Newsmaker: Economist in the spotlight

Newsmaker: Economist in the spotlight
Newsmaker: Economist in the spotlight

At the age of 46, she has accomplished what a girl coming from a middle class family would have never dreamt of. Gita Gopinath has become the first woman to be chief economist of the International Monetary Fund and the second Indian after Raghuram Rajan to occupy the position.

This is not her very first accomplishment the country can be proud of. It was nothing but her sheer determination and hard work that made her the third woman and the first Indian after Nobel laureate Amartya Sen to become a tenured professor at the Ivy League university. She is John Zwaanstra Professor of International Studies and Economics at Harvard. For her PhD in Economics from Princeton University, she was mentored by eminent economists like Ken Rogoff and former chair of the US Federal Reserve Ben Bernanke.

Gopinath has said that as a woman she has never felt discriminated against at the workplace, the second woman in recent days to say that – physicist Donna Strickland being the other one.

Academia beckons

Even as a school girl she was determined to excel in whatever she did. She quit sports practice after discovering that she could not excel in it and instead chose studies. Nothing could distract her from studies, not even her fondness for cricket matches. After studying science, she joined BA Economics at Lady Shri Ram College for Women in New Delhi to appear for UPSC exams. The desire to excel found her topping the subject in Delhi University. Meanwhile, she also discovered that administration was not her cup of tea and chose the cloistered – and in her case, uplifting – world of academia.

Probably she did not want to court the controversies of a career in administration and desired peaceful life associated with academics. But in academics she reached such heights that made her advice valuable for administrators. Needless to say, she often found herself in difficult and paradoxical situations while dealing with the political class in the past two years.

There is a view that her time has come and that perhaps explains her selection as the IMF’s chief economist, apart from her excellent credentials. She is an authority on exchange rate flexibility and a votary of flexible exchange rates. That would mark her  relevance in the present times.

She comes from Kannur, which is the heart of communism in Kerala, and she also belongs to a family of communist leaders. Her father is a relative of communist leader TC Narayanan Nambiar and her mother comes from the family of the CPI(M) leader AK Gopalan, better known as AKG.

But, as a Harvard professor her neo-liberal ideologies were in stark contrast to her leftist family background. For a person who has studied in the US and was mentored by eminent personalities like Ben Bernanke, it is natural to inculcate ideas from the neo-liberal school of thought.

Gopinath decided to return and serve her native state as an economic advisor of the Kerala government led by the CPI(M) on an honorary basis. It is no secret how deep socialist ideologies are rooted in Kerala's political landscape. Even her appointment became a big controversy as the Left-leaning economists warned that her ‘advice’ could be against the labour class and the common people.

According to party insiders, Gopinath was brought in by chief minister Pinarayi Vijayan and his Kannur lobby to rein in finance minister Thomas Issac, who despite being an economist has been gathering political support with his ground-level developmental activities. Issac was not consulted before appointing an economic advisor for the first time in the state, they say.

Kerala experience

Needless to say, Gopinath’s remarks always met with some controversy or the other. Her suggestion for a Chilean model to tackle the financial crisis in the state created a furore. She intended to suggest that Kerala should create a ‘financial stabilisation fund’ using NRI remittances to cope up with the economic fluctuations in the Gulf region similar to what Chile did with its copper revenue. Her detractors were not amused as Chile reminded them of failed neo-liberal reforms. Her recent advice to cut government expenses on salaries, pensions and other social security benefits also has met with opposition.

Her contradicting remarks about demonetisation too became the talk of the town.  In November 24, 2016, a few days after demonetisation, Gopinath said that “Modi’s policy intervention is bold, and the economic principles motivating it are beyond reproach”.

However, in an interview given to a newspaper in December 22, 2017, a year after demonetisation, Gopinath said that the exercise was not a good idea. She said that demonetisation should not have been done in India with the level of development that it has. In India the cash in circulation, relative to the gross domestic product (GDP) was 10 per cent, whereas in Japan it is 60 per cent and “that is not black money; that is not corruption”.

After a two-year stint as economic advisor of communist government in Kerala, Gopinath is assuming the office of chief economist at IMF. One is naturally reminded about how the Communist parties were up in arms against the Congress-led government at the centre for pledging gold and “operating as per the diktats of IMF and World Bank”. Though IMF and World Bank remained dirty words in the communist lexicon for several more years, it is common knowledge that even Left governments have borrowed from these international agencies.

As chief economist of IMF, Gopinath’s expertise in international macroeconomics and trade will be put to the test at a time when the world is threatened by trade wars between leading economies. With her passion for excellence, she surely is going to make a mark as IMF chief economist.