Cooperation among human beings have existed in different forms from past centuries till now. The modern cooperatices have been formed in response to disorders due to the occurrence of industrial revolution. Inefficiency of market and government for various reasons, justifies the formation of the third sector of economy (including cooperatives). This paper aims to answer the following questions:What are the reasons for the formation of cooperatives? What is the thire sector of economy? What are the roles of cooperatives in macroe conomy?