CHAPTER VI

PROBLEMS OF CONSUMER COOPERATIVE STORES IN KERALA

6.1 Introduction

As evident frorn the previous chapters, cooperative movement is a

distinct segment of the Intlian economy and it acts as an (effective mechanism o f '

socio-economic transformation of rural community The co-operative

movement successfully deals with the basic problems of the economy, by

promoting economic, r;ocial and cultural development of the society. (13th

Indian cooperative con;yess, 1997) wherever co-operatives have worked, they

have become a part of their members' lives and a source of strength to their

families, the community and the nation (Co-operative Initiative Panel, 1992)'

The International Labour Organisation (ILO) had adopted a

recommendation (No. 127) on the "role of cooperatives in the economic and

social development of developing countries" in June 1966 which stated: "The

establishment and growth1 of cooperatives should be regarded as one of the

instruments for economic, social and cultural development as well as human

advancement-- All appropriate measures should be taken to detect and eliminate

provisions contained in laws and regulations which may have the effect of

unduly restr~cting the development of cooperatives through discrimination.

~ -- -- I Cooperative Initintt\c Pa~nel (1992). Vision of ' India's Cooperat~ve.~ in the year 2000.

Intemat~onal symposium c'11 Management of Rural Co-operative December 7-1 1. Institute of Rural Management. Anancl. P2.

There should be laws or regulations specifically concerned with the

establishment and functioning of co-operatives, and withi the protection of their

right to operate on not less than equal terms with other forms of enterprise."

The past few decades have witnessed substantial growth of the

cooperative sector in diverse areas of the Indian economy. The number of all

types of cooperatives increased from 1.8 1 lakh in 1950-5 1 to 5.04 lakh in 1998-

99. The total membership of cooperative societies increased from 1.55 crore to

20.91 crore during the sane period covering about 67 percent rural households

and about 99 percent villages. (Draft National policy on cooperatives,

Government of India 2001). In the early nineties, India made a paradigm shift

towards market economji from the socialistic pattern. Fall of the western

ecoriomies which India, i~dolized for long, its own sluggish economic growth

rate; mounting debt burden, adverse trade balance, fiscal deficit, scanty foreign

direct investment have left the country with no other option than to seek a

change over to a market friendly economic policy. (Nitin Ghosh, 2000)'

To face increasing competition from private sector including multi-

nationals, co-operative organisations will have to make earnest efforts to protect,

preserve and project their identity in the market driven economy. (Nitish Kumar,

2000)~. In the era of liberalization, privatisation and globalisation the co-

operatives cannot operate without being efficient and viable. Unfortunately, in

~ p ~ - ~ ~ ~~~

Nitin Ghosh (2000). ..Restiucturing of the corporates and the co-operatives". NcZ)C' Bt~lletin, Vol.XXXIV. Nod. October 1'.13

' Nitish Kumar (2000) Htl;, C'aiknthhh~rr Mehta Memorial Lecture delivered at a function orgainsed b> the National Co-opcrat~ve Union of India at New Delhi on June 21. 2000. NC:DC Bulletin. Vol.. XX:YI'V'. August . p.35

most cases, they are neither efficient nor viable financially (Prabhu, 1994)~

Marly have become sick and doimant and exist only in records. Despite the

many problems facing co-operatives, opportunities also exist for a substantial

advance in their role within the world economy. [Edgar Parnell, 1999)~

The cooperative movement in India has carved out a niche for itself in

important sectors like credit (both rural and urban), banking, sugar, fertilizers,

dairy, agriculture marketing, consumers, handloom and handicrafts, fisheries,

labour and housing activities (Sisodia, 2001)~. Consumer cooperatives in India

have developed a network: of super market and department stores in cooperative

sector in different parts of the country, with visible success (Misra, 1995)~.

The gove~nment of India's Expert committee on c:onsumer co-operatives

(1993-94) headed by (j.IC. Sharma, the then Regional Director, International

Cooperative Alliance in its report has come out that .57 percent of primary

societies are either in loss or defunct condition. The remaining 43 percent in

profit, that too most often marginally.

Kerala, being a c:onsumer state with peculiar features of economic

development as mentioned elsewhere is expected to have a strong and viable

consumer cooperatives metwork. However, the number of profit making stores as

a percentage of total number of primary consumers stores is less than the

I Prabhu. P V (1904) -'Ch;~lle:nges before the cooperative movement". Encyclopaedia of Co- operative Mnnagemmt: I'vlrtaphy~sic.\ qf'Co-operative Movement (Ed) Vol.1. Deep & Deep Publications. Nen Delhi. 11.215. Edgar Parnell (1999). .'Global Cooperat~on in a New Century - A Situation Report", Review qflnternationul ('ooperalion, Vo1.92. No.2, p.73

6 Sisodia S.S. (200 1) '-Pubhc Fklations-Key for success of cooperatives in the present era: some issues": The ('oopercitor. Vol.XXXIX. No.2. August p.53.

7 Misra S.C. (IY9.i). op ~ l i l . p.40.

national average in K.erala. The investigations made by the researcher has

identified the following problems in the functioning of primary consumers co-

operatives in Kerala. ih~ attempt is also made to suggest some remedial

measures in this section.

6 .2 . Inadequate Share Capital Base

Capital is the life- 'blood of any business. The lack of a strong equity base

affects the long-term viability of the primary consumers societies in Kerala. The

average paid up capital of the selected 24 stores for the study period is presented

in table 6 1 From the table it is evident that nearly 55 percent of the samples

had an average paid up (capital below Rs. 1,00,000.

Table 6.1

Average paid-up share capital of the sample primary c'onsurners' stores in Kerala

'

Southern ' Central Northern '

Total Percen-

Lim~ts (Rs) Region Region Region (No.)

tage to total

~

25,000- 50,000

-p~

1 ,00,000- 1.50,000 .

1,50,000- 2,00,000 ~~~~ .... ~

20.00

2,00,000 - 3,00.000 ~ ~ --...

4.17

3,00,000-4,00,000 -- -~p

2 2 8.33

Total 8 8 24

Source: researcher.^ comp~ilation

Since the consumers' stores has no fixed charge commitment for the

share capital contribution, stores should try to optimise their capital base. Table

6.1 brings out that only 112.50 percent societies have share capital in excess of

Rs.2 lakh. With regard to adequacy of share capital the responses from the

officials of the stores are :;ummansed in table 6.2.

Table 6.2

Opinion about the adequitcy of share capital available with the sample primary consumers' stores in Kerala

percentage to Opinion about share cap~tal No.of societies the total

- - --.. . -

Fa~rly adequate i Adequate

~

Inadequate ~. ~

~~~ 1 Tot,al 24 100.00

Source: Researcher's compilation.

As revealed from table 6.2, 79.17 percent of the consumers' societies are

operating with inadequate capital. Hence the management may initiate measures

to enhance the equity base of the societies. Incentives may also be offered to

members in order to per:suade them to contribute more towards their share

capital and I-easonable return on the invested capital may also be assured to

them. The tierala Coojperative Societies (amendment) Act 1999, which came

into force with effect from 1-1-2000 has the provision to provide membership to

the local body institutions in the cooperative societies. The consumer

cooperative societies may initiate necessary measures to tap the resources from

the local body institutions towards the share capital of the societies

6.3. Limited Internal Resources

Business expansion has been a problem without much reserves

accumulated by the stores. Regarding the adequacy of internal resources in the

selected stores, 2 1 stores ((87.50 per cent ) reported that the internal resources of

these stores are inade'quate. Only one store (4.17 percent) assessed that its

internal resources are fairly adequate. The main reasons for the inadequate

internal resources were attributed to the limited profits and the incurrence of

losses resulting from trading operations.

6.4. Shortage of Working Cap~ ta l

Capital required for stock holding and for meeting the monthly

committed expenditure is called the working capital. This goes on rotating while

doing the business and the efficiency lies in the higher rate of turnover. The

response from the officials of the stores regarding the adequacy of working

capital is presented in table 6.3

Table 6.3

Opinion about the adequacy of working capital available with the sample prirnary consumers' stores in Kerala

Fa~rly adequate

Adequate

Inadequate

Opinion ab0u.t working capit;al

Source: Researcher's compilation

No. of societies

Percentage to the total

The inadequate working capital in 75 percent of the primary stores points

out the need for ~ncrea,sirng the working capital in primary consumers societies.

T h s was evldent from the earlier analysis on financial performance also.

6.5 High Cost of Borrowings

In the consumer stores of the developed countries, there is a strong equity

base. They borrow less and the rate of interest in those countries is

comparatively less In India most of the consumers cooperatives have a poor

equity base and they do not have a scientific management of bank borrowing.

(~isra,1995) ' Among the selected primary consumers' stores in Kerala, 19

stores (7917 percent) had availed loans and advances from the district

cooperative banks. and the interest liabilities mount pressure on the profitability

of these stores.

With the activation of members, internal financial strength of the

members can be tapped to overcome the problems associated with the high cost

of borrowing. Under the Interest Free Deposit (IFD) scheme formulated by the

Consultancy & Promotion cell of NCCP, members including nominal members,

who keep an Interest free deposit of Rs. 10,000 get goods worth Rs. 150 every

month free of cost. This scheme has helped to get capital with minimum cost,

and to earn loyalty and goodwill of the customers, apart from getting a sort of

free publicity (Misra. 1995)'. Though six sample stores (25 percent) had

introduced interest payable deposit schemes, none of the selected stores in

Yhisra (19%). o/).cir . p43 Y Ibid, p.43.

Kerala had nnplernented the Interest Free Deposit (IFD) scheme formulated by

the C& P cell of NCCF

6.6. Heavy Administrative Overheads

The ('onsultancy and Promotion Cell, NCCF stipulates that standard

nonns for cost structure percentage to sales (revised nonns, 1983) should be 6

percent for rural stores and 7 percent for urban stores. Establishment and

contingency charges as a percentage of sales (ten year average) was high in SR6

(9.35 percent) SR7(9.0 I percent) and SR4 (8.31 percent) in the southern region.

In the central region, it was high in CR4 (8.80 percent). In the northern region,

N R I had the maximum percentage (10.89 percent), foilowed by NR5 (10.29

percent) and NR2 (8.56 percent). .4s a consequence of this higher administrative

overheads, the profit margins are turning negative. The overhead expenses in

the case of private traders' business are comparatively low (Himachalam and

Narendrakumar. 1 9 9 4 ) ' ~ . In the selected stores, though the sales volume has

declined, there was no proportionate reduction in the number of employees. The

management of consumer cooperative stores should initiate measures to control

the establishment and c~~ntingency charges effectively.

6.7. Absence of Scientific Purchase Policy

All the selected stores were depending upon manufacturers, wholesale

dealers and local markets for the purchase of goods, except in the case of public

distribution system articles suppl~ed by the govenunent agencies. Three stores

used to procure ce~tain stationery articles from the State Federation and four

-- -- -- 10 H~machalarn D md Narendrrr Kumcir D (1994). op c l r . p 6

stores purchased certain gsoce1-y items and stationery items from the district

wholesale stores. The authorities of primary stores felt that there is no price

advantage or certainty of' prompt supplies by the state federation or district

wholesale stores. In practice there is no linkage between the different tiers of

consumer cooperatives in the matter of purchases. It wa:; also reported that the

non-availability of all the required goods from the state federation and district

wholesale consumers' cooperative stores force the primary consumers' stores to

make purchases from thse private wholesalers. beside:^, the credit facilities

extended by the prlvate i~holesale dealers are more attractive to the primary

stores, as these stores hiwe the paucity of funds.

15 societies (62501 percent) reported that there is no sub-committee of

the Board of Directors to monitor the purchases. Five societies (20 percent ) had

effectively fnnctioning purchase committees, which meet twice in a month and

four societies (16.67 percent ) had purchase committees, but it assembled

bimonthly or quarterly only.

Regarding the frequency of purchases, 21 stores (8'7.50 percent ) reported

that there is no specific plan or procedure for determining the frequency of

purchases for different items. In many cases, the purchases of specific brands of

some products were made only after the enquiries made by the customers. The

estimates of the quant~tie:~ to be purchased were not determined on scientific

basis. None of the societies under study had fixed minimum, or maximum or

economic order quantithes for the different types of goods; and commodities. The

quantities to be purchased on certain products were mainly based on the offer of

credit facilities extendemd by the dealers.

6.8. Low Volume of Sales

It is a common thing that unless sales performance is over and above the

break even point there will be loss in any organisation. Since we are living in an

age of inflation. cost structure is bound to increase, pushing up the break even

point. Hence the sales perfonnance has to be improved at least 5 percent or

more on annual bas~s over and above the rate of inflation. (Misra, 1995)". Over

the ten year study period, only one store in the southern region (SR3), two

stores in the central region (CR3 and CR6) and one store: in the northern region

(NR7) have recorded continuous growth in the sales turnover. The sales volume

of 83.33 percent stores have recorded fluctuations. In the southern region in

store SR6. the sales volurne is less than the ten year average since 1995-96. In

the northern region, the :;ales volume of store NR5 is less than the ten year

average volume of sales since 1993. The trends were mainly due to increasing

competition and the absence of scientific sales management procedures among

the stores.

The standard norms for sales per man day developed and revised (1983)

by the consultancy and promotion cell, NCCF specifies Rs.2500 for urban stores

and Rs. 1,600 for rural stores. Considering the ten year average sales per man

day (taking 300 days in a year) 1.3 primary stores (54.17 percent) had only less

than Rs. 1,600 sales per m.an-day.

6.9. Narrow Commodity Coverage of the Stores

The nature of p~oducts dealt with by the selected societies during the

initial year of stud) 1990-5) 1 may be grouped into:

~ .-

" Misra (1995) O I ) . L I / I) 4 I

Products dealt with

p~ - ~~ -

Food gralns. pr-ovisio~ns and stationery items

Food gl-alns. prov~!;ions statloner?. textlles and consumer durables

Food gralns. prov~:;ions stahonery. fertilizers flour mill and retail ration articles

Food grains. provisions textiles, stationery. fertilizers' and retail ration articles

Foodgrams. provlslons s t a t ione~ . canteen and consurner durables

Foodgra~ns, provrslons, stationery, leather goods, textiles. retall ration articles and consumers durables

Food grains, prov~sions, stationery, fert~lizers, gas stoves and LPG

Food grains. provisions, stationer)., vegetables and cold storage itenis

Food gralns. p~ov~sions, statlone1-y and wholesale ratlon goods

In the year 1990-'91 all the 24 stores had the trade in food-grains,

-

provisions and statlonely items Seven stores had managed retail ration shops,

-

Southern Region

1

3

-

3

-

-

-

1

-

-.

No.of

Central Region

1

2

1

1

1

-

1

-

2

Stores

Northern Region

1

3

-

1

-

1

-

1

-

Total No.

3

8

1

5

1

1

1

2

2

two stores had dealership in textiles and consumer durables, two stores had

traded vegetables and cold storage items, one store each had flour mill, canteen

in the name of .Sahakarana Bhavan' and dealership of lntlane LPG.

In the year 2001, the products dealt with by two stores in the ~entral

region have been totally changed. Stores CRl and CR3 had discontinued its sale

of food-grains, provisions and stationery items in the open market. While store

CRI which had 8 retail ration shops in 1988-89 confined its operations into the

running of SIX reta~li public distribution centres alone, store CR3 has limited its

business operatlolls Into the dealings of LPG, gas stoves and Servo engine oil.

Store CR5 has surrendered its licence for the authorised dealership in wholesale

rations articles and now runs a margin-free super market. In the northern

region, store N K runs eight retail public distribution centres, supermarkets,

footwear shops etc. While store NR2 had discontinued its sale of food grains

and provis~ons and now deals in stationery items and textiles. In the southern

region store SR3 has dropped its sales of vegetables. In the central region store

CR6 has introduced the processing of copra with the installation of copra drier

and the related machint:ries. In the northern region, store NR4 has modernised

the canteen and also started the self service type super rr~arket. Three stores in

the northern reglon ant1 one store in the southern region have undertaken the

sale of vegetables in 2001

The assortment policy of consunler co-operatives should be such that it

should meet the entrre requirements of the customers and the population within

the catchment areas. In the selected stores, only three stores are supplying food

grains, provisions. stationt:ry and vegetables to the consumers. The cold storage

items are sold only in one store. The non-availability of vegetables, cold storage

items etc. which are requured for daily use by the customers creates problems to

the customers.

6.10. Attitudes of Sales Personnel

The attitudes of the sales personnel play a significant role in attracting

the customers. According to Harish, a service consumer who has been dealt

within a personal manner is likely to absorb service failures (less than

competitive perfo~mance). The customer would give some amount of leeway to

the service providers for occasional failures. The human touch can add positive

bias to servlce evaluation. (Harish V. Verma, 2000)'~. The approach of sales

personnel in ce~tair~ stores are not motivating the customers to the stores.

Consolidated customer perception index towards the motivational approach of

sales personnel was 24.83., which signifies that consumer cooperatives are lying

in the least favourable re:gion. Sales personnel rnay be trained in the art of

extending courtesies to their customers and win their goodwill and confidence.

Lack of enthusiasm and non-cooperation on the part of the sales personnel lead

to loss of customers in the consumer cooperative store.

6.11. Lack of Trained and Experienced Staff

In India, most of the consumers' cooperative stores are employing

persons without any expertise, skills and experience in business line which

resulted in failure to compete with private traders who possessed better business

acumen, insight, and neces,sary vision of the business trends. (Himachalam and

-p ~ ~~ --

" Harish. V. Vcrnin. (2000:1. .'The Human Face of Service Quality". Productivily. Vo1.41. No. 1. April-JUIIC. p I ?h

Narendrakurnas. 1994)". Among the 24 selected stores in Kerala, none of the

stores had employed professional managers with MBA or similar qualifications.

Six stores have secretary with the qualification of degree and higher diploma in

cooperation. The employees of the 23 stores (95.83 percent) were not deputed

for any training programmes or inservice courses during the past ten years. The

secretaries w~th H.D.C qualification opined that training institutes should

redesign the courses with special emphasis to management practices. Private

sector marketing strategies are in conformity with the modem business practices

in the market, where as cooperative training designs are not that futuristic

I-I . . (Herath, 1999) . I he employees in the consumer cooperative stores should be

equipped with necessary skills, knowledge and experience so as to enable them

to take up tasks more efficiently and with greater sense of responsibility.

6.12. Non-Availability of Preferred Brands

In the customer survey. it was revealed that the customers are very

particular to get the specified brands of the product. While 45 customers (15

percent ) opined that availability of preferred brand and brand choice is better,

125 customers (41.67 percent) opined that it is poor in the consumers'

cooperative store. Regarding the reaction of the customer on the non-availability

of preferred brand from the store, only 32 customers (10.67 percent) were

prepared to purchase the substitute brand of the product from the consumer

cooperative store. As the customers are loyal to the brands, and not to the shop,

13 D. Hirnachalam aid D Narendra Kuninr (1994). op.cit.: p.6. I4 Herath. W U (1009). Ke,:.errt 7rend,s is~!f('on.sumer Cooperation in Asia and the Pacific;

International Coperntne Alliance Reyio~~al Office for Asia and the Pacific. New Delhi, p.65

the consumers cooperatives should pay more attention to make available the

brands demanded by the customers.

6. 13. Poor Display of Products

In the display of products. the consumer cooperative stores are lying in

the least preferred reglon (perception index 12.33). Proper display of stationery

items, consutner durables etc can attract the customers and result in the boosting

of sales volume In the display of goods, it is to be ensured that goods are

displayed attractively, practically and safely (Kambli, 1994) '~

To ensure that goods are displayed attractively, place the good in groups,

at eye level. show the faces of the packets, display the prices clearly and fill up

the front of the shelves attractively. Practical display means placing the groups

of goods which are most often requested within easy reach, place heavy items

near the ground and do not put different things behind each other. In the safely

display, attention is to be paid to keep strong selling products and food items

apart. Articles which attract shoplifters should not be displayed since they are

easy to be stolen

6.14 Absence of Prompt Service

In the present day circumstances, the customers cannot be taken for

granted. The customers want to receive prompt service from the stores. Among

the 24 stores studied. only two stores(8.33 percent) have adopted computerised

billing system. in order to avoid the delay in writing the bills it is necessary to

I5 Kambli P A ( 1 YC)4). Assortment. Pricing. Display of Goods and Sales Promotion", Report of

ICA:N('C"Sirh- tk!,yir~ntr/ Seminar on ('onszrmer Coopernfive llevelopment in India. P.46.

install computer for billing operations. The average cost: of installing computer

billing works out to less than Rupee one lakh only.

In order to speed up the delivery of goods to the customers, pre-packed

goods are prefened by the customers Among the 24 stores, 9 stores (37.50 per

cent ) have already rmplernented the sale of pre-packed goods.

The customers also desire the introduction of self-service system in the

consumers' stores Only two stores have the self service facilities and all the

customers interv~ewed in these two stores have strongly agreed to the statement

that they are receiving prompt service in the consumer cooperative store.

Regarding the consolidated custorners' perception index towards the availability

of prompt service from the consumers' stores, the average index was 28.33 for

all the three zones. signitying that the consumer cooperatives are in the least

preferred reglon. Trme for getting service from the store is also to be minimised.

6.15. Defective Pricing Policy

Way back in 1960. All lndia Seminar on consumer Cooperation held at

Bombay suggested that: the stores should sell the products at a price which

includes cost plus a reasonable margin of profit or at the prevailing market price,

whichever is less (Goyal, 1972)"'. Among 300 customer:j interviewed only 102

customers (34 pel- cent ) :strongly agreed with the statement that the prices are

reasonable in the consun~ers' stores. The store authorities has informed that

generally the prices for goods are fixed for a week and in certain cases for one

month. The consunler cooperatives should adopt the system of active price

.- ~ ~~~~ ~~~ ~ ~ --

16 Goyal. S K ( 1972). 01, c i r . p .72 .

policy in the fixat~on of prices for the goods and commodities. Under active

price policy. the purchaser gets a part of the economic advantage at the bme he

makes his purchases and the balance as purchase bonus or dividend at the end of

the accounting year. Hence the prices of goods in the store will be slightly lower

than the prevailing market price. The consumers stores can also adopt leadership

price policy and odd price policy for certain selected products.

6.16. Lack of innovative Sales Promotion Techniques

\ Consumer coope~:atives are functioning in a very cornpHithe

environment and hence these stores have to adopt a package of sales promotion

techniques, so that every day there is an attraction for. sustaining customers'

loyalty. Sales promotion drive should be intensified by resorting to home

delivery, free supply of cany bags with the message of co-operative advantages,

extending the credit facilities to all the members, those who are in regular

employment and also to the public within the ceiling of their trade deposits.

The Shree Warana Vibhag Sahakari Grahak Mandal Ltd. Warananagar in

Panhala Taluk of Kolbapur dishict in Maharashha state, popularity known as

'Wama Bazar' has adopted several innovative sales promotion methods,

(Varkey, 1994)" including, member discount-] to 5 percent, festival and

cooperative week discount - 3 to I0 percent, school season discount - 5 percent,

gift schemes, stock clearance sales, demonstration-cum-fiee sample distribution

from suppliers. several facilities to the customers are provided such as water

cooler, telephone-local and outstation, Xerox facility and other shopping

" Varkcy. V O(l99.I). .'Waram B a z a r - Successful Rural Consutr~er Co-operative". Report of IC4 N('( '7'.St~h-l~~.g1on~ri Seminar on consumer Cooperative Ue~rlopment in India. p. 155

facilities Unless new systems and techniques of sales promotion are adopted,

the prospects of consumer cooperatives will become bleak.

6.17. Unplanned Business Operations

Accu~nulation of slow ~noving items and launching upon uneconomic

ventures have adversely affected the functioning of consumers cooperatives. On

the basis of the discus:sian with the store authorities, it was revealed that 18

stores (75 percent ) had faced the problem of accumulation of slow moving

items and 7 stores (29.17 percent) had suffered loss in the past due to launching

of uneconomic business ventures. The authorities of primary consumers'

cooperatives should realise that decisions on crucial issues have to be arrived at

after taking into consideration the demand analysis, consumer behaviour, market

structure etc

6.18. Lack of Diversific,ation of Business

Lack of proper policy of diversification of business affects the growth of

consumer cooperatives. In the context of globalisation, because of free-market

economy and competition from private agencies, the diversification of business

is inevitable. Among the ;!4 stores. only 3 stores (12.50 percent) CR3, CR6, and

NR4 have successfully diversified their business operations. While store CR3

has secured the dealership of Indane LPG and Servo engine oil, store CR6 has

installed plant and machirrery for copra processing, and processes rice powder

through its flour mill and store N R 4 has setup a super market and runs a canteen

for the public in the name of 'Sahakarana Bhavan'.

6.19. Unscientific lnventory Management

The consumers' cooperatives should undertake standardisation of

inventory to be maintained so as to avoid injudicious and uneconomic

purchasing and stocking of unpopular and slow moving goods. Lists of goods

and commodities. sub-divided according to different varieties, components and

specifications should be drawn up. Economic order quantities are to be

determined by the stores. Regarding the scientific inventory management, 22

stores (91.67 per cent) admitted that their inventory management practices are

unscientific and 23 stores admitted that their inventory level was not at

optimum. Losses in storage is also a serious problem for eight stores (33.33 per

cent). Adequate attention should be paid to use insecticides to kill the various

insects causing damage to the goods stored

6.20. Lack of Co-operative Value Education and Dedicated Co-operative Leaders

Lack of dedicated leaders and lack of education or1 consumer protection,

welfare activities, member participation etc. are serious problems confronting

consumer co-operatives in Asia (Pradit Machima, 1994)" Our co-operative

leaders have developed with very poor models for leadership, we must help

them to lea~n the skills of true leadership and to relearn the values on which co-

operation rests (tiur~en. 1092)'' in the customer survey, it was revealed that

only 99 customers (33 percent) were influenced by cooperative education on

buying goods from the store. It was also made known that some office bearers

were not mak~ng any purchases of their requirements from their consumer store.

p ~ - ~ ~ ~

'' Pradit Machinla ( l Y'j4). o[p.cil. _ p.27 I n VKurien (1992). I.irleclic,'oiy Addrr.s.\ nt the Internatzonal .Sj~rnpo.sium on Mnnagrmen! clf

Rural Cooperotive.~ lnstitlrte of Rural Management; Anand. December 7-1 1. p.6 I

Regarding the leadership. all responsible in reviving the cooperative

movement have to adhere: to basic human values, principles of democracy and

social justice. Without ;a cadre of dedicated workers having faith in the

cooperative philosophy and efficient management, c:ooperative movement

canriot sustain in future (Mohan Dharia, 2 0 0 1 ) ~ ~ . Intensive education and

awareness progranlmes may be worked out and implemented through

cooperative unions. training institutions, panchayathi raj institutions, and

educational institutions. 'Whenever people are educated about the values of

cooperation, it will lead to the sustainable devel~spment of consumer

cooperatives in Kerala.

6.2 1 . Declining Government Assistance

'The 1 4 ' ~ lndian Cooperative Congress (2001) noted with great concern that

the effect of liberalization has been strongly felt in the cooperative consumer

sector. The government of lndia has transferred the Centrally Sponsored Scheme

to State sector with effect from 1992. Eventhough subsidies are not justified in

the context of liberalisation and globalisation, the consumer cooperatives

engaged in the implementation of various welfare measures like distribution of

essential commodities are to be adequately compensated.

As the decentralised planning process has been implemented in Kerala,

the panchayathi raj institutions should support the local consumer cooperatives.

(Thomas and Man,. 2001b)~' in the customer survey, 21 1 customers (70.33

.~ 20 Mohan Dhar~a (2001 ) '-Cooperative Movement in 21" Centun Challenges". N('DC Bulletin.

Vol.XXXV. No. I . .4pr1l. p.X " Thomas Paul Kattookaran and Man1.K P (2001 b). op .c i f . . p.34 1 .

percent) were in favou~ of granting assistance to the consumer cooperatives by

the panchyath~ rat institutions.

Table 6.4

Customers' oplnlon about the need for granting assistance to the consumer co- operatives by the panchayathi raj institutions

Required 60 73 1 78 211 7 0 . 3 3 1 . --

Need for Southern Central I Assistance Region 1 Region

rot rec1y.d : 1 I 65 I 21.67 I r

No reply 24 8.00 p ~ p ~ - ~ ~ ~ - ~ ~ ~~ - -

Total 11 00 100 100 3 00 100.00

Northern 1 No, % 1 Region

Source: Customer survey

Regarding the nature of assistance to be provided by the panchayathi raj

institutions, the 01-der of preference was (a) allotment of rooms in the shopping

complexes of the panchayathi raj institutions at a nominal rent (b) providing

furniture , fixtures and equipments required by the store ,and (c) financial grants

for specified purposes. ,4mong the 24 stores, only one store has received

assistance from the block panchayath. The consumer stores may prepare

appropriate proiects to receive assistance from the panchayathi raj institutions.

6.22. Excess Governme:nt Control

In the past. the cooperat~ves have tended to be viewed generally as

appendages of the government. rather than independent, democratically run

bodies of ind~vlduals pursuing a common goal (Surinder Sud, 2 0 0 1 ) ~ ~ . The

report of the taskforce set up by the Planning Commission to study self-

managed lnstltut~ons for integrated development (1991) said: "A cooperative as

an instltut~on had a lot of potent~al but was so regulated by the state government

through various legislative and administrative measures that it had turned out to

be a semi-government institution. Cooperatives have undergone a crisis of

identity being neither government nor private."

The exlstlng cooperative societies Act in most of the states have

restrictive provlslons which pre~ents the funct~oning of the cooperative as a

business organlsatlon. (Paranjothl and Pitchai, 2001)~'. The cooperative is the

only sector where bureaucratic interference and control ;are rooted deep. Given

the ongoing l~beral~sed environment and to protect the larger interests of the

members, it is necessay to adopt the legislation to suit the changing

circumstances (Ramesh, 2 0 0 1 ) ~ ~ The seminar on "I-uture of cooperative

legislation. Pr~nc~ples ;md prom~ses" organised by the Cooperative initiative

Panel at h a n d (2000) resolved that good cooperative law will define the role of

Reg~strar of Cooperatives solely as certification of registration and liquidation of

cooperatives. Cooperative Initiative Panel at its Anand Charter for Cooperatives

(1997) had opined that the cooperative autonomy was destroyed by excessive

official presence and control backed by draconian anti-democratic laws.

~ ~- -- --

'' Surinder Sud (200 I ). .-Coop~crati\cs i l l 2 I " C e n t ~ ~ " , NC'DC' Bzrlr'etm. vol. XXXV. No. 4 & f, October-Dcce~nher. p. 30.

" TParanjoth~ and C' Pltclnai (2001). ..Restructuring Cooperative Law in the contest of Marketisat1011 - cnsl: of ll-~dia". Muno,yemm/ Researcher. Vol.VI1. No.2&3. October, 2000- March 200 I . P 5 2

" Ramesh R S (2001) Neecl for fresh look at cooperative legislatio~i. Cooperative Perspective, Vo1.35. N o 4 Jaiuan- March, p.55

Within the per~od of ten years, the management committees of four

consumer stores ( 16.67 percent) had been superseded by the government. The

authorities of 19 prima~ry consumer's stores (79.17 percent) opined that there is

excess governnient intervention in the affairs of the :stores. As govelnment

control and overbearing, has weakened the growth and development of

cooperative leadership (Ramesh, 200l)*~, the legislation procedures of

cooperatives are to be am1:nded. Even though Kerala Cooperative Societies Act,

1969 was atnended in 1999, the Kegistrar of Cooperative Societies still enjoys

vast powers to control the cooperatives in Kerala.

6.23. Insufficient lnfras~tructural Facilities

Among the 24 stores selected for the study, the authorities of 19 stores

(79.19 per cent) ~.eportetl that ~rifrastructural facilities like floor space for

trading, warehouse space, furn~ture and fixtures etc are not sufficient. Eight

stores (33.33 per cent) even had no telephone connection. It is necessary to

initiate urgent measurer, to create the necessary infrastructural facilities in the

stores.

As the government of India has discontinued the Centrally Sponsored

Scheme with effect from 1-4-1992 the consumer cooperative stores will have to

seek assistance from the panchayathi raj institutions. The National Development

Council in its resolution on cooperative policy in 1958 recommended that the

responsibility and initiativ'e for social and economic development at the village

level should be placed fully on village cooperatives and village panchayaths.

pp . ~ ~ --

" Ramesh R S ( 200 I ) --(:oc8peratl~c Icadership- Some reflections". Kerolo Cooprrariw .lournol. Vol -13. No 12. April. p.23

The Working Group on I'anchayaths and Cooperatives under the chairmanship

of Mishra (1961) also recommended that panchayaths should provide

accommodat~ons In its premises, wherever possible and provide land for

building godowns and give licences to cooperatives for undertaking processing

activities on a preferential basis. After the 73'* constitutional amendment, Kerala

enacted a new legislation viz. The Kerala Panchayath Raj Act, 1994 to empower

the grama panchayaths. block level panchayaths and district level panahayaths.

In Kerala, the strengthening of existing cooperatives is one of the general

functions of the Panchayathi raj institutions. (Third schedule, Kerala Panchayath

Raj Act, 1994). As far as possible, the consumers co-operative may try to

mobilize the resources internally. without seeking assistance from government

or panchayatht raj institutions.

6.24. External business environment

In the case of perfect competition, the very competition among producers

and suppliers is a factor of safety in keeping prices down, eliminating the less

efficient, and preserving quality But perfect competition is a theoretical

condition which does not exist in real life (Gulshan, 195)4)2h. Evasion of taxes

by private tradel-s affects the intensity of competition (Saxena, 1988)" in the

trading operations. The office bearers of 17 selected stores (70.83per cent)

opined that while the consumer co-operatives have to pay sales tax, minimum

wages to en~ployees etc the private traders are in an adva~ltageous position.

~~ -~

2 G l ~ u l s l ~ ~ ~ S S ( I Y W ) ( 'onsumer ~~rofrct ion and .sotisfac!ion Legal and Managerial Di1nen.vlon.s. Wile! Eastern Ltd. p 3

"Saxena. A . K . ( I Q X X ) . opLl t . 1~189.

6.25. Absence of Effective Linkages and Integration Among Cooperatives

The government of india's Draft National Policy on Cooperatives 2001

admits that some federal cooperatives which were suppc~sed to guide and nurse

their affil~ate organlsat~ons are competing with them resulting in deterioration of

the health of the prlmary level cooperatives. The authorit~es of 20 primary stores

(83.33 percent) opined that the retail branches of district wholesale stores and

the 'Neethl Stores' and 'Trivenl Stores' managed by the Consumerfed are

competitors to then business. Regarding the sources of purchase, the authorities

of 21 stores (87 50 percent) revealed that they depend on private wholesale

markets for their purchase requirements. The Report on the committee on

structure and I-ole of Ni~ti~onal Cooperative Societies under the chairmanship of

Venkatappaiah had foumd overlapping in functions of the cooperative

federations and t11e1r constituent members. This overlapping of functions and

competition amongst the various tires of a cooperative sector has sounded the

death knell of many coopmeratives (Marathe, 2000)~'. The cooperatives among

themselves w~l l have to ecolve a closer partnership and alliance in order to steal

a competitive edge over the private firms (Sivakumar, 1999)"

Strategic alliances between processing cooperatives and consumer

cooperatives 1s another area where the Indian cooperatives are lacking (Herath,

1999)" The consumer cooperatives should try to procure the required goods

and commod~t~es from the producers' cooperatives, industrial cooperatives and

marketing cooperative:;. If there is a horizontal cooperation amongst

- ~~ ~- ~ ~

2"arathe.M S (2000). "Cooperati~cs in the New Millemhiurn". NC'DC.'. Btrlletin, Vol.XXXIV.No.4. Octobel-, p .12

'"ivakumar S ( 1949). '.Financing of Cooperativt: Services". Yqanu. Vol. 43. No. 4. p.41. "'Herath WU(i94'1). J [ ~ . C U . p.66

cooperatives. the rniddlennen and agents can be avoided and it will prove to be

beneficial. both to the producers and consumers.

6.26. Narrow Membership Base and Apathy of Members

In view of bringing about continuity, growth and strength to a consumer

store, the enrolment of new members plays a crucial role. As against enlightened

members, ignorant. slei:p!i, inactrve, non-participative and indifferent members

become a problem in thzrr~selves (Selvaraju, 1999)".

Table 6.5

pp-~-~ ~

31 RSelvaraji~. Y 'Members apath! towards their cooperatives". C'or~pwotive,~ in the New Miilrnittm (Ed1 V~kris Publislling House. New Delhi. p.2

Co~~solidated table showing number of members in sample primary consumers' cooperative stores in Kerala

-- -4. ~ - ~ - ~ ~ ~ - A - - +-

1993-94 t 6970 9488 -+ .--I E l 4 1994-95 ' 7063 1 9634 I 7719

1995-96 7212 9926 -- ~~~ ~~- i---~

~~~~ ~ ~~

795 1

1997-98 10410

1998-99

L . 11629

Kerala

21374

21683

22057

24078

24416

24967

24998

25497

271 13

27354

Source: Researcher's compilation.

As ev~dent from table 6 5 with respect to membership, the percentage

change ovel- the ten :ye,ar period was 27.98. In the southern region, the

percentage change was at a low level of 6.92 and it was at a high level of 56.30

percent in the central region.

In the customer survey conducted by the reseiucher, 161 customers

(53.67 per cent) were rine~mbers of the store. Regarding the nature of purchases

made by the member customers from the store, only 58 customers (36.02

percent) were regularly purchasing from the store. The patronage by members to

the consumer cooperative stores are to be improved.

The Kerala State Cooperative Societies (Amendment) Act, 1999 has

introduced the PI-ov~sion of active members in co-operatilie societies. In the case

of non- credit societies, an active member means, a member who has involved in

all or any of the objects of the society specified in the bylaws there of during the

period of five years immediately preceding the date of resolution of the

committee for the candluct of election. With the activation of members

especially women and youth, the members would become assets in giving health

and prosperity to their stores.

In the customer stuvey, it was disclosed that only 68 members (42.22

percent) regulat-ly attended the general body meetings of the store. The

percentage of regular attendance was at a high level of 45.90 in the northern

region and i t was at a lc~w level of 34.09 in the central region.

Table 6.6

Reasons for not attending the general body meetings regularly r p ~ ~ ~ . , ~ ~- ~p

I I 1

Regarding the rea.sons for not attending the general body meetings

regularly, 44 members (47.3 1 per-cent) disclosed that they are not interested in

the general body meetings of the stores. Eleven members (1 1.83 percent)

reported that absence of timely intimation and 38 members (40.86 percent)

assigned pre-occupied work as the reasons for not attending the general body

meetings.

Southern Central Reason

Region Region

% No. % pp~

No timel), 10.34 intimation

Pre-occupied work

55.17

34.49

100.00 ..~_--LPp-~

6.27. Lesser Involvement of Women

Housew~ves play an important role in determining the consumption pattern

Source: survey data

of tlie family. Hence thzir participation in consumer movement should be active

Northern Region

and meaningful (Malathirn Sar~n. 1989)'~. In Japan a major part of successes

No.

4

11

18

33

Total

achieved by the cooperatives part~cularly in connection with the group activities

%

1:2.12

33.33

54.55

100.00

No.

11

38

44

93

("Han") are certainly attributable to the energy and enthusiasm of the women

%

11.83

40.86

47.31

100.00

.. --

'' Malathi Sar~n (14XV). o(~.cit.. p.51

who have identified thenlselves with the task and in so doing have increased

their own sense of self-esteem. (Ciunther Vacek, 1989)"'. Though sex-ratio and

the degree of enipowement are favourable for women in Kerala (sex ratio 1058

as per Census 2001 provisional data), the involvement of women in the

management committees of consumer cooperatives are not encouraging. Among

the selected 24 societies, only seven stores (29.17 per cent) had female

representatives in the Board of Directors. The recommendation made by 1 4 ' ~

Indian Cooperative Congress (2001)'~ that cooperative law should provide for

reservation of at least 10 percent for women in the management committees of

the cooperatives at all1 levels deserves special attention. The provision for

reservation will not be the real solution, but the housewives should take active

interest as in the case of Japan.

6.28. Declining Role in the Public Distribution System

The mld-term appraisal of the Ninth Five Year Plan (2001)'~ suggests

that despite hefty increase in the annual food subsidy from Rs.2450 crore in

1990-91 to R 9200 cror,: in 1999-2000, all is not well with PDS in India. There

is 36 per cent dlvers~on o:F wheat. 3 1 per cent diversion of rice and 23 per cent

diversion of sugar from the system at the national level. In spite of food grains

production going up from 175 million tonnes to 206 million tonnes in the

1990's, growth rate in availabilitv of food grains per capita has come down to

.-

" Gaunther Vucck (IlIX')) (~'onsrrmrr (oop~.rative.s in '7 Changmg World. Vol.Z(Ed) Johann Brazda and Robert Schcdi~.+y. International Cooperative Alliance. F'. 1094.

31 14" Indian C'oopcrative Congress (2001) Resolution No.43. The ('ooperafor (2001); Vol.XXXIX. No 4. Octobcr . P.19X

' 5 Mid-term Appra~snl of thc Ninth FIVC Year Planl; quoted from 1?c'~.onomic Development in

India - Ann/j8.sis. Kc/~o~l.s, t'o.l~cy Doc1rmm1.s (200 1) (Ed). Academic Foundation. Ghaziabad, Vol.36. p.

-0.28 per cent per annum as compared to a growth rate in per capita availability

of 1.20 per cent pel anrlurn during the 1980's.

In the case of food distribution, PDS has often being criticised for

providing to the citizens food grams which are of extreniely poor quality. This

apart, corruption at various stages of the distribution channels often results in

deterioration in the quality of supplies. The low level of commissions paid to

PDS agencies in the distribution network force them to substitute good quality

cereals by poorer qualities and to sell the good quality cereals in the open

market.

Though the rnargin on dealings in the public distribution centres (ration

shops) is low. the majority of customers are satisfied with the public distribution

centres managed by the consumers' cooperative stores. 37 customers (12.33 per

cent) were receiving their. PDS supplies from the ration shops managed by the

stores. Of this, 36 custorners (97.30 per cent) expressed satisfaction with the

functioning of public distribution centres. 153 customers (61.94 percent)

receiving PDS supplies from pr~vate dealers opined that the involvement of

consumer cooperatives in the management of public distribution centres are

preferred by them

As the custorners have expressed their desire fisr the involvement of

consumer cooperatives in the public distribution system, the low margin on the

dealings in PDS items are to be compensated by the government or by the

panchayathi raj ~nstitu'tions. The presence of consumer cooperatives in the

management of public distribution centres will create a good image to the

consumers stores

6.29. Low Stock Productivity

A consumer cooperative store cannot survive unless it achieves a stock

productivity of at least 80 per cent and preferably 100 to 120 percent in the

present cost structure. In the developed countries, minimum stock productivity

has been kept around 500 per cent (Misra, 1995)". The average stock

productivity was less than 80 percent in eleven stores (45.83 per cent). The low

productivity in eleven !stores indicates that margin and stock turn rate are not

satisfactory in the consumer cooperative stores.

6.30. Stiff Competition

One of' the distinct characteristics of the nineties is the shift in the

economic growth paradigm from comparative advantage to competitive

advantage (Shanna and Nair, 1999)". With the adoption of economic reforms

in India since 1991 and .with greater emphasis on liberalisation, operation of

market forces. structural adjustment and overall stabilisation, the cooperative

sector has also to gear itself up to face this competitive environment

(Viswanathan. 1997)".

In order to compete successfully with the private sector, the cooperatives

have to function as business unlts and have to be cautious of cost and quality.

The priman consumers' cooperative stores in Kerala are facing stiff

competition from the private shops and supermarkets, margin-free shops, retail

~ - - ~ --

'6MisraS.C (1995). o j i c i ~ . p.41. " Shamla S S and Na~r h1.K. (1999). "Economic Reforms in India and Competitiveness",

Prod2ru1ivi1~~. Vol 40. No 3. October-December. p.355 38 Viswanathan B S (1997). Coopernt~ves vis-a-vis Liberalised. Economic Environment.

Solrvmlr, / 3"' Indlcln ('ooperatrvr ( ' l~ngress . National Cooperative Union of India. New Delhi. p. 17

outlets known as Maveli Stores and Supplyco Supermarkets managed by the

State Civ~l Supplies Corporation, department stores and retail branches of

district wholesale stores, Triveni stores and Neethi stores run by the

Consumerfed. As the government provides subsidy to the State Civil Supplies

Corporation. the pnces charged by the Maveli stores are comparatively low. As

long as goods supplied through the Maveli stores are subisdised, the consumer

cooperatives are to be subsidised by the government. The consumers

cooperative sector ha;s to evolve new strategies to face the increasing

competition in the liberalised economy.

6.3 1. Defective Accounting and Audit Practices

The accounting system adopted in consumer cooperatives are elaborate and

expensive. At the same time, it IS reported that it is not able to provide the

information for taking right decisions at right time. (Himachalam and

Narendrakumar. 1994)". In Kerala, the accounts and audit practices in

consumer cooperatives are regulated by the provisions of Kerala Cooperative

Rules. Anand Declaration 2000 (('ooperative Initiative Panel) has resolved that

the law must prov~de for the appointment of Chartered P~ccountants as auditors

of cooperative soc~eties.

Authorities of 18 consumers' stores (75 percent) revealed that the audit

of accounts are in arrears for more than two years. Elev~:n societies (45.83 per

cent) complained that the audit fees based on the turnover of the store affects the

profitability of the stores. 19 stores (79.17 per cent) opined that audit report

does not contain any suggestions for the improvement of business in the stores.

23 stores (95.83 per cent) are of the view that audit by chartered accountants

would be useful and less expensive to the stores than the audit held by the

cooperative department of the government. The present system of accounting

methods is to be replaced by the management accounting system. The audit

should be completed within three months after the end of the accounting year.

The critical assessment of the efficiency in the management of assets and

liabilities of the societies may also be one of the objectives of audit.

6.32. Lack of Professionalisation of Management

The National Conference on Consumer Co-operatives convened by the

National Cooperative Consumers Federation of India in association with the

International Co-operative Alliance in 1995 at New Delhi recommended that

development of professional of management in the consumer cooperatives

should be given first priority of the movement. In all the :24 selected store, there

were no managers or secretary wlth professional qualifications in management.

Among the members of the management committee there were no graduates in

five stores (20.83 per cent). The members of Board of Directors of all the 24

stores had not attended any h-aining programmes or management development

courses. T h ~ s supports our hypothesis that absence of sound policies and

professionalisln In management adversely affect the financial performance of

consumer cooperative stores and satisfaction of customers. The management

body and other supporting; staff need regular training to improve their skills and

performance (Amin. 2001)4~. Absence of books, reading :materials, management

courses in retail trade r:tc act as a hindrance for developing professionalism in

management. The draft National Policy on Cooperatives (govenunent of India,

2001) states that the government recognises the need to !support the cooperative

movement to develop human resources, cooperative education and training,

appropriate technolog~es and ~nfrastructural facilitie:~ so as to promote

professional management in cooperatives particularly at: the primary level for

their greater functional and operational efficiency. As primary consumer

cooperatives in Kerala lacks professionalisation in mana,gement, it is necessary

to impart profess~onal education and training.

6.33. Miscellaneous Issues

a) Inconven~ent working hours:- In six consumers' stores, (25 percent) certain

customers were not satisfied with the duration of working hours. Though it

would be expensive for the stores, the noon interval is to be removed.

b) L,ack of credit facilities:- The customers in eight stores (33.33 percent) were

not satisfied with the denial of credit facilities. The store authorities should

formulate appropriate schemes to grant credit, on the security of trade

deposits collected from the customers.

c) Lack of purchase rebate: The member-customers of eight stores (33.33 per

cent) revealed that they are not getting any purchase rebate as members of

the store

d) Absence of home delivery of the goods: One of the reasons for the

preference assigned to private shops is the home delivery made by these

shops. The consumer cooperatives should collect purchase orders from

customers over telephone and goods should be delivered at home. Only one

store (4.17 per cent) has implemented this method for t:he time being.

e) Irregularity in the payment of' dividend:- Members of 21 stores (87.50 per

cent) were not satisfied with the nature of dividend payment. Cooperative

laws should be amended to enable the consumer store,s to create reserves and

~rtilise these reserves for the payment of dividend, even in the years of

accidental loss

f ) Reluctance to collect the feed back from customers:- 298 customers (99.33)

had informed that they had not given any suggestions for the improvement in

c,ustomer services of the stores. The authorities of 17 stores (70.83 per cent)

admitted that they were not collecting regular feedback from the customers.

The consumer stores may organise annually the customers' meet on a day in

the co-operative week and the evaluations and suggestions of customers are

to be entertained.

g) Poor wage structure:- The wage structure in 13 stores (54.17 per cent) were

not attractive to the employees. The sala~y paid to the employees appointed

on a temporaly basls is very low. Though there are financial constraints to

the stores. it is necessary to formulate some attractive incentive schemes,

based on the productivity of employees so as to boost the volume of sales

and profitability All the primary consumer cooperative societies in the state

may fonnulate a plan to implement the uniform wage !structure in accordance

with the provisions of Section 80 in the Kerala Cooperative Societies Act.

h) Lack of preferential treatment:- The government of India's draft national

policy 011 cooperation (2001 ) recognises the need to provide preferential

treatment to the cooperatives engaged in consumer business, especially in

rural areas. The authorities of 22 stores (91.67 per cent) revealed that they

are not receiving ar~y preferential treatment in their business. The

government, seml-government and panchayathi raj institutions should give

some preferential treatment to the consumer cooperatives in the matter of

purchases.

Though consumer cooperatives are operating in the midst of problems,

for the protection of the interests of consumers in llndia, they are to be

strengthened Consumer is not the king in our country, but a vehicle

conveniently used by businessmen for driving towards the goal of profit

maximization. (Singh and Sah, 2001)'". Kurian, in his valedictory address at

the International Symposium on Management of Rural Cooperatives of Institute

of Rural Management, Anand (December 7-1 1, 1992) said, "When we have

provided unrestrained freedom to multinationals and big, business houses, is it

not essential that we have strong. vital and competitive cooperatives to ensure

that our economy retains a place for the poor and to ensure that something more

humane than the "market" has a place in our economy? For the market, 1 fear is

little more than another name for greed and exploitation". Whenever the

government and coopera.tive leaders pay attention to the above mentioned

problems and nnplen~ent appropriate remedial measures, the consumer

cooperatives can meet the: challenges of the market economy and can play an

effective role in the protection of consumer interests in India. 4

41 Singh. L P and R.K. Sah (2001). 'Business Ethics in India: An overview", Southern Economr.sl. Vol.40. No. 10. Scptembcr 15. p.5