Q40.
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?
Answer
A
Explanation
government receives money by way of loans or the sale of its assets. Loans will have to be to the agencies from which they have been Thus they create liability. Sale of assets, like sale of shares in Public Sector (PSUs) which is referred to as PSU reduce the total amount of financial of the government. All those receipts of the which create liability or reduce financial are termed as capital receipts. Hence I and II are correct. revenue receipts of the central government consist of interest receipts on account of loans the central government, dividends and profits on made by the government, fees and other for services rendered by the government. They not create liability. Hence statement III is not