Story so far: The serious financial crisis India’s cooperative societies are in was on full display on March 10 when the Center informed the Lok Sabha that out of 8.48 lakh societies, 2.11 lakh are in loss, 1.41 lakh are non-functional and 47,688 are under liquidation. It is reported that profit/loss data is not available for 99,325 co-operative societies. Union Cooperation Minister Amit Shah In a written reply. Only 3.49 lakh cooperative societies are in profit.
Uttar Pradesh, one of the largest states, has the highest percentage of dead bodies at 41.8% (16,997), followed by Madhya Pradesh at 34.4% (18,545), Rajasthan at 31.8% (13,357), Andhra Pradesh at 30.1% (5475) and West Bengal at 27.8% (8,930). The situation in smaller states is even worse – Nagaland (72.7%), Delhi (67.1%), Sikkim (55.3%), Manipur (52%) and Chandigarh (46.4%).
In contrast, Maharashtra, which has the highest number of cooperative societies (2.26 lakh), has the lowest share of inactive societies (2,739 or 1.21%). A similar pattern emerges in Gujarat, where 6,272 out of 86,519 societies (7.25%) are inactive, followed by Karnataka (7.54%) and Haryana (8.23%).
Among the top ten states with the highest number of cooperative societies, the southern and western states—Maharashtra, Gujarat, Tamil Nadu, Karnataka and Telangana—have managed to keep most of their societies operational. However, in West Bengal and the Hindi belt—UP, Madhya Pradesh, Rajasthan—at least 25% of the society is inactive.
Functional Co-operative Societies in Loss, Liquidation
The condition of functioning cooperative societies is also bad. On an average, 31.75% of cooperative societies in the above mentioned states are in loss. Poor performers include Telangana (47.22%), Madhya Pradesh (38%), Haryana (41%) and Tamil Nadu (35.3%), while Maharashtra is at the borderline (31.14%). States like Gujarat (20.02%), Karnataka (25.9%), Uttar Pradesh (28.98%) and Rajasthan (23.53%) have performed better.
Apart from the loss-making societies, 47,688 societies are under liquidation. The five states with the highest number of cooperative societies – Maharashtra (2,25,986), Gujarat (86,519), Telangana (60,858), Karnataka (46,969) and Madhya Pradesh (53,965) – have 44,561 (93.44%) societies under liquidation.
Although the western and southern states have managed to keep more societies afloat, the data clearly indicates that most of them are either in losses, are subject to liquidation, or data are not available regarding their profit/loss status. On the other hand, West Bengal and the Hindi belt have managed to keep more societies in gains than losses.
Why are cooperative societies performing poorly in these states?
Analysis of the top five states – Maharashtra, Gujarat, Telangana, Karnataka and Madhya Pradesh – points to five sectors whose performance has declined – dairy, housing, credit and savings, labor and women welfare.
Here’s a look at how the numbers stack up and what’s wrong with them.
dairy
One of the most affected sectors is dairy cooperatives. Defined as a voluntary group of dairy farmers for collective procurement, processing and marketing of milk and its products, 14,251 dairy cooperative societies (DCS) in five states are either non-functional or under liquidation. In Madhya Pradesh, out of 53,965 societies, 2,793 are non-functional, and 3,952 are under liquidation, while Maharashtra and Gujarat, which have the highest number of dairy cooperatives, are faring better – 396 and 271 societies, respectively, are non-functional or under liquidation.
The dairy sector serves as a financial buffer for farmers during crop failures, droughts, floods and market volatility due to its stable income. National Bank for Agriculture and Rural Development (NABARD). However, in the post-COVID period (2022-23), the dairy industry faced tough times due to unreasonable fall in milk prices, which did not cover the production costs of farmers. Since then, with renewed farmer engagement and sustainable feed programs, milk production has increased by 25% in the period October 2024-March 2025, according to a report by financial services firm Systematics. But unseasonal rains, geopolitical disturbances in Asia and strong festive demand have led to increased milk procurement costs, depleting cooperatives’ surplus stocks.
The Center has urged cooperative societies to ensure that 100% roundness and sustainability in the dairy sector by using cattle skins and bones in addition to dung, increasing farmers’ income.
Accommodation
Maharashtra and Gujarat top the list of non-functional or under-liquidated housing cooperative societies, with 2,102 and 2,457 societies, respectively, out of a total of 8,033 non-functional or liquidated housing cooperative societies. Housing cooperatives are a democratically controlled, legally incorporated group formed to meet the housing needs of members and improve living conditions. With a higher number of housing cooperative societies in urban areas, societies in Maharashtra, Gujarat and Telangana are facing financial crisis, mainly due to depositors losing money by investing in scam-hit cooperative banks like PMC, New India and Mumbai Bank.
Other issues plaguing housing cooperative societies are non-payment of maintenance charges by members, mismanagement of funds by the societies and long-running redevelopment processes.
credit and savings
Credit and thrift societies are member-owned financial cooperatives that promote the savings, credit, and insurance needs of their voluntary members. The terms and conditions of mutual assistance are decided by the members themselves. Gujarat, Telangana and Madhya Pradesh have the highest number of non-functional credit and thrifts Societies contribute to 4,128 out of 4,898 such co-operative societies. In Maharashtra and Madhya Pradesh, 1,452 and 1,424 housing cooperative societies are under liquidation, respectively.
Most such societies are small with reserves of less than ₹ 1 lakh and are not directly supervised by the Reserve Bank of India (RBI). Due to lack of oversight, lending and interest rates are set by these committees and are often not compensated. High-cost borrowers are offered higher interest rates, putting such societies under severe stress. Mismanagement of scam-hit co-operative banks and credit unions has also increased the problems of these societies.
Labor
A worker-owned, democratically run cooperative is a labor society that helps workers in unorganized sectors earn fair wages, secure contracts, and profits through work. Labor cooperatives constitute a very small portion of non-functional societies in five states, except Telangana. In Telangana, 2,134 labor societies are inactive while 185 are under liquidation.
Successful worker cooperatives like Indian Coffee House, Mahila Grih Udyog Lijjat Papad and Mumbai Tiffin Box Suppliers Trust (Mumbai Dabbawala) have created history by not only adapting but by retaining their customers and providing better services than commercial competitors. However, in Telangana, reports suggest that many cooperative societies involved in construction have gone bankrupt. One such example is the Eturu Grama Prajala Isuka Quarry Labor Contract Cooperative Society Limited, which was imposed a GST liability of ₹3.4 crore because third-party sand miners had excavated sand worth ₹24.5 crore but paid a smaller amount to the co-operative society.
women welfare
Managed by women to improve their socio-economic status, cooperative societies help provide women with job opportunities, easy access to credit, capital and credit facilities. Women cooperative societies are functioning well in all states except Madhya Pradesh, where 8,495 such societies have become defunct. Secondly, 562 women cooperative societies have become defunct in Telangana.
according to a StudyLimited access to formal finance, lack of connectivity to business networks, mobility restrictions and social barriers had severely hindered the progress of women entrepreneurs who were part of such cooperatives in Madhya Pradesh. The study said that while 60% of women were aware of government schemes to support them, only 25% benefited from them and mainly depended on Self-Help Groups (SHGs) as their primary source of capital. Stress was also increased due to lack of support at home, with 80% of these women facing stress while juggling work, household responsibilities and caring for children.
What is the way forward?
With the implementation of the National Cooperative Policy, 2025, the Center has shown its intention to strengthen the cooperative system. Aiming to connect 50 crore people with the sector, Mr Shah has said Dalits, tribals and women are at the core of the new policy. The Center has already launched cooperatives in taxi services (Bharat Taxi) and plans to expand to insurance and green energy soon.
Critics, like Farm Union United Kisan Morcha has said that the new policy aims to provide cooperatives with corporate interests and centralized power with the central government instead of the states. It said the policy gave the Rashtriya Swayamsevak Sangh (RSS) and the BJP more control over the grassroots rather than helping the societies.
