Budget 2026-27 Empowers Cooperatives to Professionalize, Expand Markets, and Increase Farmers’ Income; Dr. K. K. Tripathy

In conversation with Sanjay Verma, Founder, Coop Talks

Q1.Do you think this year’s budget is a big step towards strengthening the cooperative sector?

• The Budget envisages promoting entrepreneurship, value addition, and collective resource management. It also empowers cooperatives to professionalize operations, expand markets, and increase farmer incomes. A framework has been suggested for resilient, integrated cooperative networks rather than fragmented entities.

 Q2,The government has extended the existing income tax deduction available to primary societies. Until now, this benefit applied to cooperatives engaged in supplying milk, oilseeds fruits, or vegetables raised or grown by their members. The Budget proposes to widen the scope of this deduction to also include primary cooperatives engaged in supplying oilseeds fruits, or vegetables raised or grown by their members. How do you see this provision? To what extent, it will be beneficial for such societies?

• The Union Budget 2026, has taken a significant step towards empowering the primary cooperatives and enabling them to improve their competitiveness. This provision widened the scope of the existing income tax deductions to include primary cooperatives supplying oilseeds, fruits and vegetables produced by their members. This move besides ensuring deeper integration with federal cooperatives, would position primary cooperatives to compete more effectively.
• Reduced tax burden will lead to less corporate/income tax and increased earnings in the cooperative sector. Lower taxes mean more funds at the disposal for investment in infrastructure, technology, quality inputs and working capital. Further, this enabling provision would encourage primary cooperatives to supply essential agri-inputs to federal cooperatives, thereby strengthening vertical integration within the cooperative ecosystem. This would also lead to ensuring member farmers’ better access to inputs at lower costs.
• When overall costs reduce, the cooperatives can register improvement in efficiency and product quality. When primary cooperatives are encouraged to supply cost-effective inputs to the federal cooperatives, it would create economies of scale and would help enhancing competitiveness in community enterprises.

Q3 The Budget allows inter-cooperative society dividend income as deduction under the new tax regime to the extent it is distributed to its members? What will be its implications?

• Budget 2026 provides that dividend income received by one cooperative society from another cooperative society will be deductible under the new tax regime, provided the income is passed on to members. This would prevent double taxation within the cooperative chain and ensure that tax is effectively levied only at the member level. The change makes investments between cooperatives more attractive by removing tax leakage. It is also expected to encourage stronger linkages among cooperatives at various levels—primary, district, state, and national—thereby creating integrated and resilient cooperative networks.

Q4.The Budget proposes to allow exemption for a period of 3 years, to dividend income received by a notified national cooperative federation, on their investments made in companies upto 31.1.2026. This exemption would be allowed only for dividends further distributed to its members cooperatives. What are your views on this?

• Through Budget 2026, the Government seeks to promote investment and income generation within the cooperative sector and to ensure that the resulting gains accrue back to cooperatives. The measure encourages professional investment behaviour across the cooperative ecosystem by reducing immediate tax erosion on investment returns. National cooperative federations can now invest in companies—including joint ventures, processing units, and logistics firms—and earn returns more efficiently. This provision effectively nudges cooperatives towards professional, market-oriented investment strategies, moving them away from dependence on grants or subsidies.

Q5. The Budget talks of making targeted efforts for increasing farmers income through productivity enhancement and entrepreneurship, with special attention to small and marginal provisions. Do you think cooperatives will be benefitted? What opportunities lie for cooperatives?

• Cooperatives are well placed to benefit, provided they prepare for the demands of an increasingly competitive business environment. As community-rooted collective institutions, they can effectively deliver income-enhancing interventions for small and marginal farmers through aggregation, risk reduction and improved market access—outcomes that individual farmers cannot achieve alone. With better governance, transparency and professional operations, cooperatives can evolve from service providers into sustainable income-generating platforms.

 Q6. The budget talks of integrated development of 500 reservoirs and Amrit Sarovars and strengthening of fisheries value chain in coastal areas. It also talks of supporting Animal Husbandry sector in entrepreneurship development. Do you think this provides big opportunities to cooperatives?

• By focusing on reservoirs, fisheries, and livestock entrepreneurship, the Budget creates a platform for cooperatives to drive real economic impact. Cooperatives can manage shared resources, scale up production, and add value through processing, logistics, and branding. Acting as collective engines of enterprise, they can convert public infrastructure and traditional livelihoods into profitable, resilient ecosystems for small and marginal farmers.

Q7.The budget proposes setting up of High-Level Committee on Banking for Viksit Bharat. How can cooperative sector benefit for this? What do you suggest for strengthening cooperative banking?

• The High-Level Committee provides an opportunity to modernize, professionalize, and expand banking sector including cooperative banking. This is directed towards preparing our banking and financial sector for realizing the dream – viksit bharat @2047. This gives us an opportunity to ensure reform measures for cooperative banking sector ranging from capital infusion and recapitalization to professionalization and governance, technology adoption and digital transformation, and integration with producer cooperatives and FPOs, service diversification. This, besides, directly supporting the cooperative ecosystem, offers ample opportunities for the sector to become a robust engine for rural credit, entrepreneurship, and financial inclusion.

Q8.The budget talks of launching Mahatma Gandhi Swaraj initiative to strengthen khadi, handloom and handicrafts. How can handloom coops, a comparatively weaker sector, benefit from this?

• Handloom cooperatives can unlock significant growth through improved market access, branding, financial support, and skill modernization, boosting income stability for artisans. Success, however, depends on upgrading governance, ensuring transparency, leveraging advanced technologies, and professionalizing marketing strategies.

Q9. The government has allocated Rs 450 crore to National Cooperative Exports Ltd in   2025-27 to promote cooperative exports and enhance international market access. Do you think it will be a big boost to cooperative exports? Will it help in enhancing international market access? What more suggestions will you make so that increased allocation proves beneficial for cooperatives?

• The Rs 450 crore allocation to NCEL provides a strong push for cooperative exports by financing marketing, logistics, and international compliance. Coupled with capacity-building, quality certification, and digital promotion, this support can enhance global market access, strengthen cooperative clusters, and enable small cooperatives to compete effectively on the world stage.

 Q10.As a priority, 364 crore has been made in 2026-27 for computerization of PACS? What are your views?

• The allocation for computerization of PACS will be a game changer for rural cooperatives. It will ensure faster, more transparent and accountable credit delivery, strengthen existing governance and accountability mechanism and enhance financial inclusion – right at the community. The need of the hour is, however, to ensure extension of timely and proper training and capacity building support services for modernizing primary cooperative societies’ network so that millions of farmer members would be able to avail the intended benefits.

 Q11. Capacity building and education have received big push, with Rs 300 crore allocation? Your views please

• The need of the hour is to convert allocations into tangible outcomes. The enhanced funding for capacity building and education must be deployed judiciously, as professionalizing cooperatives is the pressing priority. By strengthening management, improving operational efficiency, and empowering youth and women, cooperatives can become competitive, transparent, and sustainable institutions that deliver real benefits to their members.

*The views expressed are personal