The GST council, at its 47th meeting recently, decided to withdraw the tax exemption given to packaged dairy products, prompting both the public and private sectors to increase the cost of such products.
The council’s decision, while leaving a hole in the pockets of citizens, will also have a severe impact on the dairy sector, which is already struggling to cope with the rising cost of dairying. Sources at Karnataka Milk Federation (KMF) told STOI the federation has decided on an average hike of Rs 2-3 on a variety of products. “The products that will be affected include curds, sweet lassi and buttermilk. On average, the hike will be Rs 2-3 for curds, while it will be Rs 1 for buttermilk and lassi pouches,” KMF chairman Balachandra L Jarkiholi said.
At present, a pouch of Nandini curd (500 grams) is sold for Rs 22. The price will be Rs 24 henceforth. Similarly, 1kg of curd will cost Rs 46, up from Rs 43. “Going by the 5% GST, we have to additionally charge Rs 2.25 to Rs 2.6 for these categories. We have rounded it up to Rs 3,” a senior KMF official said. The revised price will be applicable to all varieties and flavours of curd, buttermilk and lassi.
KMF in a fix
The price revision has left KMF distraught as the cooperative sector had been awaiting the government’s approval to revise prices of milk and other dairy products for over six months. “The GST decision was indeed a setback to the dairy industry. Due to this inevitable revision, our demand to revise milk prices, which has been pending for almost a year, will be ignored,” an official explained.
The chairperson of a milk union said the government has been stalling on demands to revise milk prices citing the imminent polls to Bruhat Bengaluru Mahanagara Palike (BBMP). “More than 50% of KMF’s sales happen in Bengaluru and any decision on revising milk prices would severely dent the image of the government. Hence, it has been silent on KMF’s proposal. Currently, Karnataka pays the lowest rate to farmers per litre of milk (Rs 37).”
In the meantime, farmers’ activists have criticised the decision of imposing 5% tax on packaged dairy products. “Neither the customer nor the farmer will benefit from this move. The objective of the cooperative sector is the welfare of farmers. The government must immediately withdraw its controversial decision,” a leader from Hassan said.
