The Union Budget 2026-27 has been characterised by the National Dairy Development Board (NDDB) as a transformative fiscal blueprint for agriculture and allied sectors, particularly for dairy, livestock and cooperative movements. Dr Meenesh Shah, Chairman of the NDDB, emphasised that the Budget’s policy architecture is designed not merely to adjust allocations but to fundamentally strengthen income streams, entrepreneurial potential and institutional efficiency within rural economies.
At its core, this Budget reflects a strategic pivot towards enhancing farmers’ incomes and systemic support for cooperatives, which form the backbone of India’s dairy value chains. With the total allocation for agriculture and allied activities set at ₹1,62,671 crore, marking a year-on-year increase, the fiscal thrust reaffirms governmental recognition of rural livelihoods as central to inclusive economic growth.
Elevated Allocations and Sectoral Priorities
A notable feature of the Budget is the augmentation of resources for animal husbandry, which received ₹6,153.46 crore, a 16 per cent expansion over the previous fiscal. This substantial increase underscores the sector’s role in rural income generation and reflects policy intent to position livestock and dairy as engines of employment and resilience at the grassroots level.
Beyond mere quantum, the Budget introduces an Integrated Scheme for Entrepreneurship Development, with a dedicated ₹500 crore corpus to catalyse credit-linked subsidies, modernise livestock enterprises, and promote Livestock Farmer Producer Organisations (FPOs). These measures aim to embed entrepreneurial dynamics within traditional agrarian contexts, facilitating integrated value chains and employment opportunities.
Tax Reforms and Cooperative Strengthening
A critical analytical dimension of the Budget is its tax reforms targeting primary cooperatives. Historically, cooperative societies engaged in dairy and allied activities enjoyed full deductions on profits from member supplies of milk, fruits, and vegetables. The Budget now extends this benefit to cattle feed, a decision poised to reduce tax burdens on cooperatives that handle an estimated 102 lakh metric tonnes of cattle feed annually. This extension is expected to improve liquidity and payouts to farmer members, enhancing their share of the consumer rupee.
Dr Shah highlighted that Indian dairy cooperatives already return over 75 per cent of the consumer rupee to producers. The expanded tax reliefs, including provisions around inter-cooperative dividend income, are structured to reduce fiscal distortions and support multi-state cooperative investments under initiatives such as Sahkar se Samriddhi.
Institutional and Sustainability Initiatives
The Budget also signals an appreciation of animal health infrastructure gaps by proposing the addition of 20,000 veterinary professionals and a loan-linked subsidy scheme for new veterinary and para-veterinary institutions, hospitals, research laboratories and breeding facilities. Addressing service deficiencies across India’s livestock, which numbers in the tens of crores, is key to improving productivity, disease management and long-term sectoral sustainability.
In addition to agricultural and cooperative reforms, the Budget embraces sustainability paradigms, notably through support for Centralised Bio-CNG models. By excluding the entire value of biogas blended into CNG from central excise duty calculations, lawmakers aim to incentivise the conversion of dairy waste into clean energy and organic fertiliser, reinforcing circular economy goals within rural industrialisation.
Analytical Perspective: Structural Realignment and Rural Impact
From an analytical standpoint, the Union Budget 2026-27 reflects a multi-dimensional realignment of fiscal policy with the structural realities of India’s dairy and rural economies. It addresses longstanding impediments such as inadequate veterinary services, cooperative fiscal constraints, and limited entrepreneurial frameworks with integrated solutions that combine resource expansion, tax rationalisation and infrastructural support.
By entwining these fiscal instruments with broader developmental visions, including aspirations of Viksit Bharat 2047, the Budget endeavours to shift dairy and allied sectors from subsistence-oriented models towards formalised, value-added, and sustainable economic systems. Such recalibration, if implemented effectively, could catalyse improved capital efficiency, stronger cooperative ecosystems and enhanced incomes for millions of smallholder farmers.
