India’s Dairy Sector

News: Union Budget 2022-23 is expected to boost the dairying and livestock sector with a host of measures to make it sustainable amid the ongoing Covid-19 pandemic.

Background:

  • Dairy is the single-largest agri-commodity in India. It contributes5% to the national economy and employs 80 million dairy farmers directly. A revival in economic activities, increasing per capita consumption of milk and milk products, changing dietary preferences and rising urbanisation in India, has driven the dairy industry to grow by 9-11% in 2021-22.
  • The livestock sector has grown at a Compound Annual Growth Rate (CAGR) of 8.15% over the last five years ending 2020. Growth in the liquid milk segment, which accounts for over half of the dairy industry, is likely to remain stable (6-7%). The organised dairy segment, which accounts for 26-30% of industry (by value), has seen faster growth, compared to the unorganised segment.
  • Dairy analogues, plant-based products and adulteration pose a major challenge and threat to the dairy industry. Shortage of fodder resources and ineffective control of animal diseases.  Absence of field oriented conservation strategy for indigenous breeds. Lack of skills and quality services to farmers for improving productivity and improper infrastructure to support the sector.

Major Announcements under Latest Budget:

  • Border villages in northern India with a sparse population and limited connectivity, have been covered under the ‘New Vibrant Villages Programme’ in the new budget. Some 95% of livestock farmers are concentrated in rural India. Hence, infrastructure development under the Vibrant Villages Programme will play a significant role in enhancing market access for these livestock farmers. New Vibrant Villages Programme announced in the budget aims to improve social and financial infrastructure in remote habitations, primarily along the border with China, and will be an improved version of the existing border area development programme.
  • To provide a level playing field between co-operative societies and companies, alternate minimum tax has been reduced from 18.5% to 15%. Government has also proposed to reduce the surcharge on co-operative societies to 7% from 12% at present for those having total income of more than Rs. 1 crore and up to Rs. 10 crore. This would help enhance the income of cooperative societies and its members who are mostly from rural and farming communities.
  • Allocation for the Rashtriya Gokul Mission and National Programme for Dairy Development has been increased by 20% in 2022-23. It is expected to help in increasing the productivity of indigenous cattle and quality milk production. Allocation for the livestock sector has been increased by more than 40% for 2022-23 and the enhanced allocation for central sector schemes by more than 48% shows commitment by the government for the growth of livestock and dairy farmers.
  • An almost 60% enhancement in allocation for livestock health and disease control for 2022-23 over the previous year will ensure healthier livestock.
  • Incentivising digital banking, digital payments and fintech innovations will create a ripple effect in the livestock sector through greater transparency by streamlining payments during milk procurement. A completely paperless, e-bill system will be launched by ministries for procurement.