Market structure and the demand for veterinary services in India

• Published in: Agricultural economics Vol. 29; no. 1; pp. 27 - 42
• Main Authors: Ahuja, Vinod, Umali-Deininger, Dina, de Haan, Cees
• Format: Journal Article
• Language: English
• Published: Oxford, UK Blackwell Publishing Ltd 01.07.2003; Blackwell
• Series: Agricultural Economics
• Subjects: Demand analysis; H23; H42; India; L33; Livestock health; Poor; Privatisation; Q12; Veterinary services
• ISSN: 0169-5150; 1574-0862
• DOI: 10.1111/j.1574-0862.2003.tb00145.x

The livestock sector is emerging as one of the fastest growing agricultural sub‐sectors in India and the expectations are that this growth could further accelerate due to growing incomes and the high income elasticity of demand for livestock products. Given the size and relatively equitable distribution of livestock in India, this presents an excellent opportunity for the country to boost rural incomes and accelerate the pace of poverty reduction. But, successful capitalisation of such opportunities requires a policy regime that facilitates growth in productivity at the farm level as well as in the processing sector. The productive potential of animals depends crucially on the quality of nutrition, genetic material and the animal health system, and on all these counts, India has a poor record. The public sector continues to be the primary provider of veterinary services, and the deteriorating fiscal situation of most state governments is making it extremely difficult to either expand the reach of these services or improve the quality of service delivery. Although, on efficiency grounds, there is good rationale for commercialised delivery of these services, serious concerns prevail in India about the equity implications of private sector delivery or full cost recovery within the government system. Evaluation of the desirability of user fees or private delivery of livestock services requires an understanding of the factors influencing the demand for these services. This paper examines the nature of demand for veterinary services in three states of India and presents first estimates of demand elasticities for veterinary services. The results indicate that price is not an important determinant of the decision to use these services. Also, practically no variation is found in price elasticities across income groups. These results suggest that the fears of sharp declines in the use of these services as a result of full cost recovery and/or private sector delivery are unfounded.