Corporate vs. Cooperative: Exploring the Key Differences and the Absence of More Amul-like Cooperatives in India
India, a country with a diverse economic landscape, has seen the rise of various business models over the years. Two such models that have significantly impacted the Indian economy are corporations and cooperatives. While corporations are more prevalent, cooperatives like ‘Amul’ and ‘Indian Coffee House’ have also made their mark. However, the question arises – why aren’t there more cooperatives like ‘Amul’ in India? To answer this, we first need to understand the key differences between a corporation and a cooperative.
Understanding Corporations and Cooperatives
A corporation is a legal entity separate from its owners, with its own rights, privileges, and liabilities. It is owned by shareholders who benefit from profits but are not personally liable for the company’s debts. On the other hand, a cooperative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.
Key Differences between Corporations and Cooperatives
Ownership: In a corporation, ownership is based on shareholding, while in a cooperative, each member has one vote regardless of their investment.
Profit Distribution: Corporations distribute profits to shareholders based on the number of shares they hold. Cooperatives distribute surplus to members based on their participation or patronage.
Control: In corporations, control is in the hands of shareholders or a board of directors. In cooperatives, control is democratic, with each member having equal voting rights.
Focus: Corporations primarily focus on profit maximization, while cooperatives focus on member welfare and meeting their needs.
The Absence of More Amul-like Cooperatives in India
Despite the success of cooperatives like ‘Amul’, their number in India is relatively low. This can be attributed to several factors:
Lack of Awareness: Many people in India are not aware of the cooperative model and its benefits, leading to fewer cooperatives.
Regulatory Challenges: The regulatory environment in India is more conducive to corporations than cooperatives. The process of setting up a cooperative is often complex and time-consuming.
Financial Constraints: Cooperatives often face difficulties in raising capital as they cannot issue shares like corporations.
Management Issues: Cooperatives are democratically controlled, which can sometimes lead to management inefficiencies.
In conclusion, while corporations and cooperatives both have their advantages, the prevalence of corporations in India can be attributed to a combination of lack of awareness, regulatory challenges, financial constraints, and management issues faced by cooperatives. However, with the right support and awareness, the cooperative model can thrive in India, as demonstrated by the success of ‘Amul’.