Economist Surjit Bhalla has been named representative of India in the International Monetary Fund (IMF) for three years. The post, technically called executive director, fell vacant after Subir Gokarn died in July this year.
“The Appointments Committee of the Cabinet has approved the appointments of Dr Surjit S Bhalla, economist, executive director (India), IMF, for a period of three years from the date of the assumption of charge of the post or until further orders — whichever is earlier,” an official order said.
Bhalla’s appointment comes at a time when India is facing an economic slowdown and the government is struggling hard to revive it. In fact, the IMF itself is likely to come out with a country report for India this year. It is the executive director who replies to the IMF observation in the country report.
The IMF recently cut India’s economic growth rate to 7 per cent, from its earlier estimate of 7.3 per cent.
Bhalla, who did his PhD in Economics from Princeton University, attributes the current slowdown to the Reserve Bank of India’s (RBI’s) hawkish stance in 2018 that led to credit crisis in the system. In a recent interview, he said the credit cost in India is one of the highest in the world.
He favoured Finance Minister Nirmala Sitharaman’s decision to cut corporation tax rate to 22 per cent for companies not enjoying exemption and incentives and to 15 per cent for industries incorporated from October and start production by March 31, 2023.
Bhalla, who has authored books on topical subjects such as The New Wealth of Nations; Devaluing To Prosperity: Misaligned Currencies And Their Growth Consequences; Imagine There is No Country: Poverty, Inequality, and Growth in the Era of Globalization, said the government has done its due in the fiscal space, and it is now up to RBI to cut the repo rate to propel economic growth.
The IMF in 2017 had said that Prime Minister Narendra Modi’s demonetisation in 2016 would lead to salutary benefits in the medium term.
Bhalla also said that economic growth was high in 2016-17 (FY17) and even in the goods and services tax implementation year of 2017-18. Economic growth touched the highest at 8.2 per cent in FY17 in the new gross domestic product series, but it fell to 7.2 per cent the following year.
Bhalla had also lauded the first Budget of the Modi government 2.0 as deviation from the past, which has paved the way for a new era of Budgetmaking.
“The Budget is no more a financial statement by accountants, for accountants. It has now become a vision document for the future, suggesting long-term possibilities, long-term policies, and long-term projections,” he had said, while delivering the 20th Malayala Manorama Budget Lecture in Kochi.
The Modi government had appointed Bhalla as part-time member in the Economic Advisory Council to the Prime Minister. He had, however, resigned from the advisory body in December 2018.
He was founder chairman of Oxus Research & Investments and worked in key institutions such as Deutsche Bank, Goldman Sachs, and the World Bank.