Budget 2024: Government to introduce a national cooperation policy for the cooperative sector to boost rural economy

The Centre will introduce a national cooperation policy for developing the cooperative sector, finance minister Nirmala Sitharaman said on Tuesday as she laid down a series of measures to boost India's rural economy.

The move follows calls by economists for the government to increase spending on rural projects amid slow rural consumption.

Mint in February reported that the government had set up a committee of 49 members to draft a national cooperation policy to promote a cooperative-based economic development model where technology, skills and education worked together.

It recommended that a national innovation fund be set up to encourage entrepreneurship in agricultural credit societies to strengthen rural economy.

“Our government will bring out a National Cooperation Policy for systematic, orderly and all-round development of the cooperative sector. Fast-tracking growth of rural economy and generation of employment opportunities on a large scale will be the policy goal,” Sitharaman said on Tuesday. 

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“This year, I have made a provision of ₹1.52 trillion for agriculture and allied sectors.”

Other recommendations by the committee include strengthening the cooperative credit structure and financing; creating infrastructure and technology; promoting high-quality education, training and research; and establishing good governance and networks. 

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These recommendations were submitted last December to the ministry of cooperation after 17 meetings and four stakeholder workshops.

The new policy will help in realising the vision of 'Sahakar se Samriddhi', promoting a cooperative-based economic development model, strengthening the cooperative movement in the country and deepening its reach in the grassroots. 

The government will also help implement digital public infrastructure in agriculture, in partnership with the states, Sitharaman said.

"We will strengthen their production, storage, and marketing," she said. This initiative aims to achieve "atmanirbharta" (self-reliance) in oilseeds such as mustard, groundnut, sesame, soybean, and sunflower.

"To enhance the supply chain of vegetables, the budget proposes the development of large-scale clusters for vegetable production near major consumption centres. "Lage scale clusters for vegetable production will be developed closer to major consumption centres. We will promote farmer producer organisations, co operatives and startups for vegetables supply chains including for collections, storage and marketing," she said.

In the run-up to the budget, economists and industry stakeholders had urged the government to ramp up allocations for rural schemes and provide a boost for housing programmes to stimulate consumer demand as private consumption has been growing at a significantly slower pace than the nearly 8% annual economic growth.

Consumption growth has remained weak since the pandemic. Although private consumption is recovering, with growth tracking at 4% in the March quarter, as against 1.5% a year ago, it is only just catching up with the pre-pandemic trend. 

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Signficantly, it remains below the pre-pandemic average of 6.3% in 2019.

Rural India's monthly per capita household consumption, adjusted for inflation, rose over 40% between FY12 and FY23, statistics ministry data showed, though it remains lower than urban consumption. Without adjusting for inflation, the figures stood at ₹6,459 for urban households and ₹3,773 for rural households in FY23, compared to ₹2,630 and ₹1,430 respectively in FY12.