Reasons for Ghee Adulterated in India

Source: The post reasons for ghee adulterated in India has been created, based on the article “Express View on ghee adulteration: High taxes are the problem” published in “Indian Express” on 30th September is 2024

UPSC Syllabus Topic: GS Paper 3 – food security

Context: The article discusses the high cost of milk fat, its vulnerability to adulteration, and how incidents like the Tirupati ghee controversy may increase consumer demand for branded ghee. It suggests reducing taxes on ghee to prevent further price increases and adulteration risks.

What are the Reasons for Ghee Adulterated in India?

1. High Cost of Milk Fat: Milk fat is expensive, priced at Rs 460-470 per kg, much higher than refined oils like palmolein, soyabean, and sunflower oil (Rs 125-130/kg) and beef tallow (Rs 85-90/kg). This cost difference makes ghee prone to adulteration with cheaper foreign fats.
2. Limited Availability: India produces only 4 lakh tonnes of milk fat annually, mostly used by dairies for ice cream, butter, and ghee. This limited supply increases the temptation to adulterate ghee.
3. High Demand for Large Quantities: Large buyers like the Tirupati temple need significant amounts of ghee (5,000 tonnes annually), increasing the risk of adulteration due to the pressure to supply large volumes.
4. Tax Anomaly: The 12% GST on ghee, compared to 5% on vegetable fat, makes ghee costlier, encouraging adulteration.

What Can the Government Do?

Reducing the 12% Goods and Services Tax (GST) on ghee, butter, and milk fat. It argues that this higher tax makes these products even more expensive compared to vegetable fat and milk powder, which are taxed at 5%.

Question for practice:

Examine how the high cost of milk fat, limited availability, and tax anomalies contribute to the adulteration of ghee in India.