Sunday, July 16, 2017

Think inclusion (41st DP 1st to 15th July, 2017)

Dear friends,

Finally after a long wait  GST  got implemented in India. It reminded me of Y2K syndrome at the time of turn of the millennium in the year 2000. There were doubts, apprehensions and an unknown fear that what would happen to all the computer controlled systems in the world in 2000 , but everything went fine and nothing happened.

History repeated itself on July 1 on GST roll over and everything looked under control. Dairy sector has welcomed the move and even  large dairy players endorsed that gst would have positive impact on branded dairy consumption in the future.

The news of the fortnight was JICA offering around 20000 crores for dairy development in the country. It is planned to have additional milk chilling capacity of around 5 crore liters per day through 1.05 lacs bulk milk coolers. The fund would also further be utilized to replace/ expand existing infrastructure of milk processing as created at the time of operation flood.

Since the beginning all such large funds have done wonders in Indian dairy sector and have also consolidated the much needed infrastructure for dairy value chain. Operation flood program is a global bench mark for dairy development. It enabled India to increase its milk production capacity around 9 times in 65 years.

Today if we look at very basic statistics then India produces around 40 crore litres of milk per day and almost half of it i.e 20 crores come to the market . Organized sector receives around 8-9 crore litres per day and rest goes to the unorganized sector through conventional trade channels of Milk man, Halwais, tea shops etc.

Private sector has also evolved over the same period and without much of subsidy or support from the government , today it is building dairy footprint of India shoulder to shoulder with government or public sector by investing on its own. The share of milk handled in organized sector by private sector is almost 50 percent.

However whenever such subsidies or funds come like from world bank for National Dairy Plan or current fund from Jica, private sector is hardly included in utilization of those funds. The infrastructure is developed and handed over to state run federations without much of accountability in terms of ROI or market development ( barring a few state federations which are doing good).

I raised this issue a few years back in one of the CII led committee and proposed that why not private sector is considered as an eligible partner for utilizing these funds or coveted National Dairy Plan  under PPP. 

If government plans to offer 1 lac bulk milk coolers free of cost to state run cooperatives in particular then why can not it be offered to private sector at say 50 percent subsidy. Same is true for the private dairies which are doing fantastic job for farmers in north , west and south India to be benefitted from these funds to augment their capacities and expand milk collection. When stakes are being put up by the private player, the chances of gaining success also improves.

I think it is high time for Indian government to think inclusive and develop a robust selection criteria for private sector to be part of dairy development in India which they are doing otherwise also by taking capital from the market at high cost of capital.

I request all the stakeholders to Think Inclusive to build India really the largest producer of cow milk also by 2026.

Happy e reading

with best regards

Kuldeep Sharma
Chief Thinking Officer
Suruchi Consultants (ISO 9001:2008 Company)
C-49 Sector-65
Noida 201307

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