Harvard professor Gita Gopinath’s appointment as chief economist of the International Monetary Fund raises a question about her native India: Is IMF Managing Director Christine Lagarde more likely than Prime Minister Narendra Modi to hire someone with Ms. Gopinath’s stellar academic credentials?
In the past two years, three high-profile Western-trained economists have exited important policy-making positions in India to return to academia in the U.S. A rising drumbeat of nativist sentiment, increased political interference in economic decision-making, and the ruling Bharatiya Janata Party’s shrill rhetoric on cultural issues make serving the government less appealing for many highly skilled technocrats.
“A whole lot of professional economists would hesitate to go back,” says Cornell’s Kaushik Basu, a former World Bank chief economist. “There’s a worry that too much of the economic agenda is driven by pure political interests.” Mr. Basu served the previous Congress-led government as chief economic adviser.
India’s flight of technocrats does not indicate a full-blown takeover by Hindu nationalists, some of whom view mainstream economics as incompatible with their faith. Economists with Western pedigrees continue to serve in key positions, most notably in the Reserve Bank of India.
And at least on the crucial question of foreign investment, liberalizers appear to have prevailed so far over nativists. The World Bank estimates that India attracted $163 billion worth of foreign direct investment in the first four years of the Modi administration, up from $116 billion in the last four years of the last government.
Nonetheless, India’s cooling toward U.S.-trained technocrats should concern investors who expect Asia’s third largest economy to accelerate market-based reforms. After first appearing marginalized by Mr. Modi, nativists deeply suspicious of mainstream economics have clawed back influence in the broader Hindu nationalist movement of which the BJP is a part. You can see their fingerprints on higher import tariffs, higher crop prices for farmers, restrictions on genetically modified crops, and a stalled privatization program.
Until recently, someone with Ms. Gopinath’s background and outlook could have waltzed into a job in India’s Ministry of Finance. She earned a doctorate from Princeton and holds a tenured professorship in economics at Harvard.
Ms. Gopinath is a level-headed champion of globalization, which she credits for lifting millions of people out of poverty. She stands for free trade, and for further economic liberalization in India, including rationalizing loss-making public-sector companies and reforming outdated labor laws.
Her views on Mr. Modi’s record appear fair-minded. She has praised a pioneering goods-and-services tax that stitches India together as a single market, and criticized Mr. Modi’s harebrained 2016 decision to nuke nearly 90% of India’s currency by value overnight. “I don’t think I know a single macroeconomist who thinks that this was a good idea,” she said in a newspaper interview that year. These views, unexceptionable in academia, would likely make Ms. Gopinath unwelcome in India’s government.
Attacks on Western-educated technocrats began two years ago with a smear campaign by BJP parliamentarian Subramanian Swamy against Raghuram Rajan, then the Reserve Bank of India’s governor. Mr. Swamy declared that Mr. Rajan, who had served as the IMF’s chief economist and taught at the University of Chicago, was “mentally not fully Indian.” On Twitter , Mr. Swamy also demanded the sacking of chief economic adviser Arvind Subramanian, another economist who had spent much of his career in the U.S. before returning to India.
Last year, Arvind Panagariya, a prominent Columbia University economist, came in for similar treatment after he announced that he was leaving NITI Aayog, the government think tank he headed for nearly three years, to return to New York. His successor wrote approvingly in a column that “the color of foreign influence” in India was “fading away.”
For the record, Messrs. Rajan, Panagariya and Subramanian do not ascribe their departures to domestic criticism. Even so, the scurrilous attacks they all faced show how the landscape of economic policy-making in India has changed. Mr. Modi may not be complicit in smears by party loyalists against highly regarded technocrats. But neither he nor Finance Minister Arun Jaitley has been able to prevent them.
Often leading the charge against outside experts is the Swadeshi Jagran Manch, a protectionist pressure group linked to the BJP. In a phone interview, Ashwani Mahajan, a senior SJM leader, complained that “people who come here after training in the U.S. do not understand our people, culture, economy or sociology.” He believes they parrot the Washington consensus on globalization instead of taking into account local conditions in India.
Mr. Mahajan doesn’t believe India can move millions of people from farms to factories, as Western-trained economists advise. “In our nation, agriculture is part of our culture,” he says.
For India, the return of the nativists could prove costly. Instead of shutting out global expertise, India needs more of it. “When it comes to advice the rule is very simple,” says Mr. Basu of Cornell. “You seek out the best advice—whether it’s about curing gout, launching a rocket, or fiscal policy.”