Jordbrukare > Dairy > Budget 2020: Economic impact of dairy, livestock segment in India

Budget 2020 India: Budget FY21 is an attempt to recognise the critical role of the livestock segment, especially dairy, plays in the economy.

Finance Minister Nirmala Sitharaman, in her second budget, unveiled a 16-point action plan for boosting farmers’ income. The FM acknowledged the need for substantial support and hand-holding for the farm-based activities, such as livestock and fisheries. For FY21, the government has allocated Rs 3,289 crore for the animal husbandry & dairy sector—12% higher than the allocation for the current fiscal. Livestock is one of the important sectors for generating employment, empowering rural women and helping augment farmers’ income.

In recent years, milk and milk products have emerged as the largest agricultural commodity in terms of value in comparison to food grains. The central government’s allocation for the animal husbandry sector increased to Rs 1,073 crore from Rs 433 crore during 2014-15 to 2019-20. Moreover, the budgetary allocation of dairy development also increased to Rs 325 crore to Rs 663 crore in the same period.

According to the Labour Market Information System (LMIS) Report on Dairy Sector (, crop production generates employment in the rural workforce for 90 to 120 days in a year; on the other hand, the dairy sector plays a major role in providing alternative employment opportunities for them throughout the year.

One of the measures announced by the finance minister was increasing the milk processing capacity from 53.5 million tonnes (MMT) currently to 108 MMT by 2025. This step would help in achieving targets under the National Action Plan on Dairy Development of increasing organised milk handling by both cooperatives and private sector by 20% and 30%, respectively, by 2023-24, from the current level of 21%.

This will have an impact on the building of village-level dairy infrastructure, increasing milk procurement, manufacturing the milk products and enhancing marketing capacities. Besides, it also encourages the small, private and cooperative players to manufacture high-quality value-added dairy products as per international standards. RS Sodhi, managing director, Gujarat Cooperative Milk Marketing Federation (GCMMF), country’s biggest dairy cooperative has said that the move to enhance processing capacity will create 96 lakh jobs as it will get more investment in the dairy sector.

Budget 2020 India: Budget FY21 is an attempt to recognise the critical role of the livestock segment, especially dairy, plays in the economy Programme (NAIP) was launched by prime minister Narendra Modi in September 2019, covering 600 chosen districts. The NAIP is a genetic up-gradation program covering all breeds of bovines to enhance milk production using low-cost breeding technology for improving the genetic merit of milch animals with high-quality seeds.

Another critical measure announced by the finance minister includes the use of Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) for fodder farming. This is a step towards ensuring that adequate green fodder is available throughout the year to the dairy farmers. The availability of feed and fodder remains a major concern. There is a huge gap between demand and supply of feed and fodder in the country. As per the estimates of Indian Council for Agricultural Research (ICAR) affiliated National Institute of Animal Nutrition and Physiology, the deficit in the requirement and availability of dry fodder, green fodder and concentrates during 2015 was to the extent of 21%, 26%, and 34%, respectively, which is likely to increase to 23%, 40%, and 38%, respectively, by 2025.

The elimination Foot and Mouth Disease (FMD) and Brucellosis of the animals by 2024 was also mentioned in the finance minister’s speech. A research paper ‘Foot and Mouth Disease: An Indian Perspective, 2017’ by Bhoj R Singh, principal scientist & head, division of epidemiology, Indian Veterinary Research Institute, Izatnagar, UP, highlighted that India loses around Rs 20,000 – Rs 22,000 crore annually from the livestock sector. This would reduce the burden of health expenditure on the animal in the farm households, increase milk productivity and enhances the export potential of the livestock industry.

Last year, PM Modi had launched the National Animal Disease Control Programme for eradicating the FMD and Brucellosis in the livestock. With an allocation of Rs 12,652 crore for a period of five years till 2024, the programme aims to vaccinate over 500 million livestock against the FMD.

The proposal of Kissan Rail would reduce the transport cost of the milk. Six states—Uttar Pradesh, Rajasthan, Madhya Pradesh, Andhra Pradesh, Gujarat and Punjab—contributed close to 60% of milk production nationally in 2018-19. This incentive will transport milk from milk-surplus regions to milk-deficit regions. This will make milk available in the deficit regions at a lower cost.

The proposal of reducing tax on cooperative societies from 30% to 22% will help Milk Cooperative Society to enhance business activities. For example, large-scale dairy cooperatives like Amul and their value-added products including butter, ice cream and other dairy products, will compete with international brands like Nestle, Britannia, and Hindustan Unilever Limited. The increasing import duties from 30% to 40% on whey powder, butter, ghee, butter oil is expected to boost domestic production.

The Budget measures are expected to bring in more investment into animal husbandry & dairying sector which would help the government’s aim of achieving doubling farmers’ income by 2022. Those budget measures also would support the revival of the rural economy.