Dairying is the backbone of the marginal farmers and landless labourers spread over numerous villages scattered throughout the India. It is primary source of income and employment for many of India’s poor. This sector can play an important role in determining future prospects for the employment generation and poverty alleviation in the India. Performance of dairy sector is expected to influence growth in the rural economy. The feed for milch animals is largely dependent on the crop residues and agro-industrial bio-products. Milk production in India is a low output farm activity wherein about three-quarters of rural households own one to three milch animals. Income from dairying, which often helps tide over unforeseen demand for liquid cash, contributes nearly one-third of the rural household’s gross income and in case of landless wage earning households nearly half. In the present study attempt had been made to examine the costs and returns from milk production, estimate resource use efficiency and study the marketed surplus and disposal pattern of milk by the milk producers in the study area and also suggest the way of increasing profit of milk producers.