Read the following about Capital receipts.
A. All those receipts of the government which create liability or reduce financial assets are termed as capital receipts.
B. The main items of capital receipts are loans raised by the government from the public which are called market borrowings, borrowing by the government from the Reserve Bank and commercial banks and other financial institutions through the sale of treasury bills, loans received from foreign governments and international organisations, and recoveries of loans granted by the central government.
Identify the CORRECT statement/statements.
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. Both A and B.
Both statements A and B are correct.
Statement A accurately defines capital receipts as those that either create liabilities or reduce financial assets for the government. These receipts involve transactions like loans or borrowing.
Statement B outlines the key items of capital receipts, which include market borrowings, borrowing from the Reserve Bank, treasury bills, foreign loans, and recoveries of loans granted by the government. All of these are types of capital receipts as they involve the government acquiring funds through liabilities or recovering previous loans.