Union budget 2026-2027 allocates US$1B to dairy sector

INDIA – The Union Budget 2026-2027 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.

The Ministry of Fisheries, Animal Husbandry and Dairying has been allocated ₹8,915.26 crore (approx. US$1 billion) 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.

First is 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.

Second is veterinary infrastructure: New schemes fund veterinary colleges and rural hospitals, tackling a long-standing shortage of veterinary professionals.

Third is animal health & genetics: Sustained investment in disease control and genetic upgrades ensures improved milk yield and herd health.

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