UPSC Prelims 2025·GS1·economy·public finance

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?

Dalvoy logo
Reviewed by Dalvoy
UPSC Civil Services preparation
Last updated 23 May 2026, 3:31 pm IST
  1. AI and II onlyCorrect
  2. BII and III only
  3. CI and III only
  4. DI, II and III

Explanation

Analyzing statements about government receipts: I. Capital receipts create a liability or cause a reduction in assets: Correct. Capital receipts either create a liability for the government (like borrowings that must be repaid) or reduce government assets (like disinvestment of public sector enterprises). II. Borrowings and disinvestment are capital receipts: Correct. Both borrowings (which create liabilities) and disinvestment proceeds (which reduce government assets) are classified as capital receipts in government accounting. III. Interest received on loans creates a liability: Incorrect. Interest received on loans given by the government is a revenue receipt, not a capital receipt, and it does not create any liability for the government. It actually represents income earned on government assets.
economy: Consider the following statements : I. Capital receipts create a liability or cause a reduction in the assets of the Gov
ShareWhatsAppXTelegram

Related questions

More UPSC Prelims practice from the same subject and topic.