Question

Explain the merits of a co-operative society.

Answer 1

The merits of a co-operative society are as follows:

1. Easy formation: It is easy to form a cooperative organisation. A minimum of ten members is needed to form the organisation. It does not involve many legal formalities. It is compulsory to register the organisation. However, the registration process is simple, and the fees are nominal.
2. Tax concession: Co-operatives always receive government support. As they play an important role in economic and social development, the government grants them tax concessions.
3. Open membership: Membership of a co-operative organisation is open to all. A person can become a member by purchasing shares. No difference is made on the basis of language, religion, caste, etc. A person can become a member whenever he wants and terminate membership at his own will. Membership is voluntary.
4. Stability: A co-operative organisation enjoys a long and stable life. The life of the organisation is distinct from the life of its members. If any member dies, becomes insolvent, or insane, the business is not closed.
5. Financing and charity: After providing a 15% dividend to members, the surplus amount is used for self. Financing by the co-operative societies. Some amount of leftover profit is used for charity, social activities, and the growth of the co-operative society.
6. Low operating expenses: Operating costs are low because members who manage the business do not receive salaries. Members of co-operative organisations work on an honorary basis. They are not paid for their services. There are no advertising or publicity expenses. This helps to increase profit.
7. Limited liability: Members’ liability is limited. It depends on the value of shares purchased by members. Therefore, people are interested in investing in a cooperative organisation.
8. Democratic management: Democracy is followed in the management of the co-operative organisation. All members are equal. The principle of “One member One vote” is followed. Members elect representatives who form the managing committee. They work according to laws. The managing committee looks after the day-to-day administration. Decisions are taken collectively in meetings.
9. Supply of goods at a cheaper rate: Goods are sold at a lower price through a co-operative store. This is because the organisation is service-oriented. The store does not use middlemen, and there are no advertising expenses. So, goods are sold at low prices.