Kerala State Cooperative Agricultural and Rural Development Bank Ltd.

PERFORMANCE OF CO-OPERATIVE SECTOR CREDIT STRUCTURE

            The British East India Company miserably exploited India by absorbing all her resources during pre-independent period.  After independence earnest steps were taken to make her healthy in every respects.  It was generally admitted by the Architects of India that co-operatives can act as an effective media for the socio-economic reconstruction of the country.  Hence attempts were made by the Planning Commission to develop the co-operative movement as a self reliant one by augmenting the resources through mobilisation of savings in urban and rural areas, promoting integrated rural development by strengthening the links between credit, supply of inputs, processing, marketing and distribution of essential commodities and developing of weaker sections of the community.

            The growth of Cooperative movement in Kerala was insignificant during pre-independent era.  Only 1669 cooperatives were functioning in the state with a total working capital of Rs.92.21 lakhs.  The membership and paid up share capital were Rs.2.05 and Rs. 31.79 lakhs respectively.  Credit and non-credit operations during the period were also nominal.  Loan disbursed during the year 1946 was Rs.10.62 lakhs only.  Performance in the area of Consumer, Marketing etc. were also not remarkable when compared to the exquisite achievements during the succeeding years.  A comparative statement of performance of the sector during pre and post-Independent era is shown in Annexure-I.

            Before the formation of State of Kerala, Cooperatives under the area were administered by the Travancore Cooperative Societies Act V of 1112(M.E), Cochin Cooperative Societies Act XXVI of 1113(M.E) and Madras Cooperative Societies Act 1932.  After the integration of Travancore and Cochin, Travancore-Cochin Cooperative Societies Act 1951 came into force with effect from 1.9.1952.  After the formation of Kerala State, the Kerala Cooperative Societies Act of 1969 came into force with effect from15.5.1969 in order to enact a uniform law on cooperation applicable throughout the State.  Consequent on the introduction of Kerala Cooperative Societies Act 1969, Societies with unlimited liability ceased to exist and societies with limited liability came into existence.  Thereafter Government of Kerala passed the Kerala Cooperative (Amendment) Act 1999 which came into force with effect from 1.1.2000.  Providing of membership to local body institutions, Deposit guarantee scheme in Primary Agricultural Credit Societies, Consortium Lending Scheme, Cooperative Development and Welfare Fund, Independent Election Commission, Separate Audit Wing and Vigilance Wing, and Cooperative Examination Board are the new provisions made in the Amendment Act.

            Kerala can claim to have an elaborate and efficient rural credit system administered through primary Cooperatives, Central Cooperative Banks and Apex Cooperative Banks.  The cooperative credit structure in Kerala comprises of 2 parts viz. (i) short and medium term credit structure (ii) long term credit structure.  The short and medium credit requirements are met by a three tier system consisting of State Cooperative Banks at middle level and 1628 Primary Agricultural Credit Societies at the base level.  In addition to this 85 urban cooperative Banks and 1013 Employees credit Cooperatives are meeting the Non-Agricultural Credit requirements of their members.

            Position of PACS in Kerala is strong and their performance is remarkable as disclosed from the following table.

            The Primary Agricultural Credit Societies in the state which were once upon a time mere Nanaya Vinimaya Sahakarana Sangham in course of time transformed themselves into the present Agricultural Credit Societies which can cater all the credit needs of the rural mass and capable of doing all modern Banking Business.  They spread their wings in all spheres of socioeconomic activities, got entrenched in diverse sectors of the economy and touched the lives of all sections of  the people at large.  Apart from credit activities, Self Help Group Scheme, Kissan credit Card Scheme and Cooperative ‘Neethi Medical Stores’ Scheme are implemented through Primary Agricultural Credit Societies .  Further, a Tea Factory with a project cost of Rs.210.00 lakhs is run by the Malanad Service Co-operative Bank with the assistance of  ICDP Idukki

            During the period of emergency when stringent actions were taken against indigenous money lenders, there arose a social problem.  The petty tradesmen and village artisans who were depending on these money lenders could not get credit facility from anywhere.  This credit gap which posed a social problem was effectively tackled by the co-operatives in Kerala.  All the credit societies joined together to tap the internal resources from the state itself by initiating a special Deposit Mobilisation Campaign which commenced in the year 1976 as a novel idea to stabilise the Co-operative Sector.    The entire mechanism supported the scheme and it was a grand success.  Thereafter the Deposit Mobilisation Campaign is organised every year with a view to increase resources position of Primary Agricultural Credit Societies.  The performance of these societies was spectacular in as much of the programme having achieved 329% of the target fixed for the mobilisation of deposits.  An amount of Rs.7245.57 crores were collected during the period from 1976 to 2001 against the targeted amount of Rs.2201.25 crores. (Annexure II).

            Long Term Credit structure consists of Primary Agricultural and Development Banks federated into an Apex Body viz. Kerala Co-operative Agricultural and Rural Development Bank.  Various developmental purposes covered by the Bank’s lending activity include minor Irrigation, farm mechanisation, land development, cultivation of plantation/horticultural crops and diversified activities like daring, fish culture, poultry farming biogas, goat rearing, sericulture etc.  The Primary Agricultural Development Banks are having 8.24 lakhs members and share capital of Rs.75.40 crores.  The working capital of there Banks is Rs.1004.62 crores.  Loans advanced per year comes to Rs.311.00 crores and percentage of overdues at member level is 6 only.

Housing Co-Operatives

                In Co-operative Housing Sector, the Kerala State Co-operative Housing Federation is the State level Apex Institution and Primary  Housing Co-operative Societies are the institutions at base level.  The Federation provides loans to Primary Housing Co-operatives by availing loans from the National level financial institutions like Life Insurance Corporation of India, HUDCO, etc.  The main function of Primary Housing Co-operatives is to issue loans to members for construction or purchase of residential Houses.  Out of the 376 Primary Housing co-operatives, 128 societies are running in profit, 197 are running on loss and remaining 51 societies are functioning without loss or profit.  The Housing Federation is able to affiliate only 207 Primary societies out of 376 because of it’s limitation to avail  adequate finance from National level financial institutions.  Average loan issue of the Federation per year comes to Rs.60.00 crores.  State Government supports the Federation and Primaries by providing share capital contribution.  An amount of Rs.8.65 crores have been provided to the Federation by Government so far and balance outstanding after refund is Rs.5.35 crores.

Co-operative Storage

            The  Co-operative storage programme maintained it’s progress during 7^th plan period.  The role of the National Co-operative Development Corporation is significant in implementing storage programme in the State.  State Government accorded sanction to implement the  World Bank aided NCDC storage project to increase the capacity.  The  status of storage programme is shown below.

                                                                                           (Capacity in Metric tonnes)

            Co-operative Marketing structure in the State is a two tier system with the Marketing Federations at apex level and Primary Marketing Societies at base level. There are three State level Apex Federations viz Kerala State C-operative Marketing Federation, Kerala Co-operative Rubber Marketing Federation and Kerala Kera Karshaka Sahakarana Federation.  Two Multi State level Co-operatives are functioning in Karnataka State viz Central Arecanut  & Cocoa Marketing & Processing Co-operative Ltd (CAMPCO) AND Indian Coffee Co-operative Marketing Society Ltd (COMARK).  While CAMPCO is jointly sponsored by Kerala and Karnataka Governments, the COMARK is organised covering the States of Kerala, Tamil Nadu and Karnataka.  Apart from these Co-operatives, Kerala Rubber Co-operatives (RUBCO), Regional Agro Industrial Development Co-operative Society Ltd (RAIDCO) are functioning in the State at State level and Regional level respectively.  The present status these societies in brief is shown below.
(Rs.in lakhs)

Unlike the Credit Sector, the performance of Co-operative Marketing structure is not encouraging.   487 Primary Marketing  Co-operatives with a paid up share capital of Rs.1804.49 are functioning  in the State. Total membership in these primary societies is 2.21 lakhs.  Out of the 487 societies, 30 societies are running on profit and the remaining 457 co-operatives are running on loss.  Besides Marketing Co-operatives, Primary Agricultural Credit Societies and SC/ST Co-operatives are also engaged in the marketing of agricultural produce.  Value of agricultural produce marketed per year comes to Rs.375.00 crores.  Main problems faced by the Marketing Societies for their poor performance are the absence of linkage with Apex organisation, incapability of Federations to provide adequate support to primaries, inadequacy of working capital  and poor management.  Even so, the Marketing Co-operatives in the State have intervened at times of crisis to provide the farmers the much needed help viz: at the time when they faced acute problems in Rubber, Coconut, Cashew and paddy on account of liberalisation policies.

            Co-operatives continue to be the major organised sector in the field of distribution of agricultural requisites including fertilisers which are made available from FACT , IFFCO and other leading manufacturing agencies.  Value of agricultural requisites distributed by co-operatives comes to Rs.185.00 crores per year.

Co-operative Processing

            Co-operative sector actively entered in processing area from 8^th plan period with a view to increase production in the state and to provide employment opportunities (direct and indirect).  Major processing units undertaken by various co-operatives in the state are as shown below.

Sl.No. Types of processing units undertaken

Name of co-operative Institution operating the units

1.      Crumb Rubber Factor Chenappady  2.      Inter mix factory, Kaduthuruthy       3.      Procured Tread Factory                    4.      Rubberised Coir Product Mfg. Unit 5.      Rubber Wood processing and Furniture Mfg. Unit 6.      Sreekantapuram Latex Ltd 7.      Tread Mfg.Unit 8.      Cycle Tyre and Tube Mfg. Unit 9.      Hawai Chappal Mfg.Unit 10.  Note Book Mfg. Unit 11.  Neethi Gas Refilling Plant 12.  Curry Powder fg. Unit 13.  Coconut Oil Complex 14.  Malanad Tea Factory 15.  Priyadarsini Tea Factory 16.  Cattle Feed Factory 17.  Milk Pasteurization Plant 18.  Honey Processing Unit 19.  Ayurvedic Medicine Mfg.Unit

Kerala State Co-operative Rubber Marketing Federation Kerala Rubber Co-operatives Kerala Co-operative Consumer Federation RAIDCO KERAFED Malanad Service Co-operative Bank Idukki District Cattle Feed Mfg.&Mkg.CS. Elacckal Milk Supplies CS. Kerala Coop:SC/ST Federation.

Establishing of mineral Water unit under RAIDO, Automobile Tyre Manufacturing Unit and Casual Sports shoe Manufacturing Unit under RUBCO are programmed during the X^th plan period.

Consumer Co-operatives

            Consumer Co-operatives in the State played a vital role in the distribution of essential commodities at reasonable price ever since the food scarcity occurred during Chinese Aggression period in 1962. There after Consumer Co-operatives through out the state have been functioning as a parallel machinery to augment and supplement the public distribution system. Ration shops, Departmental Stores, Sahakarana Maveli stores, Super Markets, Sahakarana Neethi Stores and Neethi Medical Stores are functioning under Co-operative sector. Huge amounts have been pumped by the Govt. of Kerala by way of subsidy, share capital and loan for implementing the above mentioned scheme.

            Co-operative Consumer Sector in Kerala comprises of Kerala Co-operative Consumer Federation at Apex level, District Wholesale Stores at central level and Primary Consumer Co-operatives at base level. 14 District Wholesale Stores and 4817 Primaries including School/College and University Central Stores are functioning in the State. Further, Primary Agricultural Credit Societies, SC/ST Co-operatives, Marketing Co-operatives and some Employees Co-operative are also distributing Consumer goods to the public.  Sales turnover of Consumer articles will come Rs. 409.00 crores.

            Most of the primary consumer stores except school/college stores are running on loss. The financial condition of District Wholesale Stores is also pathetic. Most of these stores are either defunct or dormant.   Excess staff, misutilisation and mismanagement of funds and incapability to survive against the foul play of private Traders are the major reasons for the poor position of  co-operative consumer sector in the state.  Even the Kerala State Co-operative Consumer Federation could not survive unless adequate and active financial support was provided by State Government  at frequent intervals.   Proper and effective costing exercise and planning  are therefore imperative for the healthy existence of co-operative consumer sector in Kerala        

Scheduled Caste/Tribe Co-operatives

            SC/ST co-operatives were organised in the State for the upliftment of the economic conditions of Scheduled Castes/Tribes.  Assistance by way of subsidy, grant and share capital is provided to these societies under SCP and TSP, NCDC and Government of India also support these societies by providing loan, grant, and share capital contribution.  Even though huge amounts have been floated for implementing the schemes,  no fruitful results have been achieved.  Lack of guidance, mismanagement and misutilisation of funds are the main reasons for the failure of SC/ST co-operatives in the State.  New suitable small and medium sized projects have to be identified and implemented for the uplift of the SC/ST community in the State.

            The Kerala Co-operative SC/ST Federation was established as an Apex institution of SC/ST co-operatives.  The Federation is having 566 members and paid up share capital worth Rs.300.95 lakhs.  Minor Forest produce collection is the main activity undertaken by the Federation.  A Cheevakai processing unit, Honey processing unit, Ayurvedic Medicine Manufacturing unit and a Petrol/Diesel outlet are functioning under the Federation providing employment to the SC/ST community.  Inspite of these developments, the institution is running on loss of Rs.14.10 lakhs.