Co-operatives in Five-Year Plans & Early Policy Milestones: V.L. Mehta Committee, Ram Niwas Mirdha Committee & State Partnership Strategies

1. Cooperatives in India’s Five-Year Plans (1st to 4th Plan)

Following independence, the Planning Commission identified the cooperative movement as the premier democratic instrument for transforming the rural economy:

• First Five-Year Plan (1951–56): Emphasized cooperative farming and agricultural credit, designating cooperatives as the economic arm of the Community Development Programme.
• Second Five-Year Plan (1956–61): Adopted the historic recommendations of the All India Rural Credit Survey Committee (1954), injecting massive state share capital and establishing large-sized primary agricultural societies (LAMPS).
• Third & Fourth Plans (1961–74): Shifted focus toward building secondary and apex processing giants: cooperative sugar mills, spinning complexes, and fertilizer federations (leading to the creation of IFFCO in 1967 and NCDC in 1963).

2. The Vaikunth L. Mehta Committee on Cooperative Credit (1960)

Appointed by the Government of India under the chairmanship of veteran cooperative titan Vaikunth Lallubhai Mehta, the Committee investigated the structure and viability of primary societies:

3. The Ram Niwas Mirdha Committee on Vested Interests (1965)

By the mid-1960s, extensive state subsidies and cheap credit had attracted unscrupulous opportunists. The Government appointed the Ram Niwas Mirdha Committee (1965) to eradicate bogus cooperatives and eliminate vested political interests:

• Purging Bogus Societies: Recommended statutory deregistration of non-viable, paper societies formed solely to pocket government subsidies.
• Curbing Vested Cliques: Recommended statutory limits preventing individuals from holding board directorships in multiple societies simultaneously or serving continuously beyond two consecutive terms.
• Barring Private Competitors: Urged legal disqualifications against individuals engaged in private moneylending or competing trades from entering cooperative management boards.

4. Evolution of State Partnership in Share Capital and Subsidies

While State partnership succeeded in rapidly expanding loan turnover and building capital-intensive processing federations, it fostered severe structural dependency: societies relied on government budget subsidies rather than mobilizing member thrift and deposits.

5. Policy Transition: From Social Welfare to Economic Viability

The combined findings of the Mehta and Mirdha Committees catalyzed a permanent policy evolution: establishing that a cooperative cannot fulfill its social welfare objectives unless it maintains uncompromising commercial viability, professional accounting, and democratic integrity.