According to Ministry of Cooperation, out of total 8.48 lakh cooperative societies, 2.11 lakh (around 24.8%) are in loss, 1.41 lakh (around 16.6%) are non-functional and 47,688 (around 5.5%) are under liquidation.

• Uttar Pradesh has the highest percentage of defunct societies at 41.8%, followed by Madhya Pradesh, Rajasthan, Andhra Pradesh and West Bengal.

Challenges Faced by Cooperative Sector in India 

• Weak Governance: Political elites dominate boards and consequent mismanagement exacerbates financial fragility, undermining member trust and participation. E.g. PMC Bank Fraud in Maharashtra. 
• Financial Constraints: Chronic financial fragility with reliance on smaller member shares, little working capital, rising NPAs and insolvency etc. 
• Contractual Inefficiencies: Poorly enforced contracts, unclear patronage rules, and intermediary dominance often mean that members receive prices below market levels. This is evident in sugar sector. 
• Dependence on members’ participation: When members’ engagement weakens, bargaining power declines, finances deteriorate and free-riding spreads. 
• Sector-Specific Issues: Dairy Sector (Unseasonal Rains, geopolitical disturbances in Asia, and robust festive demand), Housing Sector (financial crunch due to scam-hit cooperative banks, mismanagement of funds), Credit Sector (lack of oversight, mismanagement of credit unions), Women’s Welfare (limited access to formal finance, mobility restrictions, social inhibitions).