4. What are Co-operative Societies? Discuss its features. Differentiate between Public Sector and Private Sector.
Meaning of Co-operative Societies
A Co-operative Society is a voluntary association of persons formed to promote the economic interests of its members by mutual help and co-operation. It is an organization owned, managed and controlled by its members who join together to achieve common economic objectives — for example, to obtain credit at reasonable rates, buy inputs in bulk, market produce collectively, or provide consumer goods and services. The primary aim is service to members rather than profit for outsiders. Once registered under the Co-operative Societies Act (or relevant law), it becomes a separate legal entity.
Features of Co-operative Societies
- Voluntary Membership
Membership is open and voluntary. Any person who satisfies the society’s bye-laws and needs its services can join. Differentiate between Public Sector and Private Sector - Democratic Control — One Member, One Vote
Every member has an equal vote in decision-making regardless of the number of shares held. This ensures democratic management. - Service Motive (Not Profit Motive)
The primary objective is to provide services and improve members’ welfare rather than to maximize profits. Surplus is used for members’ benefit or development. Differentiate between Public Sector and Private Sector - Limited Interest on Capital
Co-operatives normally pay only a small or nominal interest on share capital; emphasis is on service rather than high returns on capital. - Distribution of Surplus on Basis of Patronage
Any surplus (net profit) after meeting expenses and reserves is distributed among members in proportion to their transactions (patronage) with the society — not in proportion to capital contribution. Differentiate between Public Sector and Private Sector - Separate Legal Entity
After registration, the society becomes a legal person — it can own property, enter contracts, sue and be sued in its own name. Differentiate between Public Sector and Private Sector - Limited Liability
In most co-operatives members’ liability is limited to the unpaid portion of their shares (subject to the society’s bye-laws and law). Differentiate between Public Sector and Private Sector - Mutual Help and Cooperation
Members cooperate to achieve common economic objectives — pooling resources, sharing risks and benefits. Differentiate between Public Sector and Private Sector - Open and Non-discriminatory Membership
Membership is generally open to all who meet the criteria set in the bye-laws (no discrimination on caste, religion, gender, etc., unless specified). - Government Supervision and Support
Co-operatives are registered and regulated under special laws; they often receive government assistance (technical help, subsidies, loans). - Small Capital Base (Typically for Primary Societies)
Primary/co-operative societies usually mobilize capital from members and local sources; hence capital is often limited compared with companies. Differentiate between Public Sector and Private Sector
Difference between Public Sector and Private Sector
|
Aspect |
Public Sector |
Private Sector |
|---|---|---|
|
Ownership |
Owned and controlled by the government (central/state/local). |
Owned by private individuals, partnerships or shareholders (private entities). |
|
Primary Objective |
Serve public interest / social welfare / strategic goals (profit is secondary). |
Profit maximization and return on investment for owners is primary. |
|
Control & Management |
Managed by government-appointed officials or boards; subject to political/administrative control. |
Managed by owners, professional managers or boards; decisions driven by market and owners’ interests. |
|
Source of Capital |
Funded from government budget, public borrowing, or public funds; may receive grants/subsidies. |
Funded by private savings, investors, bank loans, retained earnings. |
|
Risk Bearing |
Government bears major financial risk; may bail out loss-making enterprises. |
Owners and lenders bear the financial risk; losses affect owners’ capital. |
|
Pricing & Social Obligations |
May provide essential services at subsidised rates to meet social goals. |
Prices usually market-determined to recover costs and earn profit. |
|
Profit Distribution |
Surplus generally reinvested or used for public welfare; not primarily distributed as dividends. |
Profits distributed among owners/shareholders as dividends (after taxes). |
|
Accountability |
Accountable to the public / parliament / government; subject to public audits and political oversight. |
Accountable to owners, shareholders and regulators; market discipline applies. |
|
Efficiency & Flexibility |
May be less efficient due to bureaucracy, political interference and slower decision making. |
Generally more efficient and flexible due to competition and profit incentives. |
|
Examples |
Railways, public sector banks, electricity boards, state manufacturing enterprises. |
Private banks, manufacturing firms, IT companies, privately-owned retail chains. |
Conclusion
Co-operative societies are member-owned, democratically controlled institutions focused on mutual service and local development; they help small producers, consumers and workers by pooling resources and reducing exploitation. The public sector exists mainly to achieve social and strategic objectives under government ownership, while the private sector operates under private ownership with profit and efficiency as chief goals. All three — co-operatives, public and private sectors — play complementary roles in an economy. Differentiate between Public Sector and Private Sector
If you want to know the Syllabus of Management Principles and Organizational Behaviour, you must visit the official website Gndu.
👉 Note:- Important questions of Business Organisations
- Previous question Paper of Business Organisations on Gndu
- Types of business organisations
- Merits and demerits of joint stock company