The Indian-born Gita Gopinath, currently a tenured economics professor at Harvard, has been appointed as the new Chief Economist of the International Monetary Fund (IMF) and is going to succeed Maurice Obstfeld, who is currently serving in the same position, at the end of 2018.
IMF is the international body responsible for ensuring the financial stability of developing countries by extending them large sums of money, largely for their BoP requirements, with the condition of imposing certain policies.
As an expert on trade, exchange rates, monetary policy and public debt, Miss Gita Gopinath is tasked with the responsibility of adapting the role of IMF in a world which is now beset with an emerging market crisis and a world that is also increasingly getting disillusioned with globalisation.
Gopinath is the second Indian to be appointed to the role of Chief Economist after Raghuram Rajan. Rajan was the Governor of the RBI from 2013 to 2016. Earlier he was named the IMF’s Chief Economist in the year 2003 before leaving the organisation in 2006 to join India’s Finance Ministry. Gopinath’s recent appointment has led to speculation that she will be a potential candidate to be considered for the top job at India’s central bank in a later date.
In addition to being the IMF’s Economic Counsellor, Gopinath will be also be the Director of the body’s research department – again becoming the first woman to do so. The department is crucial to the IMF’s functioning as it closely monitors the global economy and policies of member countries and is also tasked with publishing the World Economic Outlook Report every year.
It is to be noted here that she has been a strong critic of the Modi government’s demonetisation initiative that was undertaken in November 2016 in which the denominations of 500 and 1000 currency notes were declared banned suddenly.
In fact Mr. Raghuram Rajan had also criticised earlier the demonetisation move by saying that it, “was not a well-thought out exercise”. Similarly Gita Gopinath was also very vocal in her criticism of the note ban move. However she had fully supported implementation of the GST (goods-and-services tax).
Before moving to America for her Masters and Ph.D in economics, Gopinath pursued her undergraduate and graduate degrees in economics from Lady Shri Ram College and the Delhi School of Economics. Her time at Delhi University coincided with India’s balance of payments crisis in 1990-91 and this inspired her to pursue her interest in international finance. The crisis, which stemmed from a ballooning of imports in the mid-80s, saw India battle the problem of a fiscal deficit as well as a trade deficit simultaneously. Faced with a severe shortfall in its foreign exchange reserves, the government received an emergency loan from the IMF to cover its spending obligations while pledging its gold reserves as collateral. And this BoP crisis later on provided the trigger for the reform, by the Narashimha Rao led government at the centre, in the Indian economy leading it in the path of liberalisation, privatisation and globalisation, popularly known as LPG.
Since 2015, Gopinath has been advising Kerala’s CM, Pinarayi Vijayan, on economic affairs, having reportedly made recommendations on skill development and healthcare. Her appointment, however, was the subject of controversy given that her free-market beliefs were in contradiction to the ideals of Kerala’s left-wing party ideology which generally favours more and more state control over the economy with a minimal role of market. For example, once she flagged the concern on the state’s growing welfare expenditure terming it as a potential budgetary concern as could have destabilizing impact on the fiscal math of the state govt.