The Union Budget 2026-27 has delivered a historic boost to India’s dairy and livestock sector, recognising its pivotal role in rural livelihoods and national food security. With dairy contributing around 5% to India’s GDP and supporting over 80 million farmers, the budget’s provisions mark a strategic effort to modernise the sector, improve productivity, and foster rural entrepreneurship.
Record-Breaking Allocation to Animal Husbandry & Dairying
The Ministry of Fisheries, Animal Husbandry and Dairying has been allocated ₹8,915.26 crore (approx. USD 1,074.1 million) for FY 2026-27, with ₹6,153.46 crore (approx. USD 741.4 million) earmarked for the Department of Animal Husbandry & Dairying (DAHD). This 27% increase from the previous year represents the highest-ever allocation to the department and reflects the government’s long-term commitment to dairy sector growth. The DAHD’s share of the national budget has also grown in significance, in line with the livestock sector’s consistent 7% annual growth.
Strategic Scheme Allocations Driving Growth
Key central schemes under DAHD have received enhanced funding, underscoring a holistic approach to strengthening the dairy ecosystem:
- Livestock Health and Disease Control (LHDC): ₹2,010 crore (approx. USD 242.2 million) allocated to sustain national vaccination drives (e.g., Foot-and-Mouth Disease eradication) and expand veterinary services.
- National Programme for Dairy Development (NPDD): ₹1,055 crore (approx. USD 127.1 million) allocated for strengthening milk chilling, processing infrastructure, and cooperative support systems.
- Rashtriya Gokul Mission (RGM): Receives a major fillip with ₹800 crore (approx. USD 96.4 million), supporting indigenous breed improvement, genetic enhancement, and the expansion of “Gokul Grams”.
- Animal Husbandry Infrastructure Development Fund (AHIDF): ₹465 crore (approx. USD 56.0 million) allocated to support private investment in dairy infrastructure via interest subvention and credit guarantees.
New Entrepreneurship Scheme Launched
A notable new initiative in Budget 2026 is the launch of a ₹500 crore (approx. USD 60.2 million) “Integrated Scheme for Entrepreneurship Development” in animal husbandry. Designed to support FPOs, startups, and individuals, this scheme offers capital subsidies and credit support to projects in veterinary healthcare, cattle rearing, feed production, and dairy processing. By incentivising private investment in veterinary colleges, rural hospitals, and diagnostic labs, the scheme aims to bridge service gaps in remote areas while creating sustainable rural employment.
Strengthening Credit Access for Dairy Farmers
The Kisan Credit Card (KCC) scheme continues to play a crucial role in empowering dairy farmers. With a revised credit limit of ₹5 lakh (approx. USD 6,024) per farmer, over 42 lakh dairy farmers have benefited from improved access to working capital. The Budget further supports this by expanding digital KCC issuance through the Jan Samarth portal, easing credit access for smallholders.
In addition, interest subsidies on short-term loans (effective ~4% for prompt repayment) and capital investment loans under AHIDF reduce the cost of credit, spurring investment across the dairy value chain. These subsidies are vital for driving modernisation and productivity improvements among small and medium dairy enterprises.
Economic Survey: Data-Driven Justification
The Economic Survey 2025-26 laid the groundwork for these allocations by identifying livestock as the fastest-growing agriculture segment. It flagged three major bottlenecks the budget now addresses:
- Fodder Deficits: With feed costs accounting for over 70% of milk production expenses, the Budget supports fodder entrepreneurship and breed hubs under RGM to address chronic shortages.
- Veterinary Infrastructure: New schemes fund veterinary colleges and rural hospitals, tackling a long-standing shortage of veterinary professionals.
- Animal Health & Genetics: Sustained investment in disease control and genetic upgrades ensures improved milk yield and herd health.
Holistic Impact and Industry Response
Together, these provisions position Budget 2026-27 as a catalyst for a second White Revolution. The combined allocation of ₹4,830 crore (approx. USD 582.5 million) under central sector schemes marks a 20% year-on-year increase. Experts within the dairy sector have welcomed the budget’s direction, particularly its focus on value addition, disease control, cold-chain development, and affordable credit.
Prashant Tripathi, founder of agri-tech firm Jordbrukare, noted: “This budget hits all the right notes. From supporting small dairy entrepreneurs with subsidised loans to improving genetics and animal health, it lays a strong foundation for sustainable growth. What remains key is timely execution.”
If implemented effectively, these measures are expected to:
- Increase milk yield per animal
- Reduce post-harvest losses
- Improve rural incomes
- Enhance the quality and safety of dairy products
With India producing an estimated 248 million tonnes of milk in 2024-25, the 2026-27 budget lays a robust foundation for growth in line with rising domestic demand and export potential.
Trends from Past Five Union Budgets (2021–2025)
The past five Union Budgets (FY 2021-22 through 2025-26) exhibit a clear pattern of increasing support for animal husbandry and dairying, though with varying emphases each year. Table 1 below summarizes the DAHD budget allocations and key dairy-related measures in each budget, followed by further discussion of the trends and outcomes.
Table 1: Budget Allocations and Key Provisions for Dairy Sector (Union Budgets 2021–2025)
| Budget (FY) | DAHD Allocation (₹ Cr) | Key Dairy-Related Measures (Central Initiatives) |
|---|---|---|
| 2021-22 | ~3,230 (est.) | Agri credit target set at ₹16.5 lakh crore with focus on animal husbandry, dairy & fisheries credit. Continued funding for ongoing schemes (NPDD, RGM, etc.) but no major new dairy-specific scheme. |
| 2022-23 | ~4,530 (est.) | 40% jump in livestock budget allocation reflecting increased priority. Rashtriya Gokul Mission & National Programme for Dairy Development funding raised ~20% to boost indigenous breed productivity and dairy development. Livestock Health (One Health) allocation up 60% (for Foot-and-Mouth Disease and brucellosis control). Tax reforms (reduced AMT and surcharge) for cooperative societies were introduced, benefiting thousands of dairy co-ops and ~8 crore dairy farmers via higher incomes. |
| 2023-24 | 4,328 (BE) | Credit target enhanced to ₹20 lakh crore for agri and allied sectors, ensuring greater credit flow to dairy farmers. DAHD budget saw ~40% increase to ₹4327.8 Cr (vs previous year’s actual spending), marking a significant scale-up. Emphasis on cooperative development: plan to form multipurpose primary co-ops (including dairy co-ops) in every village over 5 years and creation of a national cooperative database. Gobardhan Scheme expanded with ₹10,000 Cr investment for 500 biogas plants to convert cattle dung to energy – providing waste-to-wealth income for dairy farmers. New tax incentives: a 15% corporate tax rate for new cooperatives, and TDS exemption on cash withdrawals up to ₹3 Cr (raised from ₹1 Cr) for co-ops, directly aiding dairy cooperative societies’ operations. |
| 2024-25 | 4,521 (BE) | Allocation held steady (1% rise) at ₹4521 Cr, consolidating previous gains. Focus on continuity of schemes and completing ongoing projects. A major policy development was the extension of AHIDF to 2025-26 with a revised outlay of ₹29,610 Cr, to further incentivize private investment in dairy infrastructure. This included continued 3% interest subvention and credit guarantee support under AHIDF. The government also rolled out the Digital Agriculture Mission (2024) – setting stage for digital livestock services like traceability and tele-veterinary care (mentioned in Economic Survey). No new scheme was announced exclusively for dairy in Budget 2024, as it largely maintained funding levels and carried forward the flagship programs (PM-Kisan, livestock missions, etc.) in an election-year budget. |
| 2025-26 | 4,840 (BE) | DAHD allocation increased to ₹4,840.4 Cr (+7% YoY). Significant credit support: KCC loan limit for animal husbandry doubled from ₹3L to ₹5 lakh under interest subvention, expected to benefit ~7.7 crore livestock farmers. A new central scheme for women and marginalized dairy farmers was introduced – targeting 5 lakh women, SC/ST beneficiaries – to promote women-led dairying and inclusive growth. Nutrition linkage was highlighted by integrating fortified milk into the Poshan 2.0 and Anganwadi programs, bolstering demand for milk and improving child nutrition. The National Livestock Mission was ramped up (e.g. subsidizing livestock insurance premium to only 15% farmer-share across India to expand coverage). Overall, Budget 2025-26 built on prior initiatives with a sharper focus on inclusion (gender, SC/ST) and access to finance, while continuing investment in animal health and breed improvement (e.g. funding for Indigenous Breed Improvement under RGM was raised to speed up genetic gains). |
(Sources: Budget documents and PIB releases for respective years.)
Conclusion
Union Budget 2026-27 is a decisive step forward for the Indian dairy industry. With its record funding, innovative schemes, and strategic vision, it offers an integrated roadmap for sustainable dairy development. From fodder production to veterinary infrastructure and rural entrepreneurship, the budget addresses systemic challenges head-on. As implementation unfolds, the dairy sector has a unique opportunity to cement its role as a driver of rural prosperity and agricultural transformation in India.
Source: Analysis of Union Budget 2026 – Dairy Sector Perspective – Jordbrukare
