Maharashtra Board Class 12 Cooperation Chapter 10 Challenges Before Co operative Sector PDF Download

Challenges Before Co-Operative Sector

10.1 Introduction

Liberalization, privatization and globalization have gained great importance in economic system. Government should not interfere in economic system. Economic system must run according to the market mechanism. Market mechanism and price mechanism will solve all economic problem through this view point many countries accepted globalization.

Globalization came into existence by connecting economy of one with other countries in the world. Due to industrial revolution in transport and communication, development in information and technology, there is change in the living of people of each and every country. The needs of citizens are changing and due to changing needs and increasing population to fulfill the need every country have to conduct economic transaction with other nation.

There was impact of global economy on economic system. The impact of global economy was also on co-operative sector.

Due to economic system there was competition between developed and undeveloped countries. This competition had some good and some bad effects. The developed countries were benefitted due to this competition and there was adverse effect on undeveloped countries.

In future the co-operative movement has to develop on their own efforts and they have to compete with private sectors. For this, the co-operative society has to increase their efficiency and competitiveness to accept the challenges of globalization. Due to which co-operative sector faced many problems, challenges.

Teacher's Note

Globalization means countries doing business with each other. Just like you can buy toys from America or China now, Indian farms can sell their goods to the whole world.

Exam Trick

Remember: Globalization = world market. When India opened its doors in 1991, co-operative societies had to fight with big multinational companies.

Points to Remember

Globalization means opening economy to world trade.
It came from transport and technology revolution.
Developed countries got benefits but undeveloped countries had problems.
Co-operative sector had to become more efficient to compete.

10.2 Challenges Before Co-Operative Sector

Due to development in transport, communication and revolution in information and technology. There was need of connecting economic system with other nation. In July 1991 then finance minister Dr. Manmohan Singh declared the New Economic policy. Liberalization, Privatization and Globalization was accepted.

Due to which minimizing the interference of government in economic system, increasing private participation in government sectors, opening economy for supply of goods, services, capital, technologies, labour to other nations due to which there was competition. The benefit for which was to the producer, consumer, labour, investor.

But due to this there was competition in two groups. The developed countries were benefitted and an under developed countries had adverse effect. Due to this, following challenges were in front of co-operative sector:

1. Raising capital

2. Increasing production cost

3. Expanding market

4. Lack of government aid and grant

5. Qualitative development

6. Inefficient management

7. Lack of organize efforts

8. Consumers satisfaction

9. Participation in rural development

10. Increasing political interference

11. Recovery of loan

12. Modernization

1. Raising Capital

Co-operative societies are established by weaker section of the society. Hence, members cannot provide large amount of capital to the society. Due to inefficiency and corruption the trust on co-operative society is reduced. Due to which it is difficult to collect capital. The aim of Joint stock company is to earn profit so it is easy for Joint stock company to collect capital. Hence, collecting capital is a big challenge for co-operative sector.

2. Increasing Production Cost

In production process of co-operative society traditional and labour based method is implemented. Due to labour based system, the production is not done with modern technology and capital is done with the use of manpower. The production of cooperative society is also at small scale. Due to which the production cost is more as compared to Joint stock company.

To control the increasing production cost is the big challenge of cooperative sector. To stand in the market the co-operative society must change according to their changing environment. They cannot avoid new technology, new production method, research, etc.

3. Expanding Market

The big business organization and Joint stock company produce goods at large scale. There is variety in production and large amount is spend on advertisement due to which their market is expanding regularly. But the capital of co-operative society is limited they cannot conduct production on large scale. Their production cannot compete with the production of international companies.

To compete in global market the co-operative society must adopt the changing conditions in the market and make them able to compete in international market. They must conduct market research for expanding the market. It is difficult for co-operative society to stand in the competitive market.

Teacher's Note

Co-operative societies in India like milk unions have to compete with big companies. Just like a small vegetable seller has to work harder than a big supermarket.

Exam Trick

Remember: Co-ops are small. Big companies are strong. Small shops cannot compete with big malls. Think the same way for co-operative societies.

Points to Remember

Co-operative societies have limited capital to raise.
They use old methods and machines, so costs are high.
Big companies spend more on advertisements.
Co-ops cannot produce in large quantities.
They need modern technology to compete.

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