Question

Explain the demerits of cooperative societies.

Answer 1

1. Limited Capital: Members usually have limited means, and the principle of one member one vote discourages large investments, leading to a shortage of funds.
2. Inefficient Management: Managed by elected members who may lack expertise; professional management is costly and often unaffordable.
3. Lack of Motivation: Office-bearers often have little incentive to work hard; there may be no direct link between effort and rewards, leading to apathy.
4. Non-transferability of Shares: Shares cannot be transferred, so members wishing to exit have to surrender their shares, limiting liquidity.
5. Lack of Secrecy: All members can inspect records and accounts, making it difficult to maintain business confidentiality.
6. Excessive Government Control: Legal regulations, audits, reports, and inspections can be time-consuming and restrict management’s flexibility.
7. Rift Among Members: Disputes may arise due to dominance attempts by some members, lack of harmony among diverse members, and cooperation issues.