A challenge to public finance in Mizoram is:

The correct answer is: d) All of the above.

Mizoram is a small state with a limited tax base. This means that the state government does not have a lot of money coming in from taxes. As a result, the state government is heavily dependent on central transfers from the Government of India. Central transfers are grants and loans that the central government gives to the state governments.

Mizoram also faces the problem of revenue leakages. Revenue leakages occur when money that is supposed to be collected as taxes is not collected. This can happen for a number of reasons, such as corruption, tax evasion, and poor tax administration.

All of these challenges make it difficult for the state government of Mizoram to provide basic services to its citizens. The state government has to make difficult choices about how to allocate its limited resources. It also has to find ways to increase its tax base and reduce revenue leakages.

Here is a brief explanation of each option:

• Limited tax base: Mizoram is a small state with a population of just over 1.2 million people. The state’s economy is based on agriculture and tourism. These sectors do not generate a lot of tax revenue. As a result, the state government has a limited tax base.
• High dependence on Central transfers: The state government of Mizoram is heavily dependent on central transfers from the Government of India. In 2019-20, central transfers accounted for 72% of the state’s revenue. This high dependence on central transfers makes the state government vulnerable to changes in central government policy.
• Revenue leakages: Mizoram also faces the problem of revenue leakages. Revenue leakages occur when money that is supposed to be collected as taxes is not collected. This can happen for a number of reasons, such as corruption, tax evasion, and poor tax administration. Revenue leakages reduce the amount of money that is available to the state government to spend on public services.

These challenges make it difficult for the state government of Mizoram to provide basic services to its citizens. The state government has to make difficult choices about how to allocate its limited resources. It also has to find ways to increase its tax base and reduce revenue leakages.