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India's tax reforms falter, hurting Modi's economic legacy

Pandemic starves Delhi of GST cash, leaving states with big budget hole

Indian Prime Minister Narendra Modi marks during Independence Day celebrations in Delhi on Aug. 15: A shortfall in the Goods and Services Tax has left states starved of cash.   © Reuters

BANGALORE -- When Indian Prime Minister Narendra Modi's government unveiled its Goods and Services Tax in 2017, it was called the country's biggest and most significant tax reform since independence in 1947.

But with the economy crippled by the COVID-19 pandemic, the fiscal cracks are starting to show, threatening to tarnish Modi's economic policy and political legacy.

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