NARENDRA MODI likes to make a splash abroad. On December 25th he turned up in Pakistan, the first visit by an Indian prime minister in more than a decade, for an impromptu summit with his counterpart, Nawaz Sharif. At home, though, Mr Modi appears less impressive. Despite his Bharatiya Janata Party (BJP)’s thumping general-election victory in 2014, his promises of business-friendly reforms are stuck.
The passage of an all-embracing value-added tax, known as the goods and services tax (GST), has become the litmus test of his liberalising credentials. It is the one reform that both the BJP and the opposition Congress party ostensibly agree on. Raising funds for both the federal government at the centre and the states, it is meant to replace a monstrous excrescence of taxes, duties, surcharges and cesses levied by the centre, the states and local authorities—a system that fragments the economy and gives huge scope for corruption by officials and politicians. Replacing most taxes with a GST would, for the first time, create a single market in India—of 1.3 billion people.
The latest and perhaps most promising attempt to pass the necessary...Continue reading
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