Essay on Cooperatives of Industrial Workers in India (1268 Words)

Essay on Cooperatives of Industrial Workers in India!

Kolkata is the third largest city in India and is the capital of the state of West Bengal.

This state was ruled by an elected communist party- headed government for over thirty years, which was replaced by the Trinamool Congress in June 2011 by a huge majority. This city had a number of worker cooperatives.

A study conducted by Professor Alok Bhaumik noted that at least twenty industrial units of varying sizes were run by their workers, including a ship-building and repairing factory, a bakery, two printing presses, two publishing companies, a factory manufacturing spindles for jute mills, two factories connected with making high tension wires, and a unit manufacturing batteries for rail compartments, among others.


All these units, with the exception of one, were taken over by their workers after their owners were unable to manage them, the sole exception being a cooperative unit manufacturing hosiery products. This venture was initiated by a minister of the Left Front government and its members were retrenched hosiery workers in the vicinity.

For the first ten years of their existence, most of the cooperatives were doing well in the sense that they were not making losses, though their profits were low or non-existent. All these cooperatives lacked working capital. For a decade after they started in the late 1970s, they could get loans for working capital from banks because the state government acted as guarantor.

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All cooperatives had repaid the loans before their terms ended. After ten years, the state government decided not to become guarantor for the cooperatives. The latter started facing problems because without working capital they could not sustain their business. Some of them depended on advances provided by their clients.


Four of these cooperatives were dependent on government undertakings for their market for they supplied products to different government departments such as the railways, state electricity boards and other undertakings. According to the leaders of the cooperatives, they faced problems in recovering their money because of corruption; the officers wanted their palms to be greased before they would release their dues.

There were some common features among these cooperatives. Firstly, all of them were initiated by their trade unions, invariably affiliated with CITU, a wing of the CPM which was the main constituent of the Left Front. The support of trade unions is vital for the formation of workers’ cooperatives.

In all cases (the exception being the hosiery cooperative), the trade union leaders proposed that the workers should take over the units after their managements had shut them. The lead taken by the trade union leaders provided a broader perspective for the movement.

The unions were able to draw in other sections of the working class in support of these workers. They could also negotiate with the government. The workers in these units could have not done all this on their own. The position of the unions was ambivalent in the beginning.


They had favoured the idea of forming cooperatives as an immediate measure of relief. Union leaders were primarily trying to contain the problem of unemployment resulting from the closures but they also believed that this was a prelude to takeover by the state government. The workers too believed this but this never happened.

After its initial support, the state government became indifferent to the fate of the cooperatives. This was a result of changes in the Left Front government’s orientation. When the Left Front was elected for the first time in 1977, it adopted a pro-labour policy. After 1987, when it was elected for the third time, its attitude changed.

The government then tried to create an atmosphere in the state that would be congenial to foreign investment. This basically meant that the unions would have to show restraint in their dealings with management. It repeatedly assured foreign investors that labour unrest would be contained as the main constituent of the government, CPM, controlled 80 per cent of the unionised workers in the state through CITU. In this process, the interests of labour were side-lined. The workers’ cooperatives were victims of the government’s new policies.

This created bitterness among the workers as well as the local trade union leaders who were supporting the cooperatives in their area. These leaders, local level CPM functionaries as well, were a major source of encouragement to the workers despite the lack of support of the CPM-led Left Front government.

One positive outcome of this situation was that the cooperatives learned to depend on their own strength for survival, rather than on an external agency like the state government. Despite adversities, some of the cooperatives continued to exist, but at least half of them ceased to function. The reasons for the failures were varied but in three cases infighting among workers had led to intense rivalry among the worker-members.

Besides support of trade unions, another major factor for the existence of these cooperatives was internal democracy. Here, too, the union leaders played a positive role. The leaders met the workers frequently and explained the problems to them. Dissemination of information is the basis of internal democracy.

In the aforesaid three cooperatives, the leaders tried to keep the members informed on all aspects of their functioning. The day-to-day activities and policy matters were handled through consensus. This ensured that all workers would participate actively in the cooperative’s functioning.

The successful cooperatives practised cooperative democracy. The formal means was through the General Body Meetings where reports were placed for discussion and policies were finalised. Elections to the Managing Committee (Board of Directors) were held regularly. The informal means were of holding regular meetings with the workers and discussing the problems faced and the possible solutions. Workers got more involved in trying to make their ventures successful.

The problems facing cooperatives are lack of adequate working capital and trained personnel, and the corruption involved in procuring contracts. Three cooperatives could not get loans from the banks because they needed guarantors. Though the state government had initially agreed to stand guarantor for bank loans, it later backed out. If these cooperatives had had access to greater liquidity they could have increased their production and employed more workers.

Corruption, involving kickbacks, is a problem these cooperatives faced in their dealings. The elected members have said that soon after they had started functioning, the cooperatives found that they would have to pay bribes to various state agencies for procuring orders and also for collecting payments after the orders were executed.

Four of these cooperatives that were largely dependent on orders from government agencies were the worst sufferers as their payments were held up for several months at a time for they did not bribe the officials concerned to speed up payment of their dues.

This meant that their working capital was blocked for a long period of time. All four had to close down eventually. By 2010, only two of the cooperatives, a printing and publishing unit and a factory manufacturing aluminium cables, were in operation.

We have seen that new types of management practices involving direct participation of workers did not last for a very long time— twenty-five years at the most. However, it cannot be deduced that these experiments were totally unsuccessful

Most of them failed because of forces beyond their control, such as, lack of working capital, lack of support from the government, and corruption. Some, like the ones that were victims of inter-group rivalries, were themselves responsible for their failures. Had the government provided greater support a few of the cooperatives could have survived.

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