Law and the cooperative «movement» in India

This paper traces the emergence and expansion of credit cooperatives in rural India. It shows that the colonial government designed and implemented a top-down cooperative model which served the interests of politicians and overlooked those of peasants. Provincial governments set the terms of contract between cooperative and member and selectively assigned managerial and regulatory responsibilities. Using new data on cooperatives in colonial and postcolonial periods, the paper finds that lack of managerial and regulatory over sight deterred peasants from contributing to cooperatives. Low savings invited expansion in public investment. Cooperatives endured mismanagement and high default rates where deposits were smaller than public investments. Weak collective participation and strong government participation persisted and left cooperatives vulnerable to regulatory capture.