Cooperative Democracy in Practice: Transforming Communities from Marginalisation to Development

Cooperative Democracy in Practice

Throughout the world, democracy is recognized  as a cardinal principle of the cooperative movement. The Rochdale Pioneers are regarded as the prototype of the modern cooperative society and the founders of the cooperative movement. They formulated eight fundamental cooperative business principles, which later became the basis of the International Cooperative Alliance’s (ICA) Cooperative Principles and laid the foundation for the modern cooperative movement. Among these principles, democracy—embodied in the concept of ‘One Member, One Vote’—is regarded as the kingpin, as it reflects the very essence of what Chartism stood for. Democratic management practices subsequently spread across the world, and the International Cooperative Alliance consistently upheld democracy as a fundamental principle in all its revisions and reformulations (1895, 1937, 1966, and 1995).

The ICA Statement on the Cooperative Identity (1995) comprises seven principles, of which the second principle addresses Democratic Member Control. In cooperatives, democracy encompasses not only rights but also responsibilities. It also involves nurturing the spirit of democracy within cooperatives, which is a continuous, demanding, yet socially valuable and indispensable task. In recent times, one of the greatest challenges confronting cooperatives in India has been the effective implementation and practice of the Principle of Democratic Member Control. Encouraging members to participate actively in the affairs of their cooperatives and to nominate themselves as candidates for elections has become a major challenge due to vested interests and other obvious reasons.

The revised draft (June 2026) of the Cooperative Principles, which is currently under circulation, reiterates the significance of the second principle, namely Democratic Member Control. Cooperatives are democratic  organizations controlled by their members. Persons elected or appointed to senior leadership positions are accountable to the members, who exercise their authority through their voice, their vote, and their active participation. In primary cooperatives, members normally enjoy equal voting rights based on the principle of one member, one vote. Cooperatives at higher tiers and those comprising distinct classes of members are organized on an appropriate democratic basis as determined by their members.

A defining characteristic of all sustainable democratic systems is that democracy requires the protection of sound laws, governance codes, procedures, and institutional processes, including well-formalised organisational and business management models. Accordingly, the Constitution of India, the Multi-State Cooperative Societies Act, and the various State Cooperative Societies Acts contain legal provisions to safeguard and strengthen democracy within the cooperative sector.

The Constitution (Ninety-Seventh Amendment) Act, 2011, emphasized  the democratic management of cooperative societies and highlighted the role of their boards of management. The Act stipulates that the maximum number of directors on the board of a cooperative society shall not exceed twenty-one. It further provides for the reservation of one seat for members belonging to the Scheduled Castes or the Scheduled Tribes and two seats for women on the board of every cooperative society. In addition, the Act permits the co-option of persons possessing expertise in banking, management, finance, or any other field relevant to the objectives and activities of the cooperative society. However, the number of such co-opted members shall not exceed two, in addition to the twenty-one elected directors. The Act also clearly specifies that the term of office of the elected members of the board and its office-bearers shall be five years.

All State Governments are mandated to incorporate similar provisions in their respective State Cooperative Societies Acts to ensure democratic governance in cooperative institutions. However, the extent of implementation varies considerably across states. While states such as Kerala conduct cooperative elections regularly, others, including Tamil Nadu, have a history of postponing elections for prolonged periods. Although the Constitution permits the appointment of a Special Officer for only six months, this arrangement has often been extended for much longer through various means, thereby sounding the death knell for cooperative democracy.

Transforming Communities from Marginalisation to Development

Wherever democracy functions effectively and the professionalization of management is practised,  marginalized  communities have witnessed significant social and economic development. The Department of Social Justice and Empowerment is entrusted with the responsibility of empowering the disadvantaged and marginalized sections of society. The Ministry’s target groups include Scheduled Castes, Other Backward Classes, senior citizens, victims of substance abuse, Denotified, Nomadic and Semi-Nomadic Tribes, beggars, transgender persons, manual scavengers, sewer and septic tank workers, waste pickers, and several other disadvantaged groups.

In the State of Kerala, which has one of the most diversified cooperative sectors in the country, cooperatives have been established for a wide range of marginalised communities, including women labourers, differently abled persons, transgender persons, forest labourers, Scheduled Castes, Scheduled Tribes, auto-rickshaw drivers, lime shell workers, washermen, taxi drivers, toddy tappers, tailors, goldsmiths, coir workers, and many others. These cooperatives exhibit varying levels of performance. While some have achieved remarkable success, many others are presently in the stage of liquidation for various reasons.

Despite localised inequalities within the State, Kerala’s sustained investment in the social sector has ensured that even marginalised communities perform significantly better than the national average on human development indicators. High levels of political awareness, targeted reservation policies, and a robust educational infrastructure have collectively contributed to these positive outcomes. Furthermore, the cooperative movement in Kerala has played a crucial role in generating income and extending credit to marginalised communities. Its contribution to higher education deserves special mention, as it has had a transformative impact on the second generation.

However, both the cooperative movement and State interventions have also brought to light a new set of second-generation challenges. Democratic cooperative enterprises currently face two major issues:

• Sustainability challenges arising from inadequate financial resources, insufficient modernisation, and the lack of youth enrolment.
• A growing dependency syndrome. For a prolonged period, cooperatives have benefited from extensive government patronage, and these privileges have, to a certain extent, adversely affected their long-term growth and self-reliance.

Nevertheless, one encouraging development is that the children of members belonging to these marginalised communities, whose parents toiled tirelessly to earn their livelihood through cooperatives, have gained access to higher education. Consequently, these communities have experienced occupational mobility of a much higher order. This is precisely the developmental outcome that policymakers and development interventionists sought to achieve. Cooperatives should therefore continue to emerge wherever there exists a common socio-economic need. Like any other business enterprise, cooperatives can also adopt appropriate exit strategies when circumstances so require.

Another significant way in which cooperatives assist marginalised communities in integrating into the mainstream is through the creation of meaningful employment opportunities.

Several cooperatives have been established specifically to promote the development of marginalised communities, and a few noteworthy models are presented below.

1. Kerala Dinesh Beedi Workers Central Cooperative Society Ltd. The Second World War created a high demand for beedis, as smoking became increasingly common during that period. Consequently, many manufacturers emerged in Mangaluru and established production units in Kannur and Kasaragod in the Malabar region of the erstwhile Madras Presidency. The workers employed in these units were poorly paid and subjected to exploitative contract labour practices. While investors earned substantial profits, the workers continued to suffer from exploitation. Following India’s Independence, the Beedi and Cigar Workers (Conditions of Employment) Act was enacted by Parliament in 1966. The Government of Kerala also adopted and implemented the Act, which prohibited contract labour in the beedi industry and introduced provisions for improved working conditions. In response to these regulatory measures, the private traders operating from Mangaluru abruptly shut down their units in Kannur and Kasaragod in November 1968. As a result, nearly 12,000 workers lost their jobs, causing immense hardship to them and their families. Recognising the gravity of the situation, the then State Government took the initiative to establish twenty primary beedi workers’ cooperative societies along with a federal cooperative society. This intervention significantly improved the lives of the workers. They began receiving regular wages, dearness allowance, paid holidays, earned leave, gratuity, provident fund benefits, and several other employment-related benefits. In 1999, the Kerala High Court, along with the Government of Kerala, imposed a ban on public smoking. Consequently, beedi consumption and sales declined drastically. Faced with this challenge, the cooperative was compelled to redesign its business model. The Board identified several products for business diversification and sought technical expertise and patent rights from research institutions such as Kerala Agricultural University. Today, the cooperative manufactures food products, garments, umbrellas, and several other products while engaging in a variety of business activities. It continues to operate successfully and provides employment to nearly 2,000 worker-members. However, the society is also experiencing member attrition, which the author considers a positive indicator, as the second-generation children of the members have attained higher education and are moving into more skilled and better-paid occupations.
2. Uralungal Labour Contract Cooperative Society Ltd. India has long struggled with the evil of untouchability. In Kerala, in addition to untouchability, the practice of “unseeability” also prevailed. The caste system was extremely rigid and exploitative, and both slavery and bonded labour were widely practised. During the early nineteenth century, several social reformers, including Sri Narayana Guru, Sri Vagbhatananda, and Sri Ayyankali, emerged and advocated education for marginalised communities, along with the formation of cooperatives as a means of achieving their economic development. Inspired by the speeches of Sri Vagbhatananda, fourteen farm workers belonging to the Thiyya community, one of the oppressed communities of that period, established the Uralungal Labour Contract Cooperative Society Ltd. on 13 February 1925. Initially, the cooperative undertook small-scale road construction projects. At that time, its primary objective was to provide employment and food security to marginalised workers who were subjected to feudal oppression. The members relied almost entirely on their physical strength to execute these works, as they lacked technical skills and functioned mainly as unskilled labourers. The second generation acquired the skills required to operate construction machinery and gradually became skilled workers. The third generation embraced technology, professionalised the entire construction process, and began executing large-scale infrastructure projects. To cater to the needs of knowledge workers, the cooperative also established a Cyberpark. Today, the cooperative has approximately 18,000 workers, 1,500 engineers, and 1,500 administrative staff, with assets worth nearly ₹6,600 crore. This phenomenal growth clearly demonstrates the process of generational socio-economic transformation, whereby a marginalised community has evolved into a prosperous and developed society. It stands as a truly sustainable democratic business model for the empowerment of marginalised communities.
3. Indian Coffee Board Workers’ Cooperative Societies. During the British colonial period, coffee-drinking culture was introduced in India through the establishment of coffee houses. Subsequently, the Coffee Board established several coffee houses across the country. After India’s Independence, the Government of India decided to close these coffee houses. As a result, nearly 850 workers lost their jobs and faced severe economic hardship. During this crisis, the then Opposition Communist leader, A. K. Gopalan, intervened and took the initiative to revive these establishments by organising the workers into cooperative societies and taking over the coffee houses. Today, around 500 Indian Coffee Houses are successfully operating across the country. One of the most remarkable policies of this cooperative is that every employee begins his or her career as a vessel cleaner. No individual is directly appointed to any managerial position. This practice ensures that every member gains firsthand experience of every stage of the organisation’s functioning before assuming higher responsibilities.

All the above-mentioned cases are genuinely democratic in nature and were established for the welfare of marginalised communities. They are free from vested interests and effectively utilise the expertise and guidance of professionals. This, indeed, is the secret of their enduring success.

Conclusion

In a highly competitive, capital-driven economy, the risk of the marginalised becoming further marginalised remains significant. The likelihood of their exclusion from economic opportunities is considerably high. In such a context, cooperatives can emerge as an effective alternative mechanism for addressing this challenge by promoting collective ownership, democratic decision-making, enhanced bargaining power, and a more equitable distribution of income. Through these features, cooperatives facilitate the economic, social, and psychological empowerment of marginalised communities. Although cooperatives may not be a panacea for all the problems faced by the marginalised, they undoubtedly serve as an important instrument for promoting inclusive growth in harmony with public policies, social protection measures, and broader developmental objectives. Therefore, restoring and nurturing a democratic culture among the members of cooperative societies is essential to ensure that these institutions function efficiently and effectively for the development and empowerment of marginalised communities. Thus, cooperatives provide a platform where the voices of the voiceless can finally be heard.

Note; This Paper was presented in two-day National Conference on Children;s Cooperatives, held on 29^th and 30^th June 2026 at Vishwa Yuvak Kendra, New Delhi,organised by Butterflies, a registered voluntary organisation working with the most vulnerable groups of children, especially street connected children since 1989.