explain the merits and demerits of cooperative societies 

A co-operative society is a voluntary association of persons of moderate means
who unite together to protect & promote their common economic interests.
1. Excise of formation : It can be started with minimum of 10 member.
Registration is also easy as it requires very few legal formations.
2. Limited Liability : The liability of members is limited to the extent of their
capital contribution.
3. Stable existence : Due to registration it is a separate legal entity and is
not affected by the death, luxury or insolvency of any of its member.
4. Economy in operations : Due to elimination of middlemen and voluntary
services provided by its members.
5. Government Support : Govt. provides support by giving loans at lower
interest rates, subsidies & by charging less taxes.
6. Social utility : It promotes personal liberty, social justice and mutual co-
operation. They help to prevent concentration of economic power in few
1. Shortage of capital - It suffers from shortage of capital as it is usually
formed by people with limited means.
2. Inefficient management - Co-operative society is managed by elected
members who may not be competent and experienced. Moreover it can’t
afford to employ expert and experienced people at high salaries.
3. Lack of motivation - Members are not inclined to put their best efforts as
there is no direct link between efforts and reward.
4. Lack of Secrecy - Its affairs are openly discussed in its meeting which
makes it difficult to maintain secrecy.
5. Excessive govt. control - it suffers from excessive rules and regulations
of the govt. It has to get its accounts audited by the auditor and has to
submit a copy of its accounts to registrar.
6. Conflict among members - The members are from different sections of
society with different view points. Sometimes when some members become
rigid, the result is conflict.
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Check NCRT text book pg no.36
U will get the answer
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