Overview The Union Cooperatives Ministry, led by Amit Shah , informed Parliament that out of 8.48 lakh registered cooperative societies, only 3.49 lakh are in profit. 2.11 lakh are incurring losses, 1.41 lakh are non‑functional and 47,688 are under liquidation. Data for 99,325 societies remain unavailable. Key Developments Highest defunct‑society share: Uttar Pradesh (41.8%) , Madhya Pradesh (34.4%), Rajasthan (31.8%). Best performers: Maharashtra (only 1.21% defunct) and Gujarat (7.25% defunct). Sector‑wise distress: Dairy, Housing, Credit & Thrift, Labour and Women‑welfare cooperatives are the major laggards. Liquidation concentration: Five largest states (Maharashtra, Gujarat, Telangana, Karnataka, Madhya Pradesh) account for 93.44% of societies under liquidation. Policy response: Launch of National Cooperation Policy 2025 to strengthen the sector. Important Facts by Sector Dairy cooperatives : Dairy cooperatives in the five focus states total 14,251 non‑functional or liquidated units. Madhya Pradesh bears the brunt with 2,793 non‑functional and 3,952 liquidated societies. Post‑COVID milk price fall and rising procurement costs have eroded margins. Housing cooperatives : Maharashtra and Gujarat together host over 4,500 defunct or liquidating housing societies out of 8,033 total. Losses stem from scams in cooperative banks (e.g., PMC, New India, Mumbai Bank), unpaid maintenance fees and delayed redevelopment. Credit & Thrift societies : These credit‑thrift societies face severe stress due to inadequate reserves (often Labour cooperatives : While most states have few non‑functional labour societies, Telangana records 2,134 non‑functional and 185 liquidated units, largely in construction‑related ventures. Women‑welfare cooperatives : Madhya Pradesh shows the highest distress with 8,495 defunct societies, reflecting limited access to formal finance and social constraints on women entrepreneurs. UPSC Relevance The cooperative sector is a critical instrument for inclusive growth, rural credit, and employment generation—topics frequently examined in cooperative societies (GS3). Understanding the sector’s health aids analysis of agrarian distress, financial inclusion, and the effectiveness of government policies such as the NABARD and the newly announced National Cooperation Policy 2025 . The data also highlights the role of the RBI in supervising financial cooperatives. Way Forward To arrest the decline, the Centre should: Strengthen regulatory oversight of credit‑thrift societies, possibly extending RBI supervision. Facilitate timely liquidation and asset recovery to protect members’ deposits. Promote circular economy practices in dairy cooperatives as urged by the government. Ensure transparent governance in housing cooperatives and curb bank‑related scams. Enhance access to formal credit for women‑run cooperatives through targeted schemes. Monitor implementation of the National Cooperation Policy 2025 with periodic audits and state‑level coordination. Effective revival of cooperatives will bolster rural livelihoods, improve financial inclusion, and align with the government’s inclusive growth agenda.