India's new agri laws have potential to raise farm income, says IMF's Gita Gopinath

India's new agri laws have the potential to increase farmers' income, but there is a need to provide a social safety net to the vulnerable cultivators, IMF's Chief Economist Gita Gopinath said, adding that Indian agriculture needs reforms.

There are multiple areas where the reforms are needed, including infrastructure, the chief economist of the Washington DC-based global financial institution said on Tuesday.

The three agri laws, brought in September last year, have been projected by the Indian government as major reforms in the agriculture sector that will remove middle-men and allow farmers to sell their produce anywhere in the country.

Gopinath, in response to a question on the new farm laws, said, "These particular farm laws were in the area of marketing. It was widening the market for farmers; being able to sell to multiple outlets besides the Mandis without having to pay a tax. And, this had the potential to raise, in our view, farmers' incomes."

"That said, every time reform is put in place, there are transition costs. One has to make sure and pay close attention that it's not harming vulnerable farmers, to make sure that the social safety net is provided. Clearly, there is a discussion right now, and we'll see what comes out of it," she added.

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Thousands of farmers in India, mostly from Punjab, Haryana, and western Uttar Pradesh, have been camping at several Delhi border points since November 28, 2020, demanding a repeal of the farm laws, and a legal guarantee on Minimum Support Price (MSP) for their crops.

So far, 11 rounds of talks have taken place between the Indian government and farmer leaders with both sides hardening their positions.

In the last round of talks, the government offered to suspend the laws for 1-1.5 years, and form a joint committee to find solutions, in return for protesting farmers to go back to their respective homes from Delhi borders.

However, farmer leaders said they would settle for nothing less than a complete repeal of the laws, which they find pro-corporate, and a legal guarantee for the procurement of crops at government-fixed MSP.