Ethical business governance of co-operatives in India with special reference to Lijjat Papad

VANSHIKA BHARDWAJ

Ethical governance of co-operatives in India is a multifaceted issue that involves ensuring transparency, accountability, and equitable participation among members. Co-operatives in India have been a vital part of the rural economy and community development, but they face various challenges related to governance. Here are some key aspects:

Principles of Co-operative Governance

1. Voluntary and Open Membership: Co-operatives should be open to all persons willing to accept the responsibilities of membership, without gender, social, racial, political, or religious discrimination.
2. Democratic Member Control: Co-operatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions.
3. Member Economic Participation: Members contribute equitably to, and democratically control, the capital of their co-operative.
4. Autonomy and Independence: Co-operatives are autonomous, self-help organizations controlled by their members.
5. Education, Training, and Information: Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives.
6. Co-operation Among Co-operatives: Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional, and international structures.
7. Concern for Community: Co-operatives work for the sustainable development of their communities through policies approved by their members.

Challenges and Issues in Ethical Governance

1. Lack of Awareness and Education: Many members and potential members are not fully aware of the principles and functioning of co-operatives.
2. Political Interference: Political influence often affects the autonomy and decision-making processes within co-operatives.
3. Corruption and Mismanagement: Instances of financial mismanagement and corruption undermine the credibility and effectiveness of co-operatives.
4. Inadequate Legal Framework: The legal framework governing co-operatives in India often lacks clarity and robustness, making it difficult to enforce ethical governance standards.
5. Limited Access to Capital: Co-operatives often face difficulties in accessing sufficient capital, which can affect their sustainability and growth.

Measures to Enhance Ethical Governance

1. Strengthening Legal Frameworks: Updating and reinforcing the laws governing co-operatives to ensure they support ethical governance practices.
2. Capacity Building: Providing regular training and education to members, leaders, and employees about co-operative principles and ethical governance.
3. Transparency and Accountability Mechanisms: Implementing robust mechanisms for financial transparency and accountability, including regular audits and public disclosure of financial information.
4. Encouraging Member Participation: Ensuring that all members have a voice in decision-making processes and encouraging active participation in governance.
5. External Oversight and Support: Establishing external oversight bodies to monitor the functioning of co-operatives and provide support when necessary.
6. Technology Adoption: Leveraging technology to improve transparency, record-keeping, and member communication.
7. Promoting a Culture of Ethics: Fostering a culture of ethics and integrity within co-operatives through codes of conduct and ethical training programs.

Case Studies and Best Practices

Studying successful co-operatives that have implemented strong ethical governance practices can provide valuable insights and models that other co-operatives can emulate. Examples include Amul Dairy in Gujarat and SEWA (Self Employed Women’s Association) in Ahmedabad, which have demonstrated effective governance and member participation.

By addressing these challenges and adopting best practices, co-operatives in India can enhance their ethical governance and contribute more effectively to the socio-economic development of their members and communities.

Detailed study of business practise of Lijjat papad

Lijjat Papad, formally known as Shri Mahila Griha Udyog Lijjat Papad, is an exemplary case of ethical business practices within a co-operative framework in India. Founded in 1959 by seven women in Mumbai with a modest investment, Lijjat has grown into a multi-million-dollar enterprise, employing thousands of women across the country. The success of Lijjat Papad can be attributed to its adherence to ethical governance and business practices.

Ethical Business Practices of Lijjat Papad

1. Empowerment and Inclusivity

• Women Empowerment: Lijjat Papad is run entirely by women, providing them with employment opportunities and a source of income. It has become a symbol of women’s empowerment in India.
• Inclusive Membership: Membership is open to all women who are willing to accept the responsibilities of being a member and abide by the principles of the organization.

2. Democratic Governance

• Democratic Decision-Making: Lijjat operates on a democratic model where each member has an equal say in decision-making processes. Major decisions are made collectively by the members.
• Rotation of Responsibilities: Leadership roles and responsibilities are rotated to ensure transparency and prevent the concentration of power.

3. Transparency and Accountability

• Financial Transparency: The organization maintains clear and transparent financial records. Regular audits are conducted to ensure accountability.
• Profit Sharing: Profits are shared among members based on their contributions, ensuring equitable distribution of wealth.

4. Quality and Ethical Production

• Commitment to Quality: Lijjat is committed to maintaining high standards of quality in its products. Members are trained to ensure consistency and quality in production.
• Ethical Sourcing: Raw materials are sourced ethically, and the production process adheres to high standards of hygiene and quality control.

5. Community and Social Responsibility

• Social Welfare: Lijjat engages in various social welfare activities, including education and healthcare for members and their families.
• Community Development: The organization contributes to community development by providing employment and supporting local economies.

Challenges and Solutions

1. Maintaining Quality Across Units

• Challenge: With production spread across multiple units, maintaining consistent quality can be challenging.
• Solution: Lijjat addresses this through rigorous training programs and regular inspections to ensure all units adhere to quality standards.

2. Scaling Operations While Preserving Ethical Values

• Challenge: Scaling operations while preserving the core ethical values and democratic governance structure.
• Solution: Lijjat has managed this by decentralizing its operations and empowering local units while maintaining a unified vision and mission.

3. Adapting to Market Changes

• Challenge: Adapting to changing market conditions and consumer preferences.
• Solution: Lijjat continuously innovates its product range and explores new markets while staying true to its ethical principles.

Impact and Recognition

• Economic Impact: Lijjat has provided livelihoods to thousands of women, significantly improving their economic conditions and contributing to the local economies.
• Recognition: The organization has received numerous awards and accolades for its contribution to women’s empowerment and ethical business practices.

Conclusion

Lijjat Papad serves as a stellar example of how ethical business practices can lead to sustainable growth and success. Its model of democratic governance, transparency, quality commitment, and social responsibility has made it a benchmark for co-operatives and ethical businesses worldwide. By staying true to its founding principles and continuously adapting to new challenges, Lijjat Papad continues to thrive and make a positive impact on society.

Refrences

1. Birchall, J. (2014). “The Governance of Large Co-operative Businesses.”
   • Provides an in-depth analysis of governance structures in large co-operatives and how they maintain ethical standards.
   • Link
2. International Co-operative Alliance (ICA). (2015). “Guidance Notes to the Co-operative Principles.”
   • Offers detailed explanations and guidance on the application of co-operative principles, including ethical governance.
   • Link
3. Fairbairn, B. (2003). “Three Strategic Concepts for the Guidance of Co-operatives: Linkage, Transparency, and Cognition.”
   • Discusses strategic concepts that are crucial for the ethical operation of co-operatives.
   • Available through academic libraries or interlibrary loan services.
4. Cornforth, C. (2004). “The Governance of Co-operatives and Mutual Associations: A Paradox Perspective.” Annals of Public and Cooperative Economics, 75(1), 11-32.
   • Examines the paradoxes in co-operative governance and suggests ways to address them.
   • Available through academic databases like JSTOR or Wiley Online Library.
5. Sharma, K. C. (2007). “Agricultural Co-operatives: Role in Food Security and Rural Development.”
   • Highlights the role of agricultural co-operatives in rural development and their ethical practices.
   • Link

Case Studies and Reports

1. Lijjat Papad: An Example of Women’s Empowerment and Ethical Business Practices.
   • Case study detailing the ethical governance and business practices of Lijjat Papad.
   • Available through various business case study repositories and educational institutions.
2. National Co-operative Union of India (NCUI).
   • Publishes reports and articles on the status and governance of co-operatives in India.
   • NCUI Website
3. International Labour Organization (ILO). (2015). “Co-operatives and the World of Work.”
   • Discusses how co-operatives adhere to ethical labor practices.
   • Link
4. Amul Dairy Co-operative: Transforming Rural Economy and Ethical Governance.
   • Case study of Amul, highlighting its governance model and ethical practices.
   • Available through business schools and case study publications.

Websites and Online Resources

1. International Co-operative Alliance (ICA)
   • Provides a wealth of information on co-operative principles, governance, and ethical practices.
   • ICA Website
2. National Co-operative Development Corporation (NCDC)
   • Offers resources and reports on the development and governance of co-operatives in India.
   • NCDC Website

THE WRITER MS VANSHIKA BHARDWAJ IS REGIONAL INSTITUTE OF CO-OPERATIVE MANAGEMENT, CHANDIGARH