Earlier this week, International Monetary Fund's chief economist Gita Gopinath raised a few eyebrows when she called India the biggest drag on global growth. IMF now expects the Indian economy to grow 4.8 percent this fiscal, a steep downgrade from the 7.5 percent it had forecast just a year ago.
The Harvard economics professor, married to IAS officer Iqbal Dhaliwal, is the first-ever woman chief economist at IMF and is a renowned expert on international trade and finance. But long before her IMF stint, Gopinath has had a professional association with India. In 2016, Kerala had appointed the Mysuru-born economist as its economic advisor.
Soon after the appointment, Kerala chief minister Pinarayi Vijayan faced opposition from some senior leaders in his own party who said Gopinath’s economic policies conflicted with the Left ideology. Some others said the Left's neo-liberal phobia was undermining Vijayan’s effort to bring in professional expertise to steer state’s growth.
But ideology and economics are rarely compatible. In fact, veteran CPM leader V S Achuthanandan even wrote to the CPM central leadership questioning Vijayan’s decision. Marxist economist Prabhat Patnaik cautioned the LDF government that it “should not fall into the trap of new economic development strategies. Such strategies are often anti-labour and against the interests of the common people.”
Remember, at that point, the southern state’s economy was in a parlous state. The main revenue source— remittance money from the middle-east-- was hit by labour restrictions in the Gulf. The state was staring at an economic crisis long even before the devastating floods battered its economy. Gopinath’s expertise could certainly come in handy.
To be sure, many including the BJP-wing of Kerala favoured Vijayan’s decision to bring in Gopinath. She was seen as a competent economist and also as someone familiar with Kerala’s economy, and hence better placeed to guide the state out of its economic mess. Her neo-liberal views and pro-industry stance were largely in sync with the strategists in Vijayan's government as well, but not with the CPM's old-guard.
They saw Gopinath's induction as an affront to their ideology. This ruffled some feathers in the Left fold, prompting the CPI-M politburo to seek an explanation from Vijayan's government and the CPI to question the appointment. "Neo-liberalism has become outdated worldwide," Kanam Rajendran, state secretary of the CPI, part of LDF in Kerala, told a private TV channel. "So we are not sure whether this Harvard professor (has) also made any change in her earlier stand on this," Rajendran said.
Criticised note ban
Unlike many economists in India, Gopinath wasn’t a big fan of Prime Minister Narendra Modi's 2016 demonetisation programme. In fact, she was among the first prominent economists who criticised the note ban in strong words. "No. I don’t think I know a single macroeconomist who thinks that this was a good idea. And, it’s not something I think should be done for a country such as India and the level of development it has,” Gopinth said in a 2018 interview.
Her logic: Japan has the highest cash per capita, way more than India. The cash in circulation, relative to the gross domestic product (GDP) for India was 10 percent, whereas in Japan it is 60 percent. “That is not black money; that is not corruption," Gopinath said.
But Gopinath praised Modi’s Goods and Services Tax (GST) calling it a real reform. However, at the same time, Gopinath pointed out the problem of lack of quality data on real economic parameters including the suspicious gross domestic product (GDP) figures, the absence of basic data such as state GDP per capita.
That Gopinath took up the Kerala assignment showed her interest and willingness to work for India. Many think that with her expertise in international finance, trade and investment, international financial crises, monetary policy, debt, and emerging market crises, probably, she would have been a great addition to India’s economic recovery phase. India’s loss and IMF’s gain?