Organizations constitute an important basis for rural transformation as they can provide impulses for initiating and stimulating growth. More importantly, they can provide a forum for the participation of people in decision-making. In India, and elsewhere, cooperative organizations have been extensively used by the State as a tool for promoting rural transformation. However, generally these organizations have not been particularly successful. A major reason for the failure of cooperatives has been the inability of the State to create an environment conducive for people to cooperate. The paper argues that for rural development organizations in general, and cooperatives in particular to be successful, the State must actively change the environment in a direction which would enable the organizations to function in social as well as economic terms.
