Cooperative Organisation Exercise Solutions | KalviGavani

Cooperative Organisation: Exercise Solutions

How to Use This Page

1. Read the textbook first — These solutions are for revision, not a replacement for the textbook chapter. 2. Attempt the questions yourself before checking the answers. This helps you identify weak areas. 3. Focus on the MCQs and short answers for quick revision, and the detailed answers for in-depth understanding. 4. Use the Key Concepts table for a rapid recap before exams. 5. Check the Exam Checklist at the end to ensure you have covered every topic.

Key Concepts (Quick Recap)

I. Choose the Correct Answer (MCQ)

Q1. Membership in a co-operative organization is ......... (a) Restricted (b) Limited (c) Open to all ✓ (d) By birth

Q2. Co-operative fails because of ......... (a) Limited capital (b) Inefficient management (c) Mismanagement ✓ (d) Lack of public support

Q3. All cooperatives are established with ......... (a) Profit motive (b) Service motive ✓ (c) Charity (d) None

Q4. Consumers Co-operation was first successful in ......... (a) England ✓ (b) India (c) USA (d) France

Q5. Rochdale Society of equitable pioneers started by ......... (a) Robert Owen ✓ (b) Kautilya (c) Taylor (d) Fayol

Q1 (Additional). Cooperative movement started by Robert Owen in the year ......... (a) 1840 (b) 1842 (c) 1844 ✓ (d) 1846

Q2 (Additional). First-ever Cooperative Society started in the year ......... (a) 1842 (b) 1844 ✓ (c) 1846 (d) 1848

Q3 (Additional). Minimum number of members to start a cooperative ......... (a) 10 ✓ (b) 7 (c) 5 (d) 2

II. Fill in the Blanks

1. Membership in a cooperative organisation is open to all without discrimination. 2. The cooperative movement was started by Robert Owen in the year 1844. 3. The Rochdale Society of Equitable Pioneers was formed by 28 workers in England. 4. The minimum number of members required to start a cooperative society is 10. 5. The primary motive of a cooperative society is service, not profit. 6. Cooperatives operate on the principle of one member one vote regardless of capital contributed. 7. The main cause of cooperative failure is mismanagement.

III. True or False (with corrections)

1. True or False: Cooperatives are established with a profit motive. — False. Cooperatives are established with a service motive. Profit is secondary; service to members is primary.

2. True or False: Each member's voting power depends on the capital they contribute. — False. Cooperatives follow the principle of "one member one vote" regardless of the capital contributed.

3. True or False: The minimum number of members to start a cooperative is 7. — False. The minimum is 10 members. (7 is the minimum for a partnership firm.)

4. True or False: Robert Owen started the cooperative movement in England. — True. Robert Owen formed the Rochdale Society of Equitable Pioneers with 28 workers in England in 1844.

5. True or False: Cooperatives enjoy tax concessions because they are non-profit enterprises. — True. Since cooperatives are non-profit enterprises, the government provides various exemptions and tax concessions.

6. True or False: Cooperatives cannot be dissolved due to mismanagement. — False. Mismanagement is the main cause of cooperative failure. If managing committee members are corrupt, they can swindle funds leading to closure.

IV. Match the Following

V. Answer Briefly (2-mark answers)

Q1. What is a cooperative organization? A private business organization owned and controlled by the people who use its products, supplies, or services. It operates on the principle of "one member one vote" regardless of the capital contributed by each member.

Q2. Define Cooperatives (H. Calvert's definition): H. Calvert — "Co-operation is a form of organization in which persons voluntarily associate together as human beings on the basis of equality for the promotion of the economic interests of themselves." This definition highlights three key aspects: voluntary association, equality among members, and promotion of economic interests.

Q3. What are Credit cooperatives? Cooperative credit societies providing short-term financial help to members, formed by agriculturists, artisans, industrial workers, and salaried employees. They charge lower interest rates than moneylenders and provide easy access to credit for their members.

Q4. Is low tax possible in cooperative society? Yes. Since it is a non-profit enterprise, the law gives preferential treatment and the government provides various exemptions and tax concessions. The cooperative society is exempt from income tax on profits earned, up to a certain limit.

Q5. Who are Rochdale pioneers? Robert Owen formed a consumer's cooperative society in England in 1844 with 28 workers, called "Rochdale Society of Equitable Pioneers." This was the first successful consumer cooperative in the world, and it laid the foundation for the modern cooperative movement.

Q6. How is cooperative a democratic control organization? Cooperatives are democratic organizations controlled by members — those who buy goods or use services — who actively participate in setting policies and making decisions. Each member has one vote regardless of the capital contributed, ensuring equality in decision-making.

Q7. What are Housing cooperatives? Provide residential accommodation on ownership or rent basis. People intending to build houses join together; societies advance loans repayable over 15-20 years. Members contribute monthly and the cooperative manages the construction and allocation of houses.

Q8. What are Producers cooperatives? Established and operated by producers to increase marketing possibilities and production efficiency. They process, market, and distribute their own products. Examples: cooperative weavers' societies, cooperative carpeting units.

Q9. What are Cooperative farming societies? Farmers pool land together, treat it as one big farm for cultivation, purchase inputs jointly, and market crops jointly. Office bearers are elected on a one member-one vote basis. This helps small farmers achieve economies of scale.

Q10. What are Industrial cooperatives? Association of workers and craftsmen in cottage/village industries who come together for collective production, processing, marketing, and to provide necessary services and assistance. They help small artisans who cannot compete individually with large manufacturers.

VI. Answer in Detail (5-mark answers)

Q1. Principles of cooperatives (All 7 principles): (i) Voluntary and Open Membership — cooperatives are open to all persons without discrimination based on gender, social status, race, political affiliation, or religion. Anyone who is willing to accept the responsibilities of membership can join. (ii) Democratic Member Control — members actively participate in setting policies and making decisions. Each member has one vote regardless of capital contributed, ensuring equality. (iii) Member's Economic Participation — members contribute equally and democratically control capital. Benefits accrue in proportion to business conducted with the cooperative, not based on capital invested. (iv) Autonomy and Independence — cooperatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, they must ensure democratic control by members is maintained. (v) Education, Training, and Information — cooperatives provide education and training for members, elected representatives, managers, and employees so they can contribute effectively to the development of the cooperative. (vi) Cooperation among Cooperatives — cooperatives serve their members most effectively by working together through local, national, regional, and international structures. (vii) Concern for Community — cooperatives work for the sustainable development of their communities through policies approved by their members.

Q2. Types of cooperative societies (5 types with explanations): (i) Consumers Cooperative — organized by consumers for better prices and quality. Exists to deliver goods and services rather than maximize profit. Also supplies essential commodities through PDS. Examples: Students' cooperative stores, cooperative provision stores. (ii) Producers Cooperative — created by producers for marketing and production efficiency. They process, market, and distribute their own products. Examples: cooperative weavers' societies, cooperative carpeting units. (iii) Marketing Cooperative — associations of small producers who come together for marketing their produce collectively. They help small farmers and artisans get better prices by eliminating middlemen. (iv) Credit Cooperative — provide short-term financial help to members at lower interest rates. Formed by agriculturists, artisans, industrial workers, and salaried employees. The most widely used cooperative form nationally (~90 million members). (v) Housing Cooperative — provide residential accommodation on ownership or rent basis. People intending to build houses join together; societies advance loans repayable over 15-20 years.

Q3. Advantages of a cooperative society: (i) Easy Formation — can be started with just 10 members; registration is simple and formalities are minimal compared to a joint stock company. (ii) Service Motive — cooperatives exist to serve their members, not to maximize profit. This ensures fair prices and quality products. (iii) Democratic Management — one member one vote ensures equality in decision-making regardless of capital contributed. (iv) Low Tax — since cooperatives are non-profit enterprises, the government provides various exemptions and tax concessions. (v) Limited Liability — the liability of members is limited to the extent of their capital contribution, protecting their personal assets. (vi) Government Support — cooperatives receive financial assistance, subsidies, and tax benefits from the government.

Q4. Can funds be misused in a cooperative society? Yes. If managing committee members are corrupt, they can swindle funds. Many cooperative societies have faced financial problems and closed down due to corruption and misuse of funds. This is one of the most serious problems facing cooperatives. Proper auditing, transparency in accounts, and active member participation in governance can help prevent such misuse.

Q5. Disadvantages of Cooperatives (5 disadvantages with explanations): (i) Limited funds — membership fees are low, which restricts the amount of capital that can be raised. This limits the scale of operations and the ability to expand. (ii) Over-reliance on Government funds — cooperatives often depend on government grants and loans, which are uncertain in amount and timing. This dependency affects their autonomy. (iii) Conflicts among members — internal politics and differences of opinion among members can hamper the functioning of the cooperative. When members have conflicting interests, decision-making becomes difficult. (iv) Mismanagement — corrupt managing committees can swindle funds. Since members may lack professional management skills, the cooperative may not be run efficiently. (v) Lack of public confidence — irregularities and mismanagement reduce trust among the general public, making it difficult for cooperatives to attract new members and grow their business.

Common Mistakes to Avoid

1. "Service motive" is the primary motive — Cooperatives are NOT profit-driven. Profit is secondary; service to members is primary. 2. Minimum members = 10 — Not 7 (partnership minimum) or 2 (company minimum). This is a specific MCQ trap. 3. One member one vote — Regardless of capital contributed. Unlike companies where voting power depends on shares. 4. Robert Owen started cooperative movement in 1844 — Not 1944 or any other year. 5. Mismanagement is the main cause of cooperative failure — Not lack of public support or inefficient management. 6. Rochdale Society — The first successful consumer cooperative, formed by 28 workers in England.

Exam Checklist

• [ ] Can define cooperative organisation (Calvert's definition)
• [ ] Know minimum 10 members to start a cooperative
• [ ] Can list and explain 5 principles of cooperation
• [ ] Can list 5 types of cooperatives (consumer, producer, marketing, credit, housing)
• [ ] Know disadvantages: limited funds, government reliance, conflicts, mismanagement
• [ ] Know Robert Owen and Rochdale Society (1844, England, 28 workers)
• [ ] Understand democratic control: one member one vote
• [ ] Know the service motive is primary, not profit