describe the economic advantage of co_opreative society.
Answers
Explanation:
Here are some Economic advantages of co-operative society:
★ Low taxes:
To promote the co-operative movement and also because of the fact that it is a non-profit enterprise, government provides various exemptions and tax concessions.
★ Rural credit:
Co-operative societies have contributed significantly in freeing villagers from money lenders. Earlier, money lenders used to charge high rates of interest and the earnings of the villagers were spent on payment on interest alone.
Co-operatives provide loans at cheaper interest rates and have benefited the rural community. After the establishment of co-operatives, the rural people were able to come out of the grip of money lenders
★ Government support:
The government with a view to promote the growth of cooperative societies extends all support to them. It provides loans at cheap interest rates, provides subsidies etc.
★ Own sources of finance:
A cooperative society has to transfer at-least one-fourth of its profits to general reserve. Therefore it need not depend on outsider’s funds to meet its future financial requirements. It can utilize the funds available in the general reserve.
★ Encourages thrift:
Cooperative societies encourage the habit of savings and thrift among their members. They provide loans only for productive purposes and not for wasteful expenditure.
★ Fair price and good quality:
Co-operative societies buy and sell in bulk quantities directly from the producers or to the consumers. Products are processed and graded before they are sold. Bulk purchases and sales ensure fair prices and good quality.
★Equitable distribution of surplus:
The surplus generated by the cooperative societies is distributed in an equitable manner among members. Therefore all the members of the cooperative society are benefited. Further the society is also benefited because a sum not exceeding 10 per cent of the surplus can be utilized for promoting the welfare of the locality in which the cooperative is located.
★Limited liability:
The liability of the members in a cooperative society is limited to the extent of their capital contribution. They cannot be personally held liable for the debts of the society.
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