Q. Consider the following statements:
I. Capital receipts create a liability or cause a reduction in the assets of the Government.
II. Borrowings and disinvestment are capital receipts.
III. Interest received on loans creates a liability of the Government.
Which of the statements given above are correct?
Exp) Option a is the correct answer.
Statement I is correct: Capital receipts are those receipts of the government which create liability or reduce financial assets.
Statement II is correct: Borrowings—such as loans from the RBI, foreign governments, or through the issuance of government securities—and disinvestment, which entails selling the government’s stake in public sector enterprises, are categorized as capital receipts.
Statement III is incorrect: Interest received on loans given by the Central government to the states or other countries is classified as a revenue receipt since it represents income for the government and does not result in any liability.
Source: https://ncert.nic.in/textbook/pdf/leec105.pdf
https://www.indiabudget.gov.in/budget2011-2012/ub2011-12/rec/cr.pdf
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