Co-operation is a world-wide movement. It was introduced in India in the early years of the nineteenth century in the wake of famines, which had resulted in economic hardship and an alarming increase in the indebtedness of the farmers to the moneylenders. Co-operative credit on easy terms appeared to be the best means of getting the farmers out of the vicious circle of indebtedness and poverty. The idea was to free the farmers from the necessity of having to borrow money on usurious rates of interest from the village moneylenders. The Co-operative Societies Act, the first all-India Act, was passed in 1904 and it envisaged the formation of village credit societies. In 1912, the Act was amended to enable formation of other types of societies for activities relating to sale, purchase, production, housing etc. This Act also provided for the creation of federations of primary societies and for supervision, audit, mutual control and overall development of the co-operative movement. In 1919, the subject of co-operation was transferred to the provinces and most of the provinces enacted their own laws to regulate the working of co-operative societies. To give a stimulus to the co-operative movement, the Government of India set up an Agricultural Credit Department in the Reserve Bank of India with a view to providing financial assistance and credit to the co-operatives. The Bengal Co-operative Societies Act, 1940 was the first provincial Act of undivided Bengal. With passage of time, the West Bengal Co-operative Societies Act, 1973 and the West Bengal Co-operative Societies Act, 1983 had to be enacted. The West Bengal Co-operative Societies Act, 2006 has of late received the assent of the President of India and it will come into force shortly.
Co-operation was introduced in India mainly as a defensive organization for dealing with problems of rural indebtedness. With the acceptance and implementation of a planned economic development wedded to the ideas of socialism and democracy, co-operation became a dynamic economic instrument for achieving the social objectives of the National plan. After Independence, the national leaders once perceived the Co-operative Sector to develop as the third sector of Indian economy along with the Public Sector and the Private Sector. Within the Co-operative Sector, there are various types of co-operative societies forming different sub-sectors. These sub-sectors (often themselves termed as Sectors) represent Short Term Co-operative Credit Societies, Long Term Co-operative Credit Societies, Urban Co-operative Credit Societies, Marketing and Processing Co-operative Societies, Consumers’ Co-operative Societies and so on.