{"id":2857,"date":"2026-04-22T20:06:57","date_gmt":"2026-04-22T14:36:57","guid":{"rendered":"https:\/\/lotusarise.com\/qna\/?p=2857"},"modified":"2026-04-22T20:07:00","modified_gmt":"2026-04-22T14:37:00","slug":"consider-the-following-statements-16","status":"publish","type":"post","link":"https:\/\/lotusarise.com\/qna\/upsc\/prelims\/consider-the-following-statements-16","title":{"rendered":"Consider the following statements:\u00a0"},"content":{"rendered":"\n
    \n
  1. Capital receipts create a liability or cause a reduction in the assets of the Government.\u00a0\u00a0<\/li>\n\n\n\n
  2. Borrowings and disinvestment are capital receipts.\u00a0\u00a0<\/li>\n\n\n\n
  3. Interest received on loans creates a\u00a0liability<\/strong>\u00a0of the Government.\u00a0\u00a0\u00a0<\/li>\n<\/ol>\n\n\n\n

    Which of the statements given above are correct?   <\/p>\n\n\n\n

      \n
    • I and II only\u00a0<\/strong><\/li>\n\n\n\n
    • II and III only\u00a0<\/li>\n\n\n\n
    • I and III only\u00a0<\/li>\n\n\n\n
    • I, II and III\u00a0\u00a0\u00a0<\/li>\n<\/ul>\n\n\n\n
      \n

      Answer: (a)I and II only<\/strong><\/p>\n<\/blockquote>\n\n\n\n

      Capital Receipts<\/strong><\/h5>\n\n\n\n
        \n
      • Capital receipts are defined as government receipts that\u00a0either create a liability (e.g., borrowing) or reduce financial assets (e.g., disinvestment)<\/strong>, as detailed in these results.<\/li>\n\n\n\n
      • They are\u00a0non-recurring, long-term funds used for development or debt repayment<\/strong>, unlike revenue receipts, which do not impact the balance sheet.<\/li>\n\n\n\n
      • Common examples include\u00a0borrowings, disinvestment proceeds, and the recovery of loans.<\/strong><\/li>\n\n\n\n
      • Key Features and Examples<\/strong>:\n
          \n
        • Create Liability:<\/strong>\u00a0Borrowings from the public, foreign governments, or central banks are considered capital receipts because they must be repaid.<\/li>\n\n\n\n
        • Reduce Assets:<\/strong>\u00a0Disinvestment (selling shares in Public Sector Units), selling land, or selling machinery falls under this category.<\/li>\n\n\n\n
        • Non-recurring:<\/strong>\u00a0Unlike revenue receipts (e.g., taxes),\u00a0capital receipts are not received on a regular, routine basis.<\/strong><\/li>\n\n\n\n
        • Loan Recovery:<\/strong>\u00a0When the government recovers loans previously granted to state governments or PSUs, it reduces its financial assets, making it a capital receipt.\u00a0<\/li>\n<\/ul>\n<\/li>\n\n\n\n
        • Difference from Revenue Receipts<\/strong>\n
            \n
          • Capital Receipts:<\/strong>\u00a0Do not directly affect the profit and loss statement<\/strong>; they appear on the balance sheet. They are typically not taxable, unless specific capital gains taxes apply.<\/li>\n\n\n\n
          • Revenue Receipts:<\/strong>Earned through regular business or government operations<\/strong>\u00a0(e.g., taxes, fees, dividends) and are recurring.\n
              \n
            • Interest received on loans\u00a0given by the Central government to the states or other countries is classified as a revenue receipt<\/strong>\u00a0since it represents income for the government and\u00a0does not result in any liability.<\/strong><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n
              \"\"<\/figure>\n","protected":false},"excerpt":{"rendered":"

              Which of the statements given above are correct?    Answer: (a)I and II only Capital Receipts<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_kad_blocks_custom_css":"","_kad_blocks_head_custom_js":"","_kad_blocks_body_custom_js":"","_kad_blocks_footer_custom_js":"","_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"_kad_post_classname":"","footnotes":""},"categories":[3,1],"tags":[38],"years":[63],"class_list":["post-2857","post","type-post","status-publish","format-standard","hentry","category-prelims","category-upsc","tag-indian-economy","years-63"],"acf":[],"taxonomy_info":{"category":[{"value":3,"label":"Prelims"},{"value":1,"label":"UPSC"}],"post_tag":[{"value":38,"label":"Indian Economy"}],"years":[{"value":63,"label":"2025"}]},"featured_image_src_large":false,"author_info":{"display_name":"LotusArise","author_link":"https:\/\/lotusarise.com\/qna\/author\/team-lotusarise"},"comment_info":0,"category_info":[{"term_id":3,"name":"Prelims","slug":"prelims","term_group":0,"term_taxonomy_id":3,"taxonomy":"category","description":"","parent":1,"count":1251,"filter":"raw","cat_ID":3,"category_count":1251,"category_description":"","cat_name":"Prelims","category_nicename":"prelims","category_parent":1},{"term_id":1,"name":"UPSC","slug":"upsc","term_group":0,"term_taxonomy_id":1,"taxonomy":"category","description":"","parent":0,"count":1269,"filter":"raw","cat_ID":1,"category_count":1269,"category_description":"","cat_name":"UPSC","category_nicename":"upsc","category_parent":0}],"tag_info":[{"term_id":38,"name":"Indian Economy","slug":"indian-economy","term_group":0,"term_taxonomy_id":38,"taxonomy":"post_tag","description":"","parent":0,"count":225,"filter":"raw"}],"_links":{"self":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/posts\/2857","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/comments?post=2857"}],"version-history":[{"count":0,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/posts\/2857\/revisions"}],"wp:attachment":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/media?parent=2857"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/categories?post=2857"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/tags?post=2857"},{"taxonomy":"years","embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/years?post=2857"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}