1 Surabhi Singh Candidate #

Economics HL

EXTENDED ESSAY
How has the increase in price of milk affected the demand for milk in the household sector in the city of Jaipur?

Submitted by- Surabhi Singh Candidate # Word count-

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Contents

1.

Abstract...................................................................... .........Pg Introduction................................................................ ........Pg 3 Design of study............................................................Pg 6 the

2.

3.

4.

Market profile.....................................................................Pg 7 Theoretical framework......................................................Pg 9 Hypothesis.................................................................. ........Pg 13 Data collection..................................................................P g 14 Data analysis...................................................................... Pg 16 Conclusion.................................................................. .......Pg

5.

6.

7.

8.

9.

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10.

Bibliography................................................................ .......Pg of vernacular words .....................................................Pg List of figures......................................................................P g List of abbreviation...........................................................Pg

List

11.

Appendix..................................................................... .....Pg

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Introduction
Jaipur is the capital city of Rajasthan, which is a state situated in the north western part of India. Being a desert state, Rajasthan has an extremely dry climate. Because of this, milk and milk products play a vital role in the daily diet of the northwestern community of India. Milk is considered an essential drink for the children especially and milk products such as curd, butter, ghee, butter milk are consumed by all age groups in large quantities. Based on our interview with Mr. Narendra Sonigra, Manager Liquid Milk, Amul, the Jaipur milk market is estimated to be 12 lakh1 liters per day. With the setting up of the National Dairy Development Board in 1965 and Operation Flood2, which followed this, India has become the largest milk producer in the world. However, per capita milk consumption in the country for the year 2006-07 was extremely poor at 246 milliliters per day. This figure was somewhat better for Rajasthan, at 408 milliliters per day3. However, based on a survey carried out by Amul in 2007 in the city of Jaipur, the per capita milk consumption in the city of Jaipur was surprisingly low at 268 milliliters per day. As compared to the recommended ___ milliliters per day by the World Health Organization. Besides the high population of the country, the main cause for this low per capita consumption is low productivity of the cattle and lack of extension services to the farmers, which in turn leads to low productivity of the milch animals. Only about 18.55% of the milk production in the country is organized on the lines of the famous Anand Pattern, which is a 3 tier federated co-operative structure. In the state of Rajasthan, Saras (which is also a federated cooperative) is the dominant organization. It commands about 55-60% share of
1

10 lakhs are equivalent to one million.

Operation Flood was a Government program started in 1970 to increase the production of milk in the country.
3

http://www.nddb.org/statistics/milkprod_states_capita3.html

the Jaipur liquid milk market. In 2007, Amul, the most popular milk and dairy

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products brand in the country, entered the Jaipur market and started retailing liquid milk (it was already retailing dairy products in the State). Based on our discussions with Mr. Sonigra, Amul has been able to garner about 10-15% share of the liquid milk market in Jaipur. About 20-25% of the liquid milk market is catered to by the local dudhiyas (local milk vendors). The rest of the liquid milk market is catered to by Goras (a local brand). There are a few other local brands like Lotus but their sales are negligible. The milk products market is dominated by Amul and Saras. Besides, there are other small local vendors and brands but their market share is very low as compared to that of these leading brands. Large companies have tried to enter this market but they have not achieved much success. For example, a leading FMCG company, Britannia, retails dairy products such as butter and cheese in Jaipur and other parts of the country. However, their market share should be minimal. Saras, Amul and Goras are in the organized sector, having established front-end and back-end supply chains. Local dudhiyas sell loose milk in the local doodh mandis4. Besides, some of them also undertake home delivery, while some quality conscious consumers come to their dairy to take milk (in order to avoid any adulteration). In Jaipur, there are 3 local doodh mandis, which sell about 1.3 lakh liters of milk every day5. Thus, while the 3 organized players undertake processing and sell milk and milk products in various varieties (such as high fat, toned and double toned milk), the local dudhiyas only supply unprocessed milk. The price of liquid milk and dairy products has increased significantly in the last few years. For example, the local dudhiyas used to sell milk at about 18
4

Mandi- a market where fruits and vegetables are sold. Milk mandi market where milk is sold
5

Data given by Mr. Narendra Singh Sonigra

rupees per liter back in the year 2006 but this has increased to about 26

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rupees per liter now in the year 2009. As milk is an essential part of ones diet, this increase in price is a matter of serious concern to most consumers. The price increase could especially have a significant impact on the poor.

RESEARCH QUESTION

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Milk is an important part of a common mans diet; it is the best source for calcium. Any increase in price of milk could reduce its consumption and have serious implications on health standards, especially of children. Considering the dire consequences of this increase in milk prices, I decided to study the impact that this could have on the demand of milk. specific, the research question isTo be

How has the increase in price of milk affected the demand for milk in the household sector in the city of Jaipur?

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Design of the Study

Most colonies in Jaipur could be treated as homogenous units, comprising of inhabitants from the high, middle and low income classes. Therefore, cluster sampling was adopted and all respondents were chosen from 2 clusters Mahesh Nagar (a small area of Jaipur where I live) and the area in and around my school. School is a place where people of all communities and all classes can be found, be it the teachers, peons or the office staff. Structured questionnaires were administered on consumers about how the increase in milk prices affected their consumption of liquid milk and milk products. Similarly, besides detailed discussions, questionnaires were administered on milk retailers, local vendors. Further, discussions were had with the following:
1. An unstructured interview was conducted with Mr. Radha Swami

Thandhani, Manager of the Gaushala. (Gaushala is a large area where cows are reared for milk). Along with selling loose cow milk, the Gaushala also owns the brand Goras. Besides the interview, a questionnaire was also administered on him.
2. Mr. Ankur Chaturvedi, the Production Executive at the Saras processing

plant. Along with unstructured discussions, a questionnaire was also administered on him6.
3. An unstructured interview was conducted with Mr. Narendra Singh

Sonigra, Jaipur Depot In charge, Milk, and Amul.

4. Discussions were had with the local vendors at the largest of the three

milk mandis.

Limitations of the study

Appendix 1

1. The sample may not be representative as only 100 consumers were

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interviewed.
2. Even though the questions were explained in detail, there is a

possibility that due to lack of education, the implication of the question may not have been understood by the respondents.

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Market Profile
The milk industry in Jaipur is catered to by three-four organized players and numerous local dudhiyas who are categorized under the unorganized players. Jaipur market includes five major suppliers- Saras, Amul, Goras, local vendors, the Gaushala and the villagers who come and sell their stock of milk at the milk mandi. Each of the five major suppliers holds a different market share. Saras has gained preference over the last three to four years, hence dominates the market. Amul recently entered the market; although it does not hold a big market share it is still providing good competition to Saras and other suppliers. Similarly the other suppliers in the unorganized sector- local dhudiyas and milk mandi too hold a good market share and are giving quite a competition to others. the

Figure 1

The above figure 1 shows the market share covered by different suppliers for the supply of liquid milk only. Mahesh Nagar is an area where people of different incomes can be found,

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hence, the consumption variation can be studied well in this area. The market area here is well distributed among all the five major suppliers. Saras has many parlors and booths in the area; located at every 100-500 meters. Amul has only two booths and three other retailers in the area. Goras also has about five booths in the area, along with this it is the only branded milk which does home delivery. Both Saras and Amul produce processed milk of different grades while Goras supplies milk only of one grade. These firms run on the basis of the Anand Pattern; they are owned by the milk supplying farmers. This helps to eliminate middlemen and thus increase profits. The Milk mandis are catered to by the villagers who live on the outskirts of Jaipur. Some local dudhiyas buy milk from the Milk Mandi and then do home deliveries, whereas, some do the same with the milk sourced from their home dairies itself. These home based dairies, (run by any local dhudiya) are small in size but there are about 20-25 of these in this area. Consumers go and buy loose milk from there itself. Saras and Amul are the dominating firms in the milk products industry. There are other brands too but, their sales are much lower as compared to those of the two dominating ones. Goras produces only cow-milk products and it is the leading brand for them. Other than companies there are local shops who sell dairy products as well. The sweets caterers are the best example of this; other than this there are local shopkeepers who sell products like curd, cottage chesse, buttermilk (lassi), skimmed buttermilk (chaach), etc. Saras and Goras have their dairy plants set up in Rajasthan itself. Amul does not have a dairy plant in Rajasthan; it gets its needed milk and products from the Banaskantha dairy, situated in Gujarat.

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Theoretical Framework MARKET TYPE

The market forms exist in four types, which can be categorized under four headings Perfect competition Oligopoly Monopoly Monopolistic competition

OLIGOPOLY There are many firms present in the market but a few large firms dominate the market. These large firms enjoy economies of scale and often are able to sell their products at lower prices than other firms. The products sold are so similar that even a minimal increase in the price could have a large fall in the quantity demanded. There is high interdependence in an oligopolistic market. Thus, while any price reductions may be matched by competition (so as not to lose any market share), price increases may not be followed suit by the competitors. This implies that an oligopolistic firm will have a kinked demand curve, as shown in Figure 3. The demand will be relatively elastic if a firm increases its price but it becomes much more inelastic if the price is reduced.

WHERE IS FIGURE 3 MENTION HERE THE MILK MARKET IS AN OLIGOPOLISTIC MARKET

ELASTICITY
o PRICE ELASTICITY OF DEMAND (PED) It is the measure of responsiveness of the quantity demanded for a commodity as a result of change in price of the same commodity. It helps in calculating the response of consumers to a change in price of a product. The demand curves are always downward sloping and hence, the values are negative. PED = price % change in the quantity demanded % change in

PED varies as the elasticity of one good differs from the other. Some are classified as inelastic and some as elastic goods. Inelastic goods have very less or no substitutes and usually are necessary for a high standard of living. On the other hand, elastic goods are those with many substitutes and are usually of a luxurious nature. Milk has an inelastic demand as it is necessary for keeping good health. o CROSS PRICE ELASTICITY OF DEMAND (PEDx,y)It measures the relative sensitivity of the quantity demanded of a good with respect to a change in the price of another related good. Cross-price elasticity measures the closeness of substitutes and the relevance of complements7.

PEDx,y =
demanded for x

% change in the quantity % change in

price of y o PRICE ELASTICITY OF SUPPLY (PES) It is the measure of responsiveness of the firms to increasing the quantity supplied on the market due to a change in price. PES = price Similar to PED, the elasticity of a product supplied varies from one good to another. Goods are classified in different order with respect to having inelastic, elastic and unitary supplies. o INCOME ELASTICITY OF DEMAND (YED)% change in the quantity supplied % change in

7,8

Economics- In terms of The Good, The Bad and The Economist, - Matt McGee; published by IBID Press, Victoria.

It measures the relative sensitivity of the quantity demanded of a good with respect to a change in peoples income.8 YED = % change in the quantity demanded % change in income

Goods are classified accordingly, being income inelastic and income elastic. Income inelastic goods are those where the proportional increase in the quantity demanded is less than the increase in the income. Income elastic goods are those where the proportional increase in the quantity demanded is more than the increase in the income.

Hypotheses
Milk is likely to have an inelastic demand (it being necessary for good health); With an increase in the price of milk, there is likely to be an insignificant decline in the demand for milk. It is also hypothesized that with increasing incomes and prosperity in India, the demand for milk should have increased. Besides, this increase should have been more in the poorer sections, since they would now have the capability to satisfy their minimum nutrition requirements. Further, another hypothesis is that with increasing prices of milk and given the necessity to consume milk, consumers could have shifted to a lower grade of milk.

Data Collection
PRIMARY DATA Questionnaires were administered on the people around my house and the staff of my school, which include teaching staff, and other employees from the watchmen to the sweepers. Questionnaires were administered on the representatives of the following organized players

Amul Saras Goras

Questionnaires were also administered on vendors at the following retail points -

Milk Mandi Local Dudhiyas Booths and parlors Local Shops

Interviews were had with -

Mr. Narendra Singh Sonigra, Depot in-charge (Milk) Jaipur, Amul. Mr. Radha Swami Thandhani, the Manager of the Gaushala. Mr. Kajod Sharma, the Union leader of the doodh mandi.

Discussions with Mr. Ankur Chaturvedi, Production Executive, Saras during the visit to the Saras Dairy plant in Jaipur.

SECONDARY DATA

Secondary data has been sourced from various websites and books referred to in the bibliography.

Data Analysis
Milk is a drink which is consumed on a daily basis in one form or the other. It is one of the essential food items which are required every day and hence it should be available to all, be it of any income group. Because of this, liquid milk has an inelastic demand.
REASONING FOR THE INCREASE IN THE MILK PRICES-

The price of milk has increased significantly in the past two years. From Rupees 18 per liter of full fat milk in the year 2006, it has gone up to Rupees 26 per liter of full fat milk in the year 2008, which is approximately a 44% increase .As per the information obtained from the research, the main reasons behind this increase in price areMajor increase in the cost of production Shortage of supply Increase in demand

1. The cost of production of milk has been increasing over the years.
The main reason for this increase in the cost of production is the increase in the cost of feed. The cattle feed comprises of both wet and dry fodder. The wet feed comprises of a mixture of various food materials which are cooked together and then served to the cattle. Dry feed, locally known as tura or bhusa, is served directly without any processing. Given below is the increase in the cost of feed.

Feed (name)

Quantity (Kilograms / day)

Price (earlier) Rupees / kg 1.25

Price (now) Rupees/ Kg 3

% increase in price

Dry feed

5-8

140%

WET FEED
Gur (jaggery) 2

Winter - 1213 Summer - 22

Winter - 19 Summer 25-28

Winter - 50%58% Summer14%-27%

Kakada khal (Local feed) Gwar (Local feed) Kakada (Local feed) Gayhuo (wheat) Sarso (mustard seed) Maethi

2 2 2 1 1

14 13 16 7 5

16 17 18 12 12.5

14% 31% 12.5% 71% 150%

20

32

60%

Table 1 - Increase in cost of cattle feed Source: Discussions with the local vendors at the milk market, local dairies and with Mr. Devi Singh, a supplier of these products.

As the average rainfall has decreased from 611.6 mm to 573.7 mm 9 in the state of Rajasthan, the farmers are forced to use diesel fueled pumps to water their crop fields. With fuel prices increased by about 100%, the input cost for the cultivation and harvesting of food crops has increased. India experienced a real estate boom till 2008 (before the global credit crisis), because of which property prices rose significantly. Making use of this opportunity, many farmers sold their land, which led to a shortage of agricultural land. high prices. This resulted in reduced supply of cattle fodder and Besides, cost of other factors such as labour (200%) and

groundnut cake (135-140%) also increased.

2. The shortage of supply of milk is another major reason for the increase
in milk prices. This shortage is due to the increase in demand for red meat. With changing taste buds and increasing prosperity, the people of Jaipur are shifting towards red meat which is giving the farmers a good incentive to sell away their cows and buffaloes for a good sum. The butchers who paid only Rupees 4,000 6,000 three years ago are now willing to pay Rupees 18,000 20,000 for a buffalo today. Hence, a lot of cattle are being slaughtered in order to fulfill the growing demand for red meat.

3. Other than increase in the cost of production and shortage of supply of

cattle, the other main reason for the increase in the milk prices is the increasing demand for the product itself. As per the research, there has been an increase in the demand for milk. The local vendors at the milk market and Mr. Ankur Chaturvedi were persistent to point this out as a major reason for the increase in prices. There has been an increase in demand because of an increasing population. Further, with increasing incomes, changing lifestyles and a higher health consciousness, people
9

http://www.imd.ernet.in/section/nhac/dynamic/endofmonsoon.htm

are consuming more of milk, milk products and milk based drinks. A lot many coffee shops opened in the last two years, leading to an increase in demand for milk. CHANGING PREFRENCES Traditionally, most of Jaipur consumed unprocessed milk by purchasing it from the local vendors. But recently this has changed with a greater demand for processed milk. Saras has been in the Jaipur market since a long time, but its sales for liquid milk have increased only in the recent times. Based on our interview with Mr. Sonigra, Amul too has found high demand for its milk. The reasons for this shift are as follows: 1. Higher health consciousness (demand for fat free milk has increased).
2. Assurance of good quality and unadulterated milk by the organized

players.
3. Local vendors sell milk based on a take or pay model.

However, no such Convenience, in terms of is another ground on what basis this change has taken place. Consuming milk from the local vendor meant going to the local vendors dairy at a particular time and then waiting for your turn to come. Even if the local vendors used the required utensils, quantity remained a reason of concern. As the milk was fetched and sold right away, a lot of foam would lie in the container and hence, consumers would always complain. Other than this, mixing of water would often be a matter to concern and arguments between the vendor and the consumer. The price of milk would be same for all income groups and the quantity that one would purchase was also fixed (no fluctuations on every day basis). Whereas on the other hand, processed milk is available in different grades to suit a consumers choice and financial status. Also, mixing of milk is never a concern and so is not the quantity. Along with this, processed milk can be purchased at any time of the day and from any source

that comes your way. The different grades of processed milk available are as follows Saras supplies with five types of everyday use processed milk-

o Saras gold (full cream milk)

o

Saras shakti (standard milk)

o Saras taaza (toned milk) o Saras smart (double toned milk) o Saras fat free (skimmed milk- fat free) The toned and full cream milk are purchased most in this area. Saras also produces long shelf cow milk, whose demand as compared to the other everyday use milk is not much in the area.
As for Amul, it supplies three qualities of everyday use packed milk-

o Amul gold (standardized milk)

o o

Amul shakti (toned milk) Amul taaza (double toned milk)

Amul also supplies long shelf milk which is of four typeso Amul gold (standardized milk)
o o

Amul shakti (toned milk) Amul taaza (double toned milk)

o Amul slim and trim (fat free)

o

Amul cow milk

Goras produces only one grade of cow milk.

 MILK MARKET TYPE The milk market would be categorized as an oligopolistic market rather than being a monopoly. One could argue about this milk market being a monopoly as Saras dominates more than 50% of the market, but this would not be so as the other firms (suppliers) are giving it good competition. Along with this there are no such barriers to enter this market, and all have the good knowledge about the products and price. In an oligopolistic market, firms tend to have interdependence between them. If any firm increases its price then its sales will decrease to substantial amount. Although, if a firm decreases its price, then it cannot be assumed that its sales will increase. Milk market shares the same theory; the prices of milk are more or less similar still there are differences in the quantity consumed from each firm. The prices are still in coordination with the other suppliers present in the market. Even though Saras owns more than 50% of the market, it still does not hold the power to be a price giver. If the firm tries to increase its prices much higher than the other brands or suppliers available in the market then it will lose its consumers as they will switch to the other suppliers available in the market. PRICING The prices of the branded goods (milk and milk products) are fixed by the firms or companies and hence the consumers cannot bargain with them. Even the local vendors, who sell their milk to fixed consumers (bandhi), sell it at a fixed price which is decided in the beginning of the month as the payments are done on monthly basis. A routine change in price is seen in the milk market where the some villagers sell the milk to brokers who then further sell it the consumers. Other villagers sell their milk themselves. The price of milk may differ from one seller to other as it is based on the fat present in the milk; which is merely tested on fingers.

Analysis In analyzing the impact of the increase in price on the demand for milk in the household sector, the population was divided into 3 categories, based on the type of tenement. The primary data found strong correlation between income levels and the type of house that the respondents lived in, which is shown below. Income categories Low income Medium income High income Type of tenement Kuccha house Semi-pucca house Pucca house

Table 02: represents the different categories based on the type of house Source: The price of milk has increased significantly in the last two years. Table XX below gives the estimated increase in price per litre of different grades of milk. Price per litre (in Indian Rupees) December 2006 Full fat Standard Toned Double toned milk Cow milk Figure : xx 18 16 15 13 16.5 December 2008 26 22 20 17.5 19 % increase in the Price 44.44 37.5 33.33 34.61 15.15

Source: Based on discussions with the suppliers and confirmed by Mr Chaturvedi, Production _________. As can be seen from Table XX, while the increase in price of buffalo milk (in nominal terms) has ranged from 33% to 44%, the price of cow milk (in nominal terms) has increased only by 15.15% since December 2006. Table XX below analyzes the increase in the price of milk in real terms, ie, in inflation adjusted terms. In arriving at the increase in price in real terms, the Consumer Price Index Urban Non-Manual Employees (CPI UNME) has been considered to measure the inflation during the chosen period. December 2006 (UNME) 483 December 2008 569 % increase 17.8

CPI Index10 Price

(full

fat

18 16 15 13 16.5

26 22 20 17.5 19

44.44 37.5 33.33 34.61 15.15

milk) Price (Standard mik) Price (Toned milk) Price (Double toned milk) Price (Cow milk) Table XX: Source:

10

http://mospi.nic.in/stat_act_t4.htm

Thus, while all varieties of buffalo milk have experienced an increase in price in inflation adjusted terms, the price of cow milk has failed to keep pace with inflation. This could indicate a preference for buffalo milk in the city of Jaipur. There are various factors which determine the demand of a product, economically stated as the determinants of demand. Price, income, prices of other commodities, change in tastes and preferences, availability of substitutes are some major determinants of demand. In this study, the income and price has been looked upon in detail. The demand for milk is highly inelastic as milk is considered as an important ingredient of everyones daily diet. As the demand of any good is majorly affected by any change in price and income, liquid milk is just one of such products. The table below shows the variation of quantity demanded between each income group11. December Low income group Middle income group High income group Figure xx Source: based on the questionnaire administered on the consumers. On a weighted average the consumption of liquid milk now (December 2008) in low income group is 1.02 liters; 1.39 liters in middle income group and 2.56 liters for the high income group. There has been a substantial amount of change in the consumption as compared to two years back (December 2006) which has been represented in the figures above. The figures
11

December 2008 1.02 1.39 2.56

% change in demand 27.5 69.5 40.65

2006 0.80 0.82 1.82

Appendix

represent an increase in quantity demanded, much higher in the middle income group than in the high income group. The reason being, the ability to fulfill ones basic needs, the consumers belonging to the high income group were capable enough to fulfill their basic needs like consumption of liquid milk, back in 2006 as well. With increasing incomes the middle income group has increased its demand and therefore representing a higher increase in the quantity demanded. December Low income group Middle income group High income group Figure - xx Source: based on the questionnaire administered on the consumers. The table above represents the increase in expenditure on liquid milk. The major reason behind this increase in expenditure is the increase in incomes of each income group. The Per-capita income-based, Gini coefficient has moved up by 13% for rural India 0.38 in 1995-06 vis--vis 0.41 in 2004-05 and as much as 15% in urban India 0.39 vis--vis 0.43. At the all-India level, the Gini coefficient has moved up from 0.43 (1995-96) to 0.45 (200405)12. These figures depict an increase in the incomes of the people of India (this data was the most recent data available). 2006 17.215 17.58 16.055 December 2008 21.045 22.03 20.055 % change in the expenditure 22.25 25.31 24.91

According to the basic law of demand, with an increase in the price of a good there should be a decrease in the quantity demanded13. But this is not the case for liquid milk as despite an increase in its price the demand has
12

The Economic Times:

India rising, Bharat awaits trickle to turn into flood. 7 Feb, 2008, 0100 hrs IST, TNN

increased. The table above (figure XX) represents an increase in the prices of different grades of milk available in the Jaipur market. Demand and price are negatively correlated, but in the case of liquid milk there is a positive correlation, that is even the quantity demanded is increasing with an increase in the price. This is basically because of an increase in the increase in incomes. Income and demand have a positive correlation that is with an increase in the price the demand also increases. As stated before, the demand of a product depends on the various factors simultaneously and can be measured though different econometric models like multiple regression models and factor analysis. But these measures are not yet taught; therefore individual factor elasticity could not be computed. Although as increase in price seems to have no impact on the demand, the PED is primary based on the increase in incomes and can be assumed to be 0.114.

The Indian government has improved the budgets and hence the incomes have increased. This has had a major impact especially on the low and middle income groups as their living standards have improved. The per capita incomes have increased by about 10.468%; the household sectors contribution in the gross capital formation increased from Rs 5,00,036 crore in 2006-07 to Rs 5,78,775 crore in 2007-0815. This shows an increase in the overall incomes of all groups.
13

Economics- In terms of The Good, The Bad and The Economist, - Matt McGee; published by IBID Press, Victoria.
14

Rakesh Saxena: Dynamics of Demand for Milk in this Millennium; Published in Indian Dairyman, December 2000.

%change in demand Low income group Middle income group High income group Figure xx

% change in demand because of increase in prices

% change in demand because of increase in incomes

27.5 69.5 40.65

-2.225 -2.531 -2.491

29.725 72.031 43.141

Source: figure xx and data calculated on the basis of the questionnaires administered on the consumers. As there increase in price seems to have a minimal effect on the demand of liquid milk, it can be clearly stated that the increase in demand is mostly based on the increase in incomes. The table above represents the change in demand for liquid milk due to the increase in the incomes. The middle income group is %change in demand Low income group Middle income group High income group Figure XX Source: % change in demandbased on table 1 % change in incomes--- based on the data from the NSSO16
15

% change in incomes

PEY

29.725 72.031 43.141

13.88 5.169 15.45

2.14 13.93 5 2.79

http://www.domain-b.com/economy/general/20090130 income up.html ---based on CSO figures

16

http://mospi.nic.in/rept%20_%20pubn/ftest.asp?rept_id=523&type=NSSO ; http://mospi.nic.in/rept%20_%20pubn/ftest.asp?rept_id=527&type=NSSO

The percentage change in demand because of increase in incomes varies for each income group. The table above shows the PEY for each income group.

Conclusion
Milk is a good with high inelasticity.