IMF’s new Chief Economist Gita Gopinath had slammed demonetisation

Academic and economic adviser to the Kerala government, Gita Gopinath, was on Monday, October 1 appointed as Director of the International Monetary Fund's Research Department.

Gopinath, who received her MA degree from the Delhi School of Economics and Bachelors from Lady Sri Ram College in New Delhi, is the John Zwaanstra Professor of International Studies and Economics at Harvard University. She is concurrently the economic adviser to the Chief Minister of Kerala and, according to her bio at Harvard, was appointed in 2016 to the honorary position with the rank of principal secretary.

The director of the IMF's Research Department oversees the World Economic Outlook Report that is considered a major survey of the global economy, as well as several other reports and research projects that determine the financial and economic statuses of countries.

IMF’s Managing Director Christine Lagarde called Gopinath "an outstanding economist with impeccable academic credentials, a proven track record of intellectual leadership and extensive international experience,” when announcing the appointment on Twitter. "All this makes her exceptionally well-placed to lead our Research Department at this important juncture. I am delighted to name such a talented figure as our Chief Economist," said Lagarde.

Many in India welcomed the announcement, and also pointed out what Gopinath had to say about the demonetisation exercise announced by Prime Minister Narendra Modi on November 8, 2016. Gopinath, in an interview to the Business Standard published on December 22, 2017, Gopinath had said that demonetisation was not a good idea. She had said that demonetisation should not have been done in India with the level of development that it has. Gopinath had said in India the cash in circulation, relative to the gross domestic product (GDP) was 10%, whereas in Japan it is 60%. “That is not black money; that is not corruption,” Gopinath had pointed out. She added that the time should have instead been used to fine-tune the Goods and Services Tax rates.

Key takeaways from Gita Gopinath’s interview to Business Standard

1. Gopinath said she did not know a single macro economist who thought demonetisation was a good idea
2. Demonetisation was not something that should have been done for a country with India’s level of development.
3. The cash in circulation, relative to the gross domestic product for India was 10%, whereas in Japan it was 60%. “That is not black money; that is not corruption,” said Gopinath
4. Saying that the Goods and Services Tax was a real reform in terms of formalising the economy, ensuring tax compliance and making it harder to earn black money, , Gopinath said the that instead of doing the demonetisation exercise, the government should have used that time to have brought in GST more smoothly

With IANS Inputs