Livestock service sector reform in India: efficiency versus equity

Abstract

This paper examines the potential scope for efficiency and equity with reference to the recent public policy decision to commercialize the livestock service sector in India. The livestock service is provided free by the veterinary clinic in the public sector which operates virtually as a monopolist in Indian villages. The paper, using the discriminatory monopoly framework, shows that the government would succeed in its efforts to recover the cost of livestock service; the burden of cost recovery would fall on both the poor and rich beneficiary farm households. As regards to the effective cost of utilization of livestock service, the poor would end up bearing proportionately less than the rich. In the process, the market size for livestock service would decline in the short run but not output from animal husbandry. In the long run, there will be both growth and equity in the livestock sector.