DAIRY SECTOR PLAY VITAL ROLE IN INDIAN FINANCIAL INCLUSION

Financial Inclusion and dairy sector

Financial inclusion in simplest term means “reaching the unreached” i.e. bring people under the financial umbrella who do not uses/have no access to financial product/services. Financial Inclusion was used by RBI for the first time in its Annual Policy statement of 2005-2006.

According to NSSO survey 59 round around 51.4% of farmer households are financially excluded from both formal / informal sources, of the total farmer households, only 27% access formal sources of credit; one third of this group also borrow from nonformal sources, overall, 73% of farmer households have no access to formal sources of credit. The above mentioned figures are not all this disparity is also reflected in terms of region, caste and occupational distribution.

Dairying has been considered as one of the activities aimed at alleviating the poverty and unemployment especially in the rural areas in the rain-fed and drought-prone regions. In India, about three-fourth of the population live in rural areas and about 38% of them are poor. Need financial inclusion. In 1986-87, about 73% of rural households own livestock. Small and marginal farmers account for three-quarters of these households owning livestock, raising 56% of the bovine and 66% of the sheep population

Animal Husbandry sector provides large self-employment opportunities. According to National Sample Survey Organization’s latest survey on Employment and Unemployment (July 2004-June 2005 NSS 61st round), 6.7 per cent of the work force was engaged in rural areas in animal husbandry sector as compared to 5.5 per cent in rural and urban areas combined in the country. The progress in this sector will result in a more balanced development of the rural economy

The country is the worlds largest milk producer 121.5 million tonnes of milk during 2010-11, accounting for more than 17% of worlds total milk production. It is the worlds largest consumer of dairy products, consuming almost 100% of its own milk production.

Most of the milk is produced by small, marginal farmers and landless labourers who are grouped into Cooperatives at the village level. To provide them a steady market and a remunerative price for the milk produced, about 13.90 million farmers have been brought under the ambit of 1,33,349 village level dairy cooperative societies in the country as a part of Operation Flood Programme.

.

The milk processing industry is small compared to the huge amount of milk produced every year. Only 10% of all the milk is delivered to some 400 dairy plants. A specific Indian phenomenon is the unorganised sector of milkmen, vendors who collect the milk from local producers and sell the milk in both, urban and non-urban areas, which handles around 65-70% of the national milk production.

In the organised dairy industry, the cooperative milk processors have a 60% market share. The cooperative dairies process 90% of the collected milk as liquid milk whereas the private dairies process and sell only 20% of the milk collected as liquid milk and 80% for other dairy products with a focus on value-added products.

R K.Mehta says, “Firstly, there are the milk producers who supply milk to Mother Dairy. They open an account with PNB to receive payment for the milk supplied. Secondly, Mother Dairy is another stakeholder which recommends milk producers to the bank, procures milk from them and makes payments to the milk producers every 10 days through the bank account opened with PNB. PNB is the third stakeholder as it opens and maintains accounts of the milk producers through the BCs, makes and receives payments and deposits at their doorstep and arranges for loans for needy milk producers from the bank branch.”