of its members, and, therefore, it provides for the members to choose not to continue their association with one another, to dissolve their cooperative.
  12. Settlement of disputes by registrar: If the registering authority is given the right to unilaterally dissolve a cooperative on any of these counts, as such right may lead to unhealthy practices.

In the 1995 Act, the approach was to ensure that the department would not develop a vested interest in cooperatives, even while it had some core corrective measures in its hands. The effort was to ensure that it would play the role of registration, and then regulate only where regulation was imperative, and that these functions would not be undermined by any management role.

Download

  1. 160601 Letter to Commissioner for Co-operation & Registrar of Co-operative Societies, Govt. of Telangana
  2. 2016AGLC_MS28

Cooperatives Vs Corporates

We’re being told by today’s High Priests of Conventional Wisdom that everyone and everything in our economic cosmos necessarily revolves around one dazzling star: the corporation.

This heavenly institution, the HPCW explain, has such financial and political mass that it is the optimal force for organizing and directing our society’s economic affairs, including the terms of employment and production. While other forces are in play (workers, consumers, the environment, communities and so forth), they are subordinate to the superior gravitational pull of the corporate order. Profits, executive equanimity and a healthy Wall Street pulse rate are naturally the economy’s foremost concerns.

How nice. For the wealthy few. Not nice for the rest of us, though. We’re presently seeing the effect of this enthronement of self-serving corporate elites. Millions of Americans are out of work, underemployed and tumbling from the middle class down toward poverty. Yet excessively paid and pampered CEOs (recently rebranded as “job creators” by fawning GOP politicians) are idly sitting on some $2 trillion in cash, refusing to put that enormous pile of money to work on job creation.

The Powers That Be keep us tethered to this unjust system of plutocratic rule only by constantly ballyhooing it as a divine perpetual wealth machine that showers manna on America. Any tampering with the hierarchical control of the finely tuned machinery of trickle-down corporate capitalism, they warn, will cause a collapse and crush American prosperity.

Ha! Prosperity for whom? The corporate order itself has come crashing down on the prosperity of America’s workaday majority — and the people are no longer fooled about the system’s “divinity.” From the Wisconsin rebellion to the outing of the Koch brothers’ efforts to impose their plutocratic regime on us, from the Occupy movement to the spreading grassroots campaign to get corporate cash out of our elections, we commoners have finally peeked behind the curtain to see the fraud being perpetrated by the wizards of wealth inequality.

Yet, tightly clutching their wealth, the wizards retort that the only alternative is the hellish horror of government control, screeching “socialist” at all critics to scare off any real change.

But wait. The choices for our country’s rising forces of economic and political democracy are not limited to corporate or government control. There’s another, much better way of organizing America’s economic strength: The Cooperative Way.

Cooperatives can (and do) provide a deeply democratic, locally controlled, highly productive, efficient percolate up capitalism.

Co-ops are wholly in step with the values, character, spirit and history of the American people.

While socialism has been cast by the corporatists as a destroyer of our sainted free-enterprise system, the cooperative approach is not an -ism at all, but a democratic structure that literally frees the enterprise of the great majority of Americans — which is why the co-op movement is fast spreading throughout our country.

While it’s rarely mentioned by the conventional media, completely missing in the political discourse, not considered by economic planners and chambers of commerce and not known by most of the public, there are 30,000 cooperatives in America (with 73,000 places of business). A 2009 survey by the University of Wisconsin’s Center for Cooperatives (www.uwcc.wisc.edu) found that these energetic enterprises have 130 million members, registering $653 billion in sales and employing more than 2 million people.

There are several types of co-ops, including those owned by workers (there are 11,000 of these, with 13 million worker-owners). Also, there are cooperatives owned by consumers, producers, local businesses, artists and communities, as well as hybrids of those categories. They function in every sector of our economy — manufacturing, health care, transportation, banking, farming and food, media, massage, child care, funeral services, interpreting and translating services, advertising, home building, high tech, engineering, energy … and even a strip club in San Francisco.

Co-op businesses do everything that a corporation can do, but with a democratic structure, an equitable sharing of income and a commitment to the common good of the community and future generations.

You might be surprised to learn that such national brand names as ACE Hardware, Best Western Hotels, Organic Valley, REI and True Value Hardware are organized as co-ops, rather than as corporations. The strength of the movement, however, is in the limitless number of local cooperatives flowering all across the country. From Union Cab of Madison (http://www.unioncab.com/) to KOOP Radio in Austin (http://www.koop.org/), from Evergreen Cooperatives in Cleveland (www.evergreencoop.com) to Circle Pines Center in Michigan (www.circlepinescenter.org), citizen co-ops are highly prized for their unique personalities, human scale, democratic values and community focus.

Cooperatives are a big, structural reform that ordinary Americans can implement right where they live, giving small groups a pragmatic and effective way to push back against the arrogance and avarice of the centralized, hierarchical corporate model. Not only do co-ops work economically, they also make people important again, offering real democratic participation and putting some “unity” back in “community.”

Supreme Court’s judgment of 2nd September 2011 in Andhra Pradesh Dairy Cooperatives case: says protection available under Art. 14 & 19

Supreme Court endorses Cooperative Principles and says
Protection under Articles 14 and 19 is available to Cooperatives

[Supreme Court’s judgment of 2nd September 2011 in Andhra Pradesh Dairy Cooperatives case:
A note on from Rama Reddy, Hyderabad]

Dear friends of cooperatives,

1. These are the days of the Reddy Brothers of Karnataka, Jagan & Kiran Reddys of Andhra Pradesh, etc. More than proverbial twice, I asked myself whether it was the right time for Rama Reddy of Hyderabad to get into circulation. Since I have to share with you a significant event on a subject of mutual interest to you and me, there is no escape from writing a note, after a long time, for your perusal. I hope that it will be informative and interesting. If it is not so, my apologies to you for taking some of your precious time.

2. My training in and practice of Journalism have not changed my thought process much; on most occasions, my narrations will be in chronological frame. I am an avid reader of print media and a keen viewer of electronic media. However, it is of not much help when I start to write a news story. Your level of tolerance has to be quite high when you read my notes.

3. This is once again a story of “Goliath and Davids”. In this story, the Government of Andhra Pradesh is “Goliath” and Dairy Cooperatives in Andhra Pradesh are “Davids”. All-powerful governments rarely learn lessons from experiences and, therefore, ordinary citizens have to teach them tirelessly the same lessons repeatedly.

4. NT Rama Rao (NTR) never thought of himself as a social and political animal like you and me; he thought of himself as a divine incarnation, who takes birth on this planet once in a millennium. As the Chief Minister of Andhra Pradesh, he was in the habit of granting boons occasionally. In 1995, he saw to it that the State Legislature enacted a new liberal cooperative law, without repealing the old regressive law on cooperatives. The old law is titled “Andhra Pradesh Cooperative Societies Act 1964” (henceforth the 1964 Act) and the new law is titled “Andhra Pradesh Mutually Aided Cooperative Societies Act 1995” (henceforth the 1995 Act). The new law is also known as the MACS Act. The new law was one of those few boons that NTR granted to the ordinary mortals like you and me. He, thus, sown a seed that sprouted to start a significant change in the course of cooperative history in the country. On similar lines, state legislatures enacted liberal and parallel laws in eight other states.

5. Thrift Cooperatives and Dairy Cooperatives flourished and continue to flourish under the 1995 Act. Most of the thrift cooperatives are newly registered under the 1995 Act and most of the dairy cooperatives have migrated from the 1964 Act to the 1995 Act. The process of migration is permissible under the law.

6. The Congress Party, under the leadership of YS Rajasekhara Reddy (YSR), won the 2004 General Election and formed the Council of Ministers, YSR as the Chief Minister. For two full years, the Congress Government explored all possible executive actions to replace the elected boards of the eight District Dairy Unions, which were working in the 1995 Act, by its party nominees. Finally, it realised that no provision in the 1995 Act allows the Government and/or the Registrar to take such step. The 1995 Act is designed in such a way that a mutually aided cooperative has to always have an elected board accountable to its general body.

7. YSR almost succeeded in creating an image for himself as a messiah of all people – poor and rich, illiterate and literate, weak and strong, powerless and powerful, backward and forward, etc. Under the guise of being a messiah, he was, in fact, building an empire for himself and his only son, Jagan. He had a coterie of selected rich, clever and influential persons who were being helped, left and right, by him by transfer of public resources – material and financial – to them. It was not in his nature to tolerate the existence of any individual or institution that was not amenable to him. The autonomous functioning of dairy cooperatives, particularly district dairy unions, was not to his liking.

8. On 2nd February 2006, the YSR Government amended the 1995 Act. The 2006 Amendment stated:

(a) All dairy cooperatives that were working as on that day under the 1995 Act would stand transferred to the 1964 Act;

(b) All dairy cooperatives would be treated as if they have always been under the 1964 Act;

(c) All dairy cooperatives would be treated as if they never existed under the 1995 Act; and

(c) Henceforth, no dairy cooperative would be registered under the 1995 Act.

9. The same night, by executive orders, the Government appointed District Collectors as persons-in-charge (one may say “administrators” or “special officers”) of all eight district dairy unions. In turn, the District Collectors appointed thousands of small and big government employees as persons-in-charge of more than 3500 village dairy societies, in the place of elected boards. The same night, all these government employees assumed charge of their additional assignments. The YSR Government thought that it was a clever step forward to get the Congress Party members into the boards of dairy cooperatives.

10. When dairy cooperatives and Cooperative Development Foundation (CDF) filed writ petitions in the High Court challenging the constitutional validity of the 2006 Amendment Act and statutory validity of appointment of persons-in-charge, the High Court suspended the executive orders, as an interim relief. In effect, the elected boards continued to be in office.

11. After prolonged hearings, on and off, spread over 15 months, on 1st May 2007, the High Court declared all provisions of the 2006 Amendment Act as violative of Article 14 (equality before law) and Article 19(1)(c) (right to form associations) of the Constitution. Thus, the dairy cooperatives continued to function under the 1995 Act, with their own elected boards. YSR was not an ordinary mortal; he was a messiah. The State Government filed an appeal in the Supreme Court with a plea to quash the judgment of the High Court.

12. The process of admitting, hearing and disposing the Government appeal is a separate story in itself. One may have to write a separate note on that process. For the present, let us confine to the final result. On 2nd September 2011, the Supreme Court delivered the judgment. The Supreme Court said that it found no reason to intervene in the judgment of the High Court, which had declared all provisions of the 2006 Amendment Act as unconstitutional. The essence of the Supreme Court’s judgment would be found in the reasons it gave in support of its conclusion.

13. For the first time since 26th January 1950, Republic Day, the day from which the Constitution of India came into force, the Supreme Court emphatically speaks of voluntary association, principles of cooperation, voluntary action, free will, etc in respect of cooperatives. The Supreme Court judgment states:

(a) The cooperative, by its very nature, is a form of voluntary association where individuals unite for mutual benefit in the production and distribution of wealth upon the principles of equity, reason and common good. Therefore, the basic purpose of forming a cooperative remains to promote the economic interest of its members in accordance with the well-recognised Principles of Cooperation.

(b) Members of an association have the right to be associated only with those whom they consider eligible to be admitted and have right to deny admission to those with whom they do not want to be associated.

(c) The right to form an association will be infringed by forced inclusion of persons unwanted by the incumbent members of an association. Right to associate is for enjoying in expressive activities. The constitutional right to freely associate with others encompasses associational ties designed to further the social, legal and economic benefits of the members of the association.

(d) By statutory interventions, the State is not permitted to change the fundamental character of the association or alter the composition of the association itself. Any significant encroachment upon associational freedom cannot be justified based on any interest of the Government.

(e) However, when an association is registered under a statute, the provisions of that statute govern it. In case the association has an option/choice to be registered under a particular statute, if there are more than one statutes operating in the field, the State cannot force the association to get itself registered under a statute for which the association has not applied.

(f) The very existence of a Cooperative is based on voluntary action of its members. Once a cooperative is formed and its members voluntarily take a decision to get it registered under the X Act, the registration authority may reject the application for registration if conditions prescribed under the X Act are not fulfilled. The registration authority does not have a right to register the said applicant-cooperative under the Y Act. Even an authority, which is superior to the registering authority, is not competent to pass an order that the applicant-cooperative would be registered under the Y Act. Such an order, if passed, would be in violation of the first Principle of Cooperation, which states that its members should voluntarily approve every action of a Cooperative. Introducing an element of compulsion would violate Article 19(1)(c) of the Constitution. It is not permissible under the Constitution or any law to do something indirectly, if it is not permissible to be done directly.

(g) The Legislature has a right to amend the 1995 Act or repeal the same. Even, for the sake of an argument, if it were considered that the Legislature was competent to exclude the Dairy Cooperatives from the operation of the 1995 Act and such an Act was valid i.e. not being violative of Article 14 of the Constitution, etc, the question would arise as to whether the Legislature could force a Cooperative registered under the 1995 Act to work under the 1964 Act. Importing the fiction to the extent that the Cooperatives registered under the 1995 Act could be deemed to have been registered under the 1964 Act would be tantamount to forcing the members of the Cooperative to act under compulsion/direction of the State rather than on their free will. Such a provision would be violative of the very first basic Principle of Cooperation, which states that its members should voluntarily approve every action of a Cooperative. More so, the Act would be vitiated not only by non-application of mind but also by irrelevant and extraneous considerations.

14. It is time for cooperatives and their members, whether working in the regime of the old regressive cooperative law or in the regime of the new liberal cooperative law, to identify provisions in the said laws. which militate against the Concept and Principles of Cooperation, and advocate for their deletion and/or modification both in the Legislature and in the Judiciary.

15. During my active professional career in the field of cooperation, voluntarism and local governance, I have had the opportunity to go through most of the High Court of Andhra Pradesh and Supreme Court of India judgments that dealt with the subject of cooperation. Almost none have touched the widely accepted definition of cooperative and/or the principles of cooperation. It means that the contesting parties before the courts did not feel the necessity to bring them to the notice of the courts. It is strange that the courts have been adjudicating the disputes relating cooperatives without giving a serious thought to the definition of cooperative and/or the principles of cooperation.

16. In my view, cooperatives, labour unions, societies, associations, public trusts, etc, whether registered or unregistered, are the most appropriate and potent instruments in the hands of the powerless and the dispossessed to protect and promote their legitimate interests through collective action.

17. It will, certainly, be rude on my part to say that the communication ends here. I will be happy to hear from you. If you are interested in the full text of this note, please let me know. I will respond at the earliest.

All the best,

Rama Reddy of Hyderabad
(formerly of Cooperative Development Foundation, Warangal, Andhra Pradesh)

We need to get into mission mode on promoting cooperatives in right spirit: Interview with Shashi Rajagopalan

http://economictimes.indiatimes.com/opinion/interviews/we-need-to-get-into-mission-mode-on-promoting-co-operatives-in-right-spirit-shashi-rajagopalan-board-member-rbi-and-nabard/articleshow/9355597.cms

25 JUL, 2011, 10.45AM IST, M RAJSHEKHAR,ET BUREAU
We need to get into mission mode on promoting co-operatives in right spirit: Shashi Rajagopalan

With the growing recognition that much more needs to be done to encourage the emergence of self-reliant farmer organisations, reviving India’sco-operatives is back on the agenda. Shashi Rajagopalan, till recently on the board of the RBI, gained hands-on experience in promoting credit cooperatives and farmers’ agri-processing units during a two-decade stint working on the creation of co-operatives. In this interview, Rajagopalan illustrates why India needs co-operatives and discusses how they should be revived. The interview is also a fascinating look into a newly independent India’s early attempts to extending finance to all.

Dr KC Chakrabarty was talking about the need to revive co-ops as a way to pushfinancial inclusion. At that time, he said that while he knows how to push banks into rural areas, he is not so conversant on how to revive the coops…
First, we need to realise that some businesses are so badly off they need to be folded up. Does every cooperative have to be revived? No, if there are such gone cases, please let them go. Across the country, across 6 lakh villages, you have about 100,000 primary agricultural credit cooperatives (PACs), and you have Co-op Central Banks and you have State Co-op Banks.

Now, these PACs were started in 1904 to be pure thrift and credit co-ops. They were supposed to save regularly and lend to members from their own savings. Over a period of time, they became very strong financial institutions. Which is what happened the world over. In Europe, in North America, in Canada, in Germany, France, you have the most wonderful rural and urban credit unions. All based primarily on member savings and lending to members. These co-ops continue to flourish. In some areas, they have become like banks in more recent years. They were allowed to take the savings of the public at large. They participate in clearning house, their debit cards are accepted, and so on. So, even though, they are very much member-driven organisations, they have linked up with the larger financial system.

Given that in economically advanced countries, there is a need for such organisations, it is obvious that in India, there is even more reason why we need such institutions. After all, if you are talking about a place where everyone is literate, has access to banks, and yet chooses to have an institution of their own, there must be something to it.

And there must also be that play in the marketplace. All other businesses in the system are capital-controlled, capital-sensitive and capital-rewarding. All other businesses are formed on the basis that the person who puts in the capital is a risk-taker and must be rewarded. Here, you say, there is another way of conducting business where those who have common needs come together and fulfill those needs through a joint enterprise. In these businesses, while the members put in capital, capital must not be rewarded. It is a necessary part of the business but it is not the reason why the business succeeded. The business succeeded because the members came together and serviced yourself through that enterprise. Therefore, any returns from the business will go to each member in proportion with the business they did with that enterprise.

Plus, unlike the other form of business, where you have one share one vote, here you have one person one vote, saying that, be it a small farmer or a 20 acre farmer, the stakes are equal. So the concept of stake is understood differently. And co-ops are very clear that they are not the only form of business — they respect the fact that there are also capital owned businesses. But believe that unless user-owned businesses are also given the same space in the marketplace, capital owned businesses will be irresponsible. That is the basic theory. If the market is to behave, there must be enough user-owned institutions in the marketplace using different paradigms and therefore forcing the market to think differently.

Now, what has happened in India is that till the 1960s, there were these PACs. Even if there were just 20,000 or 30,000 of them, they were vibrant. They were only member-dependent, thrift-dependent. A Co-op Central bank was set up in Vishakapatnam district. Its leaders went village to village in an open cart saying, ‘Look, we want to set up aCooperative Central Bank, will you put in some money in as share capital?’ And there are stories of women coming out with their jewels, ten rupees, twenty rupees. People would come forward and give that and that is how many of these banks were set up across the country.

What was their scale? Village level? Tehsil level?
The co-ops were all village level. In the good old days, one village, one cooperative. And then, over time, they began to federate and become one co-op for 3/4 villages. And then, at district levels, banks began to be created saying let us federate…

Tell me about viability…
Co-ops will be viable because the members run them, through part-time services of members, through full-time services of members, and members get paid for the services they do. So, you only pay from what you earn. And you only pay local costs. There is no cost of capital (apart from servicing the capital through interest). The difference between a SHG and this is that a SHG is not a body corporate. If you are not a body corporate, you are liable jointly and individually.

When you are liable severally, you cannot own property, you cannot get into contracts, you cannot get into court cases against defaulters, etc, etc. In the case of bodies corporate, you can. I think this SHG movement has done a lot for rural women. I think she has become visible socially, politically, economically. However, I also think there is a conspiracy deliberately to say that for women, we will give groups, unregistered groups, so that, just as they cannot hold property individually, jointly also they cannot hold property, or enter into contracts, whereas the men can. And I am absolutely convinced that this is a subconscious conspiracy, which is probably not even understood by most people.

Back to the mid-60s, a committee came up saying these co-ops are a great idea and we should have government share capital participation in them. And that government should promote more and more such co-ops. And right across the country, state co-op laws were changed to say that, first, the government can become a member of a co-op by putting in some share capital. Now, the ownership was always at a state level or the district. It was almost never at the primary co-op level. However, controls were brought in for the entire structure. Second, it said that, henceforth, co-ops cannot appoint their own staff. They had to write to the registrar and the registrar would approve. Third, audit used to be a free service available to any co-op that wanted it.

Now it become a compulsory drill whereby they could not appoint their own auditors any more. Instead, the registrar would appoint an auditor from the goverbnment’s staff and the co-op would have to pay for him. So, a, I lost the right to appoint my own auditor. And b, I had pay for the audit. Also, it was no longer necessary for the auditor to finish the audit before the end of the year. Plus, the auditor did not report to the society. He reported to the registrar. As a result, all the audits began to go years behind schedule.

Then, elections used to be conducted by each co-op on whichever day they chose. Some had a three year term. Others had a two year term. Some had nine members on the board. Others had ten members on the board. Some had chairmen by a direct election on the board. Others chose the chairman through an indirect election. Each co-op had its own thing. Now, suddenly, you had the government saying it will conduct all elections for all co-ops, and all would have a three year term, and all would have 12 members on the board, etc, etc.

The reason why political parties bought into the report so well is that this was one way to scuttle local leadership. And also patronage. The primary thing here is that these are farmer votebanks and come from contiguous areas. Also, in the name of promoting co-ops, parties could have access to treasury funds of an institution that is outside the state’s control. Given that the conduct of elections, and the right to supersede a committee, was in the politicians’ hands, and given that the auditor was accountable to them and not the general body, they could play havoc with the funds.

Now, people who did not get their MLA tickets or defeated MLAs, all could all be accommodated in the co-ops. Similarly, if you wanted to misuse some of the funds of that co-operative, audit was in your hands. It was a great source of financing.

The impact on members? Mr Mahalingam of Shakti Sugars. He was a great co-operatives man and he walked out in disgust leaving all that he had built over decades to set up Shakti Sugars. Because he could not fight on a daily basis on this political front. Like him, across India, you had the most wonderful entrepreneurs who chose to use their skills for the larger community rather than for themselves. But we made things so difficult for them that they could not get on with the business of servicing members. There were enquiries against them all the time. There were inspections against them all the time. And they said, this is just too much. They walked out. And when they walked out, members began saying why am I saving so much money in this co-op for? I do not get to decide who is going to head it.

So from vibrant thrift and credit co-ops, they all became over a period of time, multipurpose channels of subsidised credit and members began to see themselves are beenficiaries of state largesse. And whatever came their way, they took it. And over a period of time, they withdrew their deposits from the coop.

What about elite capture? Did Co-operatives run the risk of the local elite running them as a fiefdom?
Well, these were local institutions. Even if there was mismanagement, the co-op would fold up, but the person running it would have to live in the same area. Many years later, when I worked for the revival of PACs, I discovered that no amount of member education and other things helped. What helped was increasing the percentage of members’ financial stake. Once their stake is significant, the members almost always chose the right person. Otherwise, they would choose the person who spoke the best, etc. Most of the presidents were fairly non-charismatic in terms of their ability to speak, to project themselves. But most of them were also strict disciplinarians. And they were not these charming flamboyant personalities at all. Whereas, in these times, where you have largely external funding coming in, you need brokers, you need people who know how to liaise. There is a huge difference between these two. Your question was on how to revive PACs.

We have to make them thrift-oriented where every member must save x rupees every month instead of waiting for banks to refinance or forNabard to step in. That may continue but that cannot be a longterm plan. The longterm plan has to be your own funding. When you have thrift in an organisation, not only do you have a stronger co-op, but wealth retention also takes place at the local level. The profits of that enterprise stay at the local level. Your own savings stay with you. They get invested locally. Plus the profits from the entire enterprise also stay locally — the profits of any third party leave the area.

And the fact that a large number of people have access to credit on a regular basis means there is purchasing power in the hands of a large number of people at the large, contiguous area year after year. You automatically have a large, domestic, service sector emerging which is sustainable because it is not falsely supported from outside. And almost everywhere we see, we see liquor, some entertainment, flour mill, tea shops, workshops, mason, and transport coming in first into the village. And wherever you have good co-ops, sooner or later, you see the housing going up in the area.

And that is a story by itself. It has not been reported anywhere so far. But, my goodness, look what we can do. Instead of going on crying that agriculture cannot support so many people.

The question is why people would put money into the PACs today? What about the comparative rates of returns? And how do they know their deposits are safe?
Yes. So the laws have to change. In the mid-80s, even with these bad laws, we did a campaign — i was the chief executive of a federation of 100 PACs from 17 districts in AP and we found that thrift is the way to do it. The first thing we had to do is ensure accounts are audited. Now, we could not get blessed auditors to have undated accounts because they wanted bribes. So what we did is we simultaneously got CAs to audit the accounts. Now, these were not accepted by the department and so, statutorily, we could not announce dividends but what we could do was offer interest on thrift.

So, the first time, we had annual reports prepared and presented to all the members. The accounts were fully read. There was time for the members to raise questions and so on. And then, the resolutions were proposed. We did all that. But every three years, we had to fight with the government to get our elections conducted. In 1984, 1987, we went to court. Apart from PACs, meanwhile, in AP, thrift coops began to come up. First unregistered, which were 100% member-financed. When the Taskforce on Farmer Indebtedness (its report was released last year) was going around, we saw their average age is about 10 years.

On savings of Rs 25-40 a month, the men’s thrift co-ops, had an average loan outstanding of Rs 5,000. The very fact is that the thrift and credit co-ops have shown that from day one they are profitable, that within 10-20 years, they are giving Rs 10,000-20,000 loans to tenant farmers and marginal farmers and oral lessees. Others won’t even be willing to lend to them.

It tells you that you can reach these levels in ten years. What are we waiting for? How much longer before we get into a mission mode on promoting co-ops in the right spirit?

So why the reluctance to revive them? Do state governments think Co-ops are an idea that failed?
No. Every state government knows co-ops are something that must be contained. There is no state govt which feels they failed. A prime case is that of AP where out of 13-14 district milk co-ops, nine moved into the new liberal co-operative law. And there was such opposition to their move! The government had employee unions go to court. But, once they shifted, within 2-3 years, profits doubled, members got better prices, and such umbrage the state government showed. The co-op minister and the animal husbandry minister brought in an ordinance saying dairy co-ops will not be under the new law. One of the complaints against the new law is that no one files returns. But the new law says, if they do not file returns, you can write to then and cancel their registration. If they are not functioning, cancel their registration. On the political side, there is a fear of new rivals emerging from the co-operatives.

You had told me earlier that the union government has drafted a Constitutional amendment for cooperatives confirming that they are part of governance and not businesses. And that, since cooperatives are in the State list, the only way to get states to enact good cooperative laws is to have a Constitutional amendment. This is something you oppose strenuously. Why?
This is an absurd idea. 14/15 years ago, I thought we needed a constitutional amendment. But, this amednment says that “The preparation of electoral rolls for and the conduct of elections shall vest in such an authority as may be provided by the legislature of the state, provided that the legislature might also lay down the procedures for the conduct of such elections.” Would you do that for companies? The audacity that, when it comes to farmers, that I will continue to control them through this process.

A for AMUL…

Inspiring Story of India’s White Revolution

Ajit Kanitkar tells the fascinating story of AMUL – the White Revolution that moved India from being a net importer of dairy products in 1950s to a net exporter in a span of just over 50 years.


It was sometime in 1992 that we, a family of three (me, my wife and our three-year-old son), were walking on that road in the town of Anand in Kheda district of Gujarat. It was the only big road that connected the Anand railway station to my workplace, Institute of Rural Management (IRMA). IRMA, where I was a faculty between 1992-1995 was located away from the town, close to the campus of the Gujarat Agriculture University also known as Khetiwadi Campus. It was on one of those evenings that my son, who had started his schooling in Anandalaya (Home of Joy) noticed the blue-neon sign display outside the dairy that processed milk and milk products. “A for AMUL!” – he screamed almost in an excitement and tone that might have resembled “eureka”. We also noticed the familiar signage but now with a new vision. “Yes, it is A for AMUL, A for AMUL” – we joined in the chorus. It is almost twenty years after that evening but the memories of that evening and our stay in Anand are still vivid in our minds. ‘AMUL’ introduced my son to the world of alphabets. It also educated me! It introduced me to the fascinating story of India’s development that many of us recall as the White Revolution, a revolution that moved this country from being a net importer of dairy and dairy products in 1950s to a net exporter in a span of just over 50 years. The story of AMUL and the subsequent white revolution is almost like a modern-day Hindi movie thriller with characters that represent many dimensions of our society, a plot with twists and turns, and a story that still continues to unfold every single day, even today. There were towering an selfless political leaders  like Tribhuvandas Patel who were inpired and advised by Sardar Vallabbhai Patel and Morarji Desai, who laid the foundation of this mass movement that mobilized thousands of farmers later. There is Dr. Verghese Kurien, a technocrat trained outside India who did not even know the difference between a cow and a buffalo (in his own words) in the beginning, who voluntarily succumbed to the persuasion of Tribhuvandas to continue to stay in Anand even today, after his reluctant and mandated stay by the government of India in exchange of an award of a scholarship was over in early 1950s. There were farmers who felt cheated and exploited at the hands of the then multinationals like Polson dairy and in frustration spilled
the milk on the road as their way of Satyagraha to record their protest. They were told by the wise politicians of those times that “they should come together, organize themselves and try to reach their milk to the then Bombay market that will fetch them a better price.” There were power-hungry and self-serving Babus of the Government in the various Bhavans of Delhi, sweet talking professionals in the bilateral and multilateral aid agencies and ruthless corporate managers in India and outside, who felt threatened with the growing success of this farmer-centric cooperative movement. They made every possible attempt, tacit and overt, to scuttle the splendid growth this project was showing to serve their self-interests but in the end gave up against the staunch leadership of Dr. Kurien and his colleagues.

And then there was this prime minister of this country Lal Bahadur Shastri who heard te story of succesful , ‘AMUL’ experiment and wanted to experience personally what it meant for farmers. He decided to spend a night in a village close to Anand as an ordinary citizen of the country throwing all protocol to the winds, his host not knowing who his guest was for that night. Having seen the miracle of hundreds of small farmers pouring the milk in small quantities
of ½ or 1 litre next day to their own institution, the Dudhani Mandali (a milk cooperative as called in Gujarati), he saw the transformative potential of this movement. This visit  heralded the National Dairy Development Board (NDDB), with a mandate of replicating the Anand-AMUL pattern of a three-tier cooperative structure all over the country. The peration Flood I, II and III translated this potential in reality and the rest os history.  ribhuvan Das Patel and Dr. Kurien became the new national icons and AMUL, the White Revolution is independent India’s splendid achievement, that all of us should be proud of.

The AMUL Pattern

There were a number of milestones in the long journey from a country that depended on imported milk products to a country that became the largest producer of milk. Many observers of that time would recall that at the time of the country’s independence, the
scenario for dairy industry was bleak. The Governmentmanaged
and subsidized city milk schemes were almost in shambles. Milk was rationed and citizens were issued limited quota that privileged
them to buy this essential food item. However, things started
changing, AMUL providing the drive for this change. In the first few years to be precise from 1946 till 1960s, it was the formation and strengthening of the Kheda (also known as Kaira) district  ooperative milk union. The popular name goes by AMUL. In those days, Tribhuvandas Patel the farmer leader from Kheda moved
from village to village, often on horseback, convincing the farmers to organize themselves into village level cooperatives. The members, belonging to all castes and creed came together and organized themselves into a formal village level cooperative society. Every morning and evening, they brought in small quantities of milk that was later transported to a district place.

The district cooperative milk union was the second tier in the cooperative structure. The union owned a processing plant that processed raw milk collected from village cooperatives who were its members. The processed milk and milk products were then sold to urban markets as far as Bombay (now Mumbai). Thanks to the vision and foresight of Dr. Kurien, the immense challenges in marketing of a perishable commodity like milk were solved by converting the liquid milk into milk products and also connecting the farmer organizations with the market that was ready to offer a decent price. As one marketer later put it, “Bombay market was a bottomless pit and lapped up any amount of supplies that traveled overnight, thanks to the railway network that connected Anand to Mumbai.”

Many readers probably do not know that there are at least six to eight ‘AMULs’ in Gujarat! As the Kheda district Union started flourishing other district co-operative unions. came into being. They were inspired by the success and the potential that the AMUL (later also known as the Anand model of Cooperatives) model offered. As many AMULs Started flourihing in other parts of Gujarat. It was Dr. Kurien’s statesmanship that forged a long-lasting collaboration in a situation that had the potential of becoming a destructive competition. Dr. Kurien convinced the leadership of the district  cooperative unions in Gujarat that while it made sense to establish multiple entities all across Gujarat to  espond to the needs of the farmers, they needed to market their products under a common  brand, a brand that was shared by all collectively. “United we stand, divided we fall” – so easy preach but so difficult to practise in a real world. But the sagacity of the farmer leader of Gujarat who understood the perils of competing brands stuck together. Thus, ‘AMUL’ became the flagship brand of all the gujrat co-operatives.

Operation Flood
Another important landmark in the journey was replication of the ‘AMUL’ or the Anand pattern of cooperatives all over the country. In an interview that appeared in India Today (December 31, 2007), Dr. Kurien shares the dramatic events that led to the formation of a national institution National Dairy Development Board (NDDB) that became the torch-bearer of India’s white revolution for the next two decades. NDDB’s sole mandate was to replicate the Anand pattern (read AMUL) of cooperatives all over the country. In Dr. Kurien’s words, “It was the mid-60s when I got a call from senior Gujarat cadre IPS officer informing me that union Home Secretary I.P. Singh was in Gujarat and wanted to take a look at the operative milk model at Anand. Singh was very impressed when he visited Anand and saw the impact of the movement. He asked me why this model, which had created a win-win situation for both the farmers and consumers, couldn’t be replicated at the national level. I told him that my proposal titled ‘Operation Flood’ was facing bureaucratic hurdles and the officials of the Union Agriculture ministry were not interested in it. Singh was surprised and he promised to put everything in order. On reaching Delhi, he arranged an informal meeting with the Union secretaries and asked me to give a presentation on my proposed scheme. At the meeting, I explained to them how the scheme aimed at recovering its initial cost by asking European countries to donate excess powdered milk and butter oil, which they otherwise disposed of as waste, to us. I also informed them that seeking aid for the project was a short-term arrangement aimed at a self-sufficient and farner friendly model for India. In other words, once the model was fully operational, financial aid for the project was to end. Singh, who was already keen on implementing the model at the national level, urged other bureaucrats to lend their support. And thanks to his efforts, the project not only took off but started moving at a fast pace. “Once the project got the clearance, my next task was
to get Food and Agriculture Organisation’s (FAO) approval
for the proposed cooperative milk model. Accompanied by the then
Union Agriculture Secretary B.R. Patel, I went to Rome to negotiate
with FAO for excess powder milk and butter oil from the European
countries and to explain how it will benefit and make farmers in India independent. We met several delegates to garner support for our proposal. Most of them resisted but two stood out- Australia and Pakistan.
The lady heading the Australian delegation was initially
opposed to our proposal because she was of the opinion
that India would become dependent on aid. But on hearing
she changed her stance. The Pakistan Delegates on the other hand, copied our proposal and presented it to FAO. But thankfully, our proposal had been cleared by then. In Rome, Patel was aked the question how the project would function without the  government’s involvement. To which he replied that the government would give me five years for the project and in
case it failed, they ‘would shoot me down’.” What AMUL did to Gujarat in the 1950s and the 1960s, the NDDB in implementing the Operation Flood did to the entire country in the next thirty years!

Unknown Faces Behind White Revolution
The human side behind the success of AMUL is rather unknown to the outside world. The AMUL story is full of heroic deeds of literally hundreds of professionals consisting of dairy technologists, veterinary doctors, extension workers, marketing managers and above all thousands of farmers who all worked with grit and determination when India was not ‘so shining’, not only for the external world but also for its own citizens. These were the decades of 1960s and 1970s when songs like Mera Joota Hai Japani ruled over the public psyche. But these people had an amazing Hindustani dil that made the AMUL story possible. There is no dearth of literature on Dr. Kurien, the architect of the white revolution. But there are literally hundreds of unsung heroes, his many colleagues, who worked shoulder-to-shoulder with him to give shape to the dream of making India self-sufficient in milk and milk products. This human side behind teh success of AMUL is rather unknown to the outside world.

The town of Anand when we lived was full of such stories about these people. There was this gutsy dairy technologist Mr. H. M. Dalaya whose professional skills made it possible to use the surplus milk collected during the winter month. Many Indian and international experts had dissuaded him saying that it was impossible to make milk powder out of buffalo milk given its high fat content. No such technology existed before and he should not waste his efforts in inventing one. But he persisted and succeeded! It was a major breakthrough in the initial years of AMUL because it removed the most important bottleneck in collecting liquid milk. AMUL could collect technically any amount of milk from its farmer-members as long as it had the facility to process the ‘raw/fresh’ milk into milk powder and thus extending the shelf life of milk from a few hours to at least a few years. When we were in Anand, there was a sort of competition among the AMULs of Gujarat to create records in milk procurement. I clearly recall when one of the managers from Mehsana District Union (the dairy is named Dudhsagar, Sea of Milk!) politely corrected my factual mistake in the presentation. AMUL was no longer the largest procurer of milk. He told me that it was Mehsana which created a new record of sorts by collecting 11 lakh litres of milk per day, overtaking AMUL’s score of 10 lakhs litres!

In the initial days of AMUL, there was one Mr. Chotani who was spearheading the team of AMUL, visiting villages in Gujarat and trying to convince farmers that they use a better variety of cattle feed so that the productivity of the cattles could increase. Farmers did not seem to be convinced. They thought that the traditional feeding practices (green and/or dry fodder) were the best; the feed from the factory would harm their precious livestock. In one meeting in a village, Dr. Chotani began addressing the meeting of farmers chewing a few tablets of the feed, the feed that he wanted the farmers to adopt! Just as a cattle would do, he spent the next one hour chewing and explaining to the farmers that he did not die after eating that tablet. No further convincing was needed!
And there is story of another officer of NDDB. Dr. Malhotra returned to Anand after completing his three years assignment in Punjab spreading the message of Operation Flood. One day, Dr. Kurien had to face an interesting delegationof farmers in punjab. There were sikhs farmers wielding swords outside their office in Anand. They were angry with Dr. Kurien and wanted to know why such an efficient and farmer friendly officer like Dr. Malhotra was moved out of punjab. They wanted him to be posted again in Punjab.

Dr. Amrita Patel was the first woman veterinary graduate who opted to work with the farmers in Kheda district. She later on shouldered many responsibilities and is currently the chairperson of NDDB. There were many veterinary doctors, who in the initial days of Operation Flood travelled miles at night to attend to an ailing cow or buffalo just in return for a grateful smile of the owner of that animal. I had the fortune of meeting a number of these individuals during my stay in Anand. They were from all states, different religions, varied age groups but the common bond that brought them together was the magic and the persuasive vision of Dr. Kurien. Operation Flood is a success not only of Dr. Kurien but also of his professional colleagues and managers.

AMUL’s Contribution : More Than Just Milk

What did the AMUL movement contribute to the country?

Apart from demonstrated and quantifiable results in milk production, milk availability and so on, it brought about and facilitated a new paradigm in development interventions.  AMUL demonstrated that a solid partnership among farmers and professional managers personified in Tribhuvandas Patel and Verghese Kurien was the way forward if the coutry believed in working with its farmers. The AMUL model placed farmers, its milk  producer members, at the centre and all the rest at periphery. Thanks again to the ‘buziness’ mindset of the Gujaratis that places progress an pragmatism above everything else . Till very recently, politics and politicians were kept at an arm’s distance (unlike its  neighbouring state of Maharashtra, where sugar cooperative barons used the instrument of cooperatives to further their political careers, at the cost of the health of the cooperative enterprises). The dairy cooperatives in Gujarat and many other states grew in strength without having to deal with the politics of politicians! AMUL showed a third alternative that was democratic, decentralized and yet had the potential to be efficient and sustainable, an alternative that was not lethargic and insensitive such as that of the ‘public sector and profiteering and exploitative like the ‘Private sector’.

The cooperatives were owned by the farmer-milk producers and managed by professionals that were accountable to them. The surplus at the end of the business transactions were distributed to producers in addition to the remunerative prices that they received for the milk-produce. It was a ‘new model’ of development. The AMUL model also demonstrated that farmerfriendly structures need not be against consumer interests. While it rewarded farmers with handsome procurement price that encouraged higher fat percentage quality milk (unadulterated); the urban consumer had access to fresh milk round the year. The AMUL pattern cooperatives produced butter, ghee, paneer, milk powder, ice-cream, chocolates and even traditional sweets like rosgulla and shrikhand that delighted the customers with consistently high quality tastes. The advertisements that featured the AMUL girl dotted the city landscapes; it established new standards in creative advertising, literally year after year, and even today. AMUL is one of the top brands of the country today recalled fondly by consumers all across the country. It all began in 1966 when Sylvester daCunha, then the managing director of the advertising agency, ASP, clinched the amount for AMUL butter. The butter, which had been launched in 1945, had a staid, boring image, primarily because the earlier advertising agency which was in charge of the account preferred to stick to routine, corporate ads. For 30 odd years the ‘Utterly Butterly’ girl has managed to keep her fan following intact. So much so that the advertisements are now ready to enter the Guinness Book of World Records for being the longest running campaign ever. The ultimate compliment to the butter came when a British company launched a butter and called it Utterly Butterly. Last week, AMUL came up with yet another advertisement coinciding with the visit of the Chinese premier Wen Jiabao, its punch line aptly titled ‘wonton more maska?’ (want more buttering?) During our stay in Anand, we must have visited the AMUL dairy at least a dozen times. It was like a spiritual ritual that we looked forward to whenever we had visitors and guests. We would visit the AMUL dairy (factory) in the morning. There were many visitors like us from all parts of the country, men and women of all ages, farmers with their families. AMUL staff would escort us in small groups around the factory showing how the liquid milk collected from the villages of Kheda district in the morning was processed. Behind the glass partitions, tons and tons of butter was being produced and packed and we watched that scene in awe. At the end of the visit, all of us were offered a glass of fresh milk! What a way to conclude the visit! But more was in the offing of the evening. We would often go to a near-by village to see the functioning of the mandali (meaning cooperative in Guajarati). At that time, often the only building with a twostoried concrete structure was that of themandali. Women and men of the village would have lined in front of their cooperative and the business was brisk. Each member collected his or her ‘passbook’ after pouring the milk, a passbook that faithfully recorded milk poured, fat percentage and the money due to the farmer. The site of a mandali was as inspiring as the dairy of the morning.

Institution-Building at the Core

The AMUL and the NDDB experiment is an outstanding innovation of modern times. It showed how aid, if used creatively and with diligence, can galvanise a dairy economy of the entire country unlike in other countries of the global south where massiv aid flows permanently disabled, and in some cases wiped out the local enterprise and the entrepreneurship. Dr. Kurien and his team zealously protected the  nstitutional autonomy of NDDB by deliberately keeping it away from the plethora of Bhavans and  epartments of power-hungry Delhi  and locating it to Anand, a remote corner of the country; where no bureaucrat would have the courage to lobby for posting leaving the corridors of power! NDDB in Anand drew from the immense expertise that AMUL had accumulated. It was a living laboratory that offered many lessons not just for Gujarat but for the country and NDDB amplified the voice of the Anand pattern of cooperatives.

Dr. Kurien and NDDB had to fight relentlessly with the politicians and officials of many state governments that wanted technical expertise and financial resources from NDDB but never let function  the  cooperatives as institutions that were autonomous. A true cooperative movement that was not subservient to the political masters was perceived as a threat by all of them and in the process Dr. Kurien and his team often became the ‘bad boys’. Reforming the almost defunct dairy development departments and urban milk supply schemes of many state governments was a thankless task that Dr. Kurien and NDDB accepted but only on their terms, terms that allowed emergence of a truly farmer-centric cooperative movement. NDDB management had to also face lobbies and interest groups that did not want development of indigenous dairy machinery and packaging equipment, which challenged their complete monopoly of the trade. Thanks to Dr. Kurien, indigenous manufacturing enterprise was  established that produced and marketedvaccines for cattle at one third the price offered by a few multinational enterprises built institutions. Indeed, modern India can give credit to this master institution-builder. It was the entire ecosystem that grew around milk and the milk capital – Anand. It was not just the cooperatives and milk processing infrastructure but a host of other institutions were conceived, thanks to the positive spin offs.

The indigenous dairy machinery equipment manufacturing facility flourished in and around the township of Vallabh Vidyanagar, as also the low-cost, high-quality vaccine manufacturing facility that threatened the overpriced multinational corporations. New advances were made in processing and packaging  echnologies. A rail milk tanker  designed specially to transport liquid milk (when the outside temperature was at 45 degree in peak summer months) travelled over 48 hours from Anand and yet successfully stored and delivered milk-supplies at 4 degrees at Kolkata. A new technology marvel! New cattle feed factories were established, the country’s human capital increased with hundreds of professionals qualifying in multiple disciplines such as dairy technology, food processing, and veterinary sciences. The AMUL model was also tried out with varying success in other sectors such as groundnut oil and fruits and vegetables.

When Dr. Kurien realized that he needed a talent pool to mange the fledging cooperatives enterprise being set up  across the country, he approached his cousin, Dr. Ravi Mathai, at IIM Ahmedabad, hoping that he would be able to recruit and retain professionals from this prestigious institution. It wasn’t the case to be. The challenge gave birth to a new institution – Institute of Rural Management, Anand (IRMA), an institution whose mandate was to train professional managers who will work in the cooperative and rural

enterprises. I had the priviledge of being a faculty member  in IRMA. Many IRMA alumni do us proud when I see them across the length and the breadth of the country contributing their skills in many development organizations. Many more IRMA-type institutions were later set up all over the country.

IRMA was indeed a trend-setter in many ways. It ‘placed’ its students in villages for over two months as a part of the two year curriculum. Often, the faculty accompanied students and engaged in a collaborative research. While the academic and the political community in India in 2010 is debating about the need to have an ‘Indian’ version of a convocation and getting rid of the colonial legacy of wearing gowns and so on; we in IRMA had a solemn convocation ceremony as early as 1980s. Everyone including the chief guest, the faculty and the graduating students dressed in white kurta/salwar kameez wearing kolhapuri chappals. The convocation was a solemn occasion when the chief guest blessed the graduating students with an Angavastram! I have vivid memories of those convocation ceremonies. The AMUL story continues even when some of its founding members and professionals have retired from the scene. The GCMMF with its flagship AMUL brand, had a turnover of close to 10,000 crores per annum in the recent years making it the largest food product marketing company in the country. AMUL consistently topped as the most popular brand.

The institution-building story of the AMUL model will not be complete without reference to the recently established Tribhuvandas Foundation (TF). The genesis of TF is equally dramatic. It was set up much later in the evolution of AMUL in the memory of its founder. The story goes like this – In one of  the general body meetings of the cooperative union, AMUL’s management was challenged by a farmer from the audience, “Sir, you have taken so much efforts for our cattle. You have placed mobile teams of   eterinary professionals that reach our villages within hours if a distress call is given to them through the wireless system about the ill-health of the cattle.

But what about us? What about our ill-health?” The question stirred the management. The TF was a  response to provide medical services to thousands of AMUL members, especially to children and women in villages. Its network is spread over Kheda district with a hospital in Anand.

Some Blemishes, Shortcomings and Controversies

There are many authors, who have praised and adored the AMUL experiment, but there are equal number of critics who claim that Operation Flood and the AMUL model has done more harm than good. These critics (call them eternal cynics?) argue that the model promoted intensive dairying compared to the earlier dairying practices prevalent in Indian villages. The high input dairying model replaced the diverse local breed of animals with artificially inseminated breed that was more vulnerable in our climatic conditions, it needed intensive care. They argued that the model promoted feeding practices that meant a constant burden on scarce water and other natural resources that generate limited green fodder. More importantly, some of these critics tried to show the imbalance that AMUL story caused by taking away the

precious milk from rural areas to feed the ever-expanding urban population, thereby depriving rural  children and infants of their only source of nutritional diet. Statistics is cited showing how while on one hand, per capita milk consumption on an average has increased, the same when disaggregated for rural and urban population has not changed. Dr. Kurien and his team saw a ‘conspiracy theory’ in these allegations. They listened to this criticism for over thirty years, saying that the international lobby  interested in promoting exports and dumping their surplus milk in developing countries was at play. They ridiculed this criticism citing similar examples when indigenous efforts that could lead to self-reliance and

economic freedom for countries like India would always be jeopardized by the so-called world supreme powers. India’s experience in nuclear and space science apartheid till the recent years makes one believe in Dr. Kurien’s arguments. However, it is equally true that the White Revolution started and almost ended in areas which were already ‘milk surplus’or ‘milksheds’ (NDDB’s description) that had marketable

surplus of milk. Many parts of Gujarat, Western Maharashtra, Haryana, Punjab, Western Uttar Pradesh, flourished but eastern India still depends on either milk tankers that ferry milk in railway or by road or on milk that is reconstituted from milk powder. Vidarbha region of Maharashtra sources its milk from drought prone Ahemadnagar and Solapur regions of western Maharashtra! Rajasthan, Northern  Karnataka, Telangana did not have the kind of success stories that its citizens can proudly narrate. There are many unfinished agendas of the white revolution.

In last few years there have been many hude conflicts between the very institutions that worked in closed

collaboration over the years. There were newspaper reports that even some of the Gujarat Milk Unions wanted to reclaim their AMUL brand from GCMMF and others. The heads of the Institutions that were once proud members of one joint family, motivated by one common mission and advised by Dr. Kurien were pitted against one another. Institutions that championed the cause of cooperation and collaboration have been bitterly competing against one another, call it the era  of privatisation or age of personality clashes, individuals on egotrips, inability of human beings not letting go or whatever. As a member of the AMUL-NDDB-IRMA community and a citizen of Anand which opened a new world view for me and  nurtured me in my formative years of professional life, I feel sad watching the unfolding of these unpleasant events, often the battles being fought in the media. I worry about the future of these institutions, especially when so much human investment has gone into building of these institutions. It has taken years to build these institutions; it will take only a few days to destroy them. However, these shortcomings do not take away the credit of what AMUL, GCMMF, NDDB and the entire ecosystem of the dairy industry did in a span of 60 years.

The AMUL story is more relevant today than it was in 1950s and 60s, especially during the current regime, when market evangelists preach privatization as the only  aradigm that can solve all problems of poverty and inequality. In times when food has become a  commodity for trading, farming an activity that is done by a faceless group of people that are passive recipients of ‘contract’, markets that are ruthless and have no space or time for the small and the marginalized, economies that grow at 9% leaving behibd a  vast number of its constituents and financial systems that collapse like a pack of cards leaving the poor more vulnerable, the AMUL cooperative model of enterprise offers a viable choice between the private and the public sector, a humane and empowering mechanism for a larger number of farmers, aa model enterprizethat can combine efficiency  and business effectiveness and still can meet the aspirations of its members-producers. AMUL offers many valuable learnings for the present as also the past. AMUL is thus a Amulya (very precious) experience that we need to learn from.

Thanks to these pioneers of AMUL in independent India; my son, a representative of the new generation of Indians, was fortunate to learn his first alphabets – A for AMUL  and of course M for Milk…! (Photo Courtesy: NDDB)

Dr. Ajit Kanitkar works as a Programme officer with FORD Foundation in New Delhi. He is working in the development sector for the last twenty years. Financial access and livelihood promotion are the two key areas of his expertise. <ajitjyoti@vsnl.com>