Of the total increase, Rs 7 per litre will go directly to milk-producing farmers, while the remaining Re 1 will be allocated to milk cooperatives, Gowda said after the Cabinet meeting.
The decision comes amid mounting pressure from milk producers, who had staged protests demanding better returns, and cooperatives seeking an increase in procurement prices.
Farmers had demanded a Rs 10 per litre hike
Gowda said representatives from all parties in the Legislative Council had called for measures to support farmers facing financial difficulties. Milk producers had also taken to the streets to press for a price revision.
Representatives of milk cooperatives had met Chief Minister Siddaramaiah, the Animal Husbandry Minister and the Cooperation Minister, demanding an increase of at least Rs 10 per litre.
However, the government decided against the full demand after deliberations, settling on an Rs 8 per litre hike instead.
"The Cabinet has today decided to increase the price paid to milk-producing farmers by Rs 7 per litre. In addition, the cooperatives will receive an increase of Re 1 per litre," Gowda said.
He added that the issue had been discussed at two or three Cabinet meetings before the government reached a unanimous decision.
Farmers to receive Rs 47 per litre with incentive
Under the revised arrangement, the price paid to milk producers will rise from Rs 35 to Rs 42 per litre. The existing state government incentive of Rs 5 per litre will remain unchanged.
This will take the total amount received by farmers to Rs 47 per litre, including the government incentive.
Gowda said the move would benefit lakhs of farming families across Karnataka.
The decision aims to address the concerns of milk producers while providing additional financial support to the cooperative network that plays a key role in the state's dairy sector.
Price revision takes effect November 1
The revised rates will come into effect on November 1.
The Cabinet's decision follows sustained demands from farmers and dairy cooperatives for better compensation amid concerns over the financial viability of milk production.
While farmers had sought a steeper increase of Rs 10 per litre, the government said the approved revision was reached after discussions and consultations with stakeholders.