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Andy Mukherjee

Why the Bond Market Loves India’s Tax Mess

Modi’s government is bending over backward to head off panic from showdown with states over revenue shortfall. 

Modi at recent Independence Day celebrations.

Modi at recent Independence Day celebrations.

Photographer: Prakash Singh/AFP/Getty

Emerging markets will exit the coronavirus pandemic with a heavy fiscal load. Many will see their public debt balloon; some will also have to carry a bigger interest burden. A smaller group may need costly repairs to broken banks. 

India may be hit on all three counts, plus have an additional problem: a consumption tax in shambles. It’s a gloom-and-doom scenario, but the bond market loves it.