Q. With reference to the classification of receipts in the Government Budget, consider the following statements:
1.Revenue receipts do not create any future liability for the government and are therefore non-redeemable.
2.Capital receipts include both debt-creating sources such as borrowings and non-debt-creating sources such as disinvestment.
3.All forms of tax revenue are progressive in nature and aim to reduce income inequality.
Which of the statements given above is/are correct?
Answer: A
Notes:
Explanation:
- Revenue receipts, such as taxes and non-tax revenues, do not create any liability for the government and hence are called non-redeemable.
- Capital receipts include both:
- Debt-creating receipts (e.g., borrowings and loans)
- Non-debt-creating receipts (e.g., disinvestment of PSUs, which reduces government’s financial assets)
- Not all tax revenues are progressive.
- Direct taxes like personal income tax can be progressive.
- However, indirect taxes like excise duties or GST are often regressive, since they apply equally regardless of income, and may disproportionately affect lower-income groups.
Source: Indian Economy (NCERT)
