Question

My aunt said, "It is a pity the government has failed to control inflation." covert it into indirect

Answer 1

my aunt said that it was a pity that the government has failed to control inflammation

Answer 2

Answer:My aunt said that it was a pity the government had failed to control   the inflation

Explanation:

Hense the reported verb is in past tense we will change the tense according to it

if the verb is in past 'is' changes into  'was' and 'has' changes into 'had'

So according to the explanation, the above answer is correct

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