Ownership Structures — Cooperative Society

The voluntary association of economically weak persons based on self-help, equality, democracy and freedom is known as

1. Public enterprises
2. Cooperative society
3. Welfare society
4. None

Answer

Cooperative society

Reason — A cooperative society is a voluntary association of persons who join together to safeguard their interests. It represents an attempt by the economically weak (the poor) to protect themselves from being oppressed by the rich. It is based on the principles of self-help, equality, democracy and freedom.

Co-operative organisation is based on the following principles —

Statement I: Service to its members in place of profits

Statement II: Morality in place of unethical business practices

1. The statement I is correct
2. The statement II is correct
3. Neither I nor II is correct
4. Both I and II are correct

Answer

Both I and II are correct

Reason — A cooperative organisation is based on four principles — (i) mutual help (each for all and all for each) in place of competition, (ii) self-help in place of dependence, (iii) service to members in place of profits, and (iv) morality in place of unethical business practices. Both statements I and II are therefore correct.

The Indian Cooperative Society Act tells cooperative organisation is "a society which has its objective for the promotion of economic interests of its members in accordance with co-operative principles." The co-operative principles are —

1. self-help, equality, democracy and freedom
2. self-profit, honesty, health of persons
3. social harmony, ideal society, well-education
4. none

Answer

self-help, equality, democracy and freedom

Reason — A cooperative society is a voluntary association of persons who join together to safeguard their interests. It is based on the principles of self-help, equality, democracy and freedom. The guiding mottos of cooperation are 'Each for all and all for each' and 'self-help through mutual aid'.

A co-operative society must be registered under the co-operative society act or a state cooperative societies law. After registration —

Statement I: The co-operative society becomes a distinct body independent of its members.

Statement II: It becomes an autonomous and self-governing organisation.

1. Statement I is correct
2. Statement II is correct
3. Both I and II are correct
4. None of them is correct

Answer

Both I and II are correct

Reason — After registration, a cooperative society becomes a separate legal entity. It becomes a distinct body independent of its members and an autonomous, self-governing organisation. It can own property, make contracts, and sue or be sued in its own name. Hence, both statements are correct.

A cooperative organisation is managed by a local area basis by selecting some persons. What are their minimum and maximum number :

1. Minimum = 10, Maximum = 100
2. Minimum = 7, Maximum = 50
3. Minimum = 10, Maximum = No limit
4. Minimum = 2, Maximum = No limit

Answer

Minimum = 10, Maximum = No limit

Reason — A minimum of ten persons above the age of 18 years and having common interest are required to form a cooperative society. There is no upper limit on the number of members, although membership is generally restricted to a particular locality or group.

A member who has made greater purchases from the cooperative store will get a larger share of profit even though his capital contribution may be small. This is known as

1. social utility
2. distributive justice
3. executive property
4. none

Answer

distributive justice

Reason — The profits of a cooperative society are distributed equitably among its members based on the volume of business transacted by each member with the society rather than in proportion to capital contributed. A member who has made greater purchases gets a larger share of profit even if his capital contribution is small. This equitable distribution of surplus is called 'distributive justice'.

The Cooperative Societies are patronised by state government.

Statement I: The government provides concessions in tax and finance etc.

Statement II: Special privileges and exemptions are enjoyed by Cooperative Societies

1. Both I and II statements are correct
2. Only statement I is correct
3. Only statement II is wrong
4. Can't say

Answer

Both I and II statements are correct

Reason — Cooperative societies are patronised by the state government and enjoy special privileges and exemptions. The government provides concessions in tax and finance to encourage the healthy growth of cooperative societies. Hence, both statements are correct.

Which of the following is incorrect?

1. A Cooperative Society never faces shortage of funds.
2. A Cooperative Society cannot afford to employ expert professional manager.
3. The share of Cooperative society are not transferable
4. The secret of business is transparent.

Answer

A Cooperative Society never faces shortage of funds.

Reason — This statement is incorrect. One of the major demerits of a cooperative society is limited capital. A cooperative society is usually formed by people of limited means, and the principle of 'one man one vote' discourages members from investing large amounts. Therefore, a cooperative society often faces shortage of funds and is unable to mobilise adequate capital for large-scale operations.

Such Cooperative society which ensure steady supply of essential commodities of standard quality at far price by eliminating middle man is known as

1. Public cooperative
2. Purchaser cooperative
3. Consumers cooperative
4. Poor buyer cooperative

Answer

Consumers cooperative

Reason — A consumers' cooperative store is set up to ensure a steady supply of essential commodities of standard quality at fair prices. It seeks to eliminate the middleman by establishing a direct link with the producers. It purchases articles of daily consumption directly from manufacturers or wholesalers and sells them to the members at reasonable prices. Examples include NAFED, Mother Dairy, and DMS.

A group of young professionals working in a city faces difficulty in finding affordable housing. Which type of cooperative society should they form to address this issue?

1. Industrial Cooperative
2. Housing Cooperative
3. Consumer Cooperative
4. Credit Cooperative

Answer

Housing Cooperative

Reason — Cooperative Housing Societies are formed to provide residential accommodation to their members either on ownership basis or at fair rents. They are organised by poor and middle-class people in big cities where housing is a serious problem. A housing cooperative buys land from the municipal authority and constructs flats or provides plots for members at relatively lower cost, allowing them to pay in easy instalments.

Agricultural cooperatives aim at to use improved seeds, fertilisers, irrigation and other modern techniques. Its outstanding works is —

1. It provides economic and social security to the peasants
2. To avoid scientific farming
3. To help in the sub-division and fragmentation in land holdings.
4. None of these

Answer

It provides economic and social security to the peasants

Reason — Cooperative Farming Societies (also known as agricultural cooperatives) are voluntary associations of small farmers who join together to avail the benefits of large-scale mechanised farming. They aim at scientific organisation of agriculture using improved seeds, fertilisers, irrigation, soil conservation and other modern techniques. They remove the evils of subdivision and fragmentation of landholdings and provide economic and social security to the peasants.

IFFCO is one of the apex level cooperative society. IFFCO stands for —

1. Indian Farmers Fertiliser Cooperatives
2. Industrial Farmers Fertilisers Cooperatives
3. Indian Farmers Financial Cooperatives
4. Indian Farmers Fertilisers Company

Answer

Indian Farmers Fertiliser Cooperatives

Reason — IFFCO stands for Indian Farmers Fertiliser Cooperatives. It is one of the apex level federations of cooperative societies in India, along with the National Agricultural Cooperative Marketing Federation (NAFED), the National Federation of Industrial Cooperatives, the National Cooperative Dairy Federation, and the National Consumers Cooperative Federation.

Assertion (A) : Cooperative societies may face challenges in raising external capital from non-members.

Reasoning (R) : Members' capital contributions and retained earnings are primary sources of funding for cooperative societies.

1. A is true but R is false.
2. A is false but R is true
3. Both A and R are true and R explains A
4. Both A and R are true but R does not explain A.

Answer

Both A and R are true but R does not explain A.

Reason — Both A and R are true. Cooperative societies may face difficulty in raising external capital from non-members. R correctly states that members' capital contributions and retained earnings are important sources of finance for cooperative societies. However, R only states the usual sources of funding and does not directly explain why external capital from non-members is difficult to raise. Hence, R does not explain A.

Name the association of artisans and small producer which helps to improve the bargaining power and competitive position of its members —

1. Consumer cooperatives
2. Marketing cooperatives
3. Bargaining cooperatives
4. None of these

Answer

Marketing cooperatives

Reason — A cooperative marketing society is a voluntary association of artisans and small producers. It is formed to enable the members to secure remunerative prices for their merchandise. It helps to improve the bargaining power and competitive position of its members. It performs various marketing functions such as transportation, warehousing, packing, grading, and marketing research for the benefit of its members.

The principle of 'One Man, One Vote' in cooperative societies means that voting rights are proportional to the amount of capital a member contributes.

1. True
2. False

Answer

False

Reason — The principle of 'One Man, One Vote' means that every member has one vote irrespective of the number of shares held by him. Voting rights are NOT proportional to the amount of capital contributed. Rich members holding more shares cannot dictate terms, and all members have an equal voice in management. This makes the cooperative society truly democratic.

Assertion (A): Cooperative societies aim to provide service to their members rather than earning profits.

Reasoning (R): Members of cooperative societies earn dividends in proportion to their capital investment.

1. Both A and R are true, and R explains A.
2. Both A and R are true, but R does not explain A.
3. A is true, but R is false.
4. A is false, but R is true.

Answer

A is true, but R is false.

Reason — A is true — the primary aim of a cooperative society is to provide service to its members, and its motto is 'each for all and all for each'. However, R is false because in a cooperative society, only a limited dividend (up to 10 per cent) is paid on share capital; the remaining profits are distributed equitably on the basis of the volume of business transacted by each member with the society, not in proportion to their capital investment.

A member of a cooperative society withdraws their membership and requests to return their shares. What does this reflect about cooperative societies?

1. Shares are freely transferable.
2. Shares are non-transferable but returnable to the society.
3. Membership is compulsory for life.
4. Capital contributions cannot be refunded.

Answer

Shares are non-transferable but returnable to the society.

Reason — In a cooperative society, the shares are not transferable to another person — a member cannot sell or transfer his shares like in a joint stock company. However, a member who wants to quit the society can submit his shares back to the society and get his money back. Thus, shares are non-transferable but returnable to the society.

A cooperative society can refuse membership to individuals based on their economic status.

1. True
2. False

Answer

False

Reason — The membership of a cooperative society is open to all. Any person having a common interest can become a member of a cooperative society and can leave the society at his own pleasure. No discrimination is made on the basis of caste, creed, religion, political affiliation or economic status. The cost of a share is kept low so that even poor persons can buy it. Cooperative societies represent universal brotherhood.

Farmers in a drought-prone area are unable to get loans from traditional banks. Which cooperative society can help them with credit?

1. Cooperative Farming Society
2. Credit Cooperative
3. Marketing Cooperative
4. Industrial Cooperative

Answer

Credit Cooperative

Reason — A Cooperative Credit Society is formed by people with limited means. It aims to provide financial assistance to its members and to promote the habit of saving and thrift among them. Credit cooperatives formed by farmers are known as rural credit cooperatives, land mortgage banks or primary societies. They protect members from exploitation by moneylenders and provide loans at reasonably low rates of interest.

Assertion (A): Cooperative societies enjoy complete autonomy from government regulation.

Reasoning (R): Cooperative societies are subject to state control to ensure healthy functioning.

1. Both A and R are true, and R explains A.
2. Both A and R are true, but R does not explain A.
3. A is true, but R is false.
4. A is false, but R is true.

Answer

A is false, but R is true.

Reason — A is false because cooperative societies do NOT enjoy complete autonomy from government regulation. The government exercises regulation and control over cooperative societies. The day-to-day working is bound by legal rules and regulations — keeping of accounts, regular audits and inspections are essential, and reports have to be submitted to the Registrar. R is true because the state controls cooperatives to ensure their healthy growth and functioning.

State two features of cooperative societies.

Answer

Two features of cooperative societies are:

1. Voluntary Association — A cooperative society is essentially a voluntary association of persons desirous of improving their economic status through joint action.

2. One Man One Vote — Every member has one vote irrespective of the number of shares held by him.

Explain the principle of 'one man one vote' in the context of cooperative societies.

Answer

According to this principle, every member of a cooperative society has only one vote irrespective of the number of shares he holds or the amount of capital he has contributed. This ensures that rich members holding a larger number of shares cannot dominate or dictate terms to other members.

"Membership of a cooperative society is open." Comment.

Answer

The statement is correct. Membership of a cooperative society is open in the following ways:

1. No Discrimination — The membership of a cooperative society is open to all irrespective of caste, creed, religion, or political affiliation.

2. Voluntary Entry and Exit — Any person having a common interest can become a member of a cooperative society, and any member can leave the society at his own pleasure after giving proper notice.

3. Affordable Shares — The cost of a share is kept low so that even poor persons can buy it and become members.

4. New Members Welcome — New members are always welcome to join the society. New shares are issued to admit new members, and membership is never closed.

"Cooperative societies are a method of self-help." Discuss.

Answer

The statement is correct. Cooperative societies are indeed a method of self-help for the following reasons:

1. Origin from Need — The cooperative movement was started by the weaker sections of society to protect and promote their interests against exploitation by the rich.

2. Mutual Aid — Cooperative societies operate on the principle 'self-help through mutual aid' and 'each for all and all for each'.

3. Economic Independence — By pooling resources, members reduce their dependence on middlemen, moneylenders, and exploitative traders.

4. Joint Action — Members improve their economic status through joint action rather than relying on government aid or charity.

What are credit cooperatives?

Answer

A Cooperative Credit Society is formed by people with limited means. It aims to provide financial assistance to its members and to promote the habit of saving and thrift among them. It may be formed by artisans, agriculturists, industrial workers or salary earners.

Explain consumer cooperatives.

Answer

A consumers' cooperative store is set up to ensure a steady supply of essential commodities of standard quality at fair prices. Such a store seeks to eliminate the middleman by establishing a direct link with the producers.

Distinguish between cooperative organisation and partnership.

Answer

What is meant by industrial cooperatives?

Answer

An industrial cooperative is organised by small-scale producers or artisans to face competition and to increase production. Cooperative undertakings are a useful means of developing small-scale and cottage industries. Industrial cooperatives are very helpful in obtaining raw materials, in improving the quality of products and in securing the economies of large-scale production.

What do you understand by cooperative societies? Explain their features.

Answer

Cooperative Society — A cooperative society is a voluntary association of persons who join together to safeguard their interests. It represents an attempt by the poor to protect themselves from being oppressed by the rich. It is based on the principles of self-help, equality, democracy and freedom. Features of a Cooperative Society:

1. Voluntary Association — A cooperative society is essentially a voluntary association of persons desirous of improving their economic status through joint action.

2. Religious and Political Neutrality — The membership of a cooperative society is open to all irrespective of caste, creed, religion or political affiliation.

3. Separate Legal Entity — After registration, a cooperative society becomes a distinct body independent of its members.

4. One Man One Vote — Every member has one vote irrespective of the number of shares held by him.

5. Service Motive — The primary aim of a cooperative society is to provide service to its members. Its motto is 'each for all and all for each'.

6. Registration — Registration of a cooperative society is compulsory. Registration is done by the Registrar of Cooperative Societies.

7. State Control — Government exercises regulation and control over cooperative societies.

8. Equitable Distribution of Surplus — The profits of a cooperative society are distributed not in proportion to the share capital contributed by the members. Rather, it is based on the volume of business transacted by a member with the cooperative society.

A group of artisans in a rural village decides to form an organization to collectively procure raw materials and market their finished goods to improve their economic position. Which type of cooperative society should they form? Explain its benefits in this scenario.

Answer

The artisans should form an Industrial Cooperative combined with the benefits of a Marketing Cooperative.

Benefits in this scenario:

1. Easy Procurement of Raw Materials — The industrial cooperative will provide raw materials, tools and other facilities to its artisan members at reasonable cost,

2. Improved Bargaining Power — By coming together, the artisans gain greater bargaining power both while purchasing raw materials in bulk and while selling their finished products in the market.

3. Elimination of Middlemen — The cooperative establishes direct links with suppliers and customers, eliminating middlemen.

4. Economies of Large-Scale Production — Even though individual artisans are small-scale producers, working through the cooperative allows them to enjoy the economies of large-scale production.

5. Improved Quality of Products — The cooperative helps artisans improve the quality of their products.

6. Marketing Functions — The marketing arm of the cooperative performs essential functions and marketing research for the benefit of its members.

7. Remunerative Prices — The produce of different artisans is pooled together and sold by the society at reasonable prices.

8. Financial Support — Marketing cooperatives sometimes provide financial help to their members.

Explain the merits and demerits of cooperative societies.

Answer

Merits of Cooperative Society:

1. Ease of Formation — Any ten adults can join together and form themselves into a cooperative.

2. Open Membership — Any person having a common interest can become a member of a cooperative society and can leave the society at his own pleasure.

3. Limited Liability — The liability of every member is limited to the extent of his share in the society's capital.

4. Democratic Management — Management of a cooperative society is fully democratic. Every member has an equal vote irrespective of his capital contribution.

5. Internal Financing — A large part of the profit of a cooperative society is transferred to general reserve every year.

6. Low Operating Costs — The office-bearers of a cooperative society offer honorary services. Therefore, the cost of management is low.

7. Cheaper and Better Supplies — Cooperative societies supply better quality goods at cheaper rates,the focus is on the welfare of members.

8. Distributive Justice — The profits of a cooperative society are distributed equitably among its members. A specified portion of profits is transferred to the Statutory Reserve Fund which increases the financial strength of the society.

Demerits of Cooperative Society:

1. Limited Capital — A cooperative society is formed usually by people with limited means.

2. Inefficient Management — A cooperative society is managed by a committee consisting of office-bearers elected by the members. These office-bearers may not be competent and experienced.

3. Lack of Motivation — Honorary office-bearers of a cooperative society have very little incentive to work hard for the society.

4. Non-transferability of Interest — The shares of a cooperative society are not transferable. A member who wants to quit the society has to submit his shares to the society in order to get his money back.

5. Lack of Secrecy — The affairs of a cooperative society are openly discussed in the meetings of its members.

6. Excessive Government Control — The day-to-day working of a cooperative society is bound by legal rules and regulations

7. Rift Among Members —Quite often disputes arise among the Managing Committee and the members.

What is the purpose of forming a cooperative society? Describe the characteristics of cooperative societies.

Answer

Purpose of Forming a Cooperative Society:

The cooperative movement is the outcome of economic and social imbalances created by the Industrial Revolution. The Industrial Revolution led to the division of society into the capitalist and labour classes.

Characteristics of Cooperative Societies:

1. Voluntary Association — A cooperative society is essentially a voluntary association of persons desirous of improving their economic status through joint action.

2. Religious and Political Neutrality — The membership is open to all irrespective of caste, creed, religion or political affiliation. Cooperative societies represent universal brotherhood.

3. Separate Legal Entity — After registration, a cooperative society becomes a distinct body independent of its members

4. One Man One Vote — Every member has one vote irrespective of the number of shares held. This makes the organisation truly democratic.

5. Service Motive — The primary aim is to provide service to members, not to earn profits.

6. Compulsory Registration — Registration of a cooperative society is compulsory and is done by the Registrar of Cooperative Societies.

7. State Control — Government exercises regulation and control over cooperative societies to ensure healthy growth.

8. Equitable Distribution of Surplus — Profits are distributed based on the volume of business transacted by a member with the society. A limited dividend up to 10 per cent is paid on share capital, and the rest is distributed equitably.

Describe various types of cooperative societies.

Answer

On the basis of services rendered, cooperatives may be classified as follows:

1. Consumers' Cooperative — It is formed to supply essential goods of standard quality to consumers at fair prices. It eliminates middlemen by buying directly from producers.

2. Industrial Cooperatives — These are formed by small producers and artisans to increase production and face competition. The society may provide raw materials, tools and facilities, or may buy and sell the goods produced by members.

3. Marketing Cooperatives — These are formed by small producers and artisans to secure better prices for their products. They perform functions such as transportation, warehousing, packing, grading and selling.

4. Cooperative Farming Societies — These are formed by small farmers who pool their land and resources to enjoy the benefits of large-scale farming. They use improved seeds, fertilisers, irrigation and modern machinery to increase productivity.

5. Cooperative Credit Societies — These are formed by people of limited means to provide financial help to members at reasonable rates. They also encourage saving and thrift.

6. Cooperative Housing Societies — These are formed to provide residential accommodation to members either on ownership basis or at fair rent. They are especially useful for poor and middle-class people in cities.

Thus, cooperative societies provide different types of services according to the needs of their members.

Explain how a cooperative is formed.

Answer

The steps involved in the formation of a cooperative society are as follows:

1. Joint Application by Members — Any ten persons above the age of 18 years and having common interest may submit a joint application for being formed into a cooperative society.

2. Application to the Registrar — In order to get a cooperative society registered, an application in the prescribed form must be submitted to the Registrar of Cooperative Societies of the state in which the society's registered office is to be situated.

3. Information to be Contained in the Application — The application should contain the following information: (a) The name and address of the society. (b) The aims and objects for which the society is being registered. (c) The names, addresses and occupations of the members. (d) Division of share capital. (e) Method of admission of new members. (f) Two copies of the byelaws (rules and regulations) of the society. A cooperative may adopt model byelaws given in the Cooperative Societies Act instead of framing its own byelaws.

4. Scrutiny by the Registrar — Once the application for registration is submitted, the Registrar will carefully scrutinise.

5. Issue of Certificate of Registration —After the scrutiny,certificate of registration will be issued.

6. Becoming a Body Corporate — After getting the certificate of registration, the society becomes a body corporate having a separate legal entity and limited liability of its members.

Members of a cooperative society pool their land and use modern agricultural techniques to increase productivity. What is this cooperative society called? How does it help in improving yield and reducing costs?

Answer

This cooperative society is called a Cooperative Farming Society (also known as an agricultural cooperative). It is a voluntary association of small farmers who join together to avail the benefits of large-scale mechanised farming. It helps in improving yield and reducing costs in the following ways:

1. Use of modern techniques: Farmers can use tractors, harvesters, irrigation facilities, improved seeds and scientific methods, which increase productivity.

2. Economies of scale: Since farming is done on a larger area, the cost of seeds, fertilisers, machinery and irrigation is shared, reducing the cost per farmer.

3. Better use of land: Small and scattered plots are combined, making cultivation more efficient.

4. Expert guidance: The society can afford trained agricultural experts and better planning, which improves crop yield.

5. Shared machinery: Expensive machines are bought or hired collectively, so individual farmers do not have to bear the full cost.

Thus, a cooperative farming society helps small farmers increase production and reduce expenses through joint effort and modern farming methods. **: