The correct answer is: All of the above.
Arunachal Pradesh is a state in northeastern India. It is the largest state in the country by area, but it has the lowest population density. The state has a large informal sector, which means that many people work in jobs that are not registered with the government. This makes it difficult for the government to collect taxes from these workers.
Arunachal Pradesh also has difficult terrain. The state is located in the Himalayas, and much of the land is mountainous. This makes it difficult to build roads and other infrastructure, which can hinder economic development.
Finally, Arunachal Pradesh has limited economic diversification. The state’s economy is based on agriculture, forestry, and mining. These sectors are not very diverse, and they are not very well-developed. This makes it difficult for the state to generate revenue from other sources.
All of these factors contribute to Arunachal Pradesh’s limited tax base and revenue collection capacity. This makes it difficult for the state to provide basic services to its citizens, such as education, healthcare, and infrastructure.
Here is a brief explanation of each option:
- Large informal sector: The informal sector is the part of the economy that is not registered with the government. This includes businesses that are not registered, workers who are not paid a salary, and transactions that are not recorded. The informal sector is often larger in developing countries than in developed countries. In Arunachal Pradesh, the informal sector is estimated to account for about 80% of the economy. This means that many people in the state work in jobs that are not registered with the government. This makes it difficult for the government to collect taxes from these workers.
- Difficult terrain: Arunachal Pradesh is located in the Himalayas, and much of the land is mountainous. This makes it difficult to build roads and other infrastructure. This can hinder economic development, as it makes it difficult to transport goods and people. It can also make it difficult for the government to collect taxes, as it is difficult to reach remote areas.
- Limited economic diversification: Arunachal Pradesh’s economy is based on agriculture, forestry, and mining. These sectors are not very diverse, and they are not very well-developed. This makes it difficult for the state to generate revenue from other sources. For example, the state does not have a large manufacturing sector, which could generate more tax revenue.