Where did milk worth ~60,000 crore go?

Spending on milk and milk products dropped in 2017-18, the year after demonetisation

There would hardly be any Indian who does not remember the advertisement in the 1990s under Operation Flood with the lyric “Doodh hai wonderful”.

It was to popularise milk across the country’s demographics by showing a schoolgirl, a bodybuilder, and an aged couple enjoying milk. It was prescient in the sense that milk production and consumption more than doubled in two decades.

But something unusual happened in 2017-18. The amount spent on milk and milk products (M&MP) dropped 10 per cent. While households, hotels, and halwai shops spent ~6 trillion on M&MP in 2016-17, consumption expenditure reduced to ~5.4 trillion in 2017-18, the data released by the National Statistical

Office (NSO) shows.

While this is a 10 per cent drop in nominal terms, there is a bigger decline of nearly 14 per cent in real terms (at 2011-12 prices) too — from ~4.1 trillion to ~3.53 trillion.

Experts and official spokespersons have varied interpretations of the data. While, some said falling farmer or labourer incomes accounted for this, according to others, global milk prices, which had tanked that year, made milk cheaper in India, and the amount of consumption did not go down.

Himanshu, who teaches economics at Jawaharlal Nehru University, said this pointed to a grim situation, and stagnant incomes of farmers and labourers were the reason.

“This indicates that the poorest (lowest-income households) did cut down on essential items in that year, which succeeded demonetisation,” he told Business Standard.

His independent analysis of the NSO data shows that incomes could have dropped in 2017-18.

Former chief statistician of India Pronab Sen called this “very serious” because it indicated crashing incomes.