Which of the following is an example of a capital receipt for the Indian government?
Show answer & explanation
Correct answer: C
Explanation
Correct Answer: Option 3 (Disinvestment proceeds from the sale of shares in public sector undertakings)
Explanation:
Government receipts are divided into two parts: revenue receipts and capital receipts.
Capital receipts: These are receipts that either increase the government's liabilities or decrease its assets.
When the government sells shares in public sector undertakings (disinvestment), the government's assets decrease. Therefore, proceeds from disinvestment are a prime example of capital receipts.
Additional Facts:
Revenue receipts: Income tax, GST, and dividends from PSUs are examples of revenue receipts because they neither increase debt nor reduce assets.
Other examples of capital receipts: 1. Borrowings from the market.
2. Recovery of loans given to states or other bodies.
3. Small savings schemes (e.g. PPF, NSC, etc.).
Possible questions for upcoming exams:
Which of the following is an example of non-tax revenue? (Answer: Dividends received from PSUs or fees/fines)
What type of receipt is foreign debt taken by the government?
(Answer: Capital receipt - because it increases liabilities/debt)
What does the fiscal deficit indicate?
(Answer: The government's total borrowing requirement)