In this study, an attempt was made to analyse the productivity of subsidised and non-subsidised dairy farms for determining the income effect of subsidy provided to the dairy farmers by the government of Bangladesh. For this purpose, a sample of 200 subsidised ande200 non-subsidised dairy farms in 6 regions of the country were purposively interviewed with a pre-tested interview schedule. The results indicated that number of milk cows, concentrate feed cost, labour cost, veterinary cost and miscellaneous cost are the most determinant factors for the dairy production in study areas. The coefficients,of multiple determinant (R2) of subsidised dairy farms (SDF) and non-subsidised dairy farms (NSDF) in the output of dairy income showed, 75 and 74 percent variation, respectively. The sum of the elasticities of production showed a more or less constant return to kale both for SDF and NSDF, indicating that subsidization could not financially influence the generation of income in dairy farming.