UPSC Previous Year Question | Prelims GS | 2025

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?

  1. I and II only
  2. II and III only
  3. I and III only
  4. I, II and III

Answer

Correct Answer

I and II only

Explanation

Capital receipts either create a liability (e.g., borrowings) or reduce assets (e.g., disinvestment/recovery of loans), making Statement I correct; borrowings and disinvestment are indeed capital receipts, making Statement II correct. Interest received on loans is a revenue receipt for the government and does not create any liability, making Statement III incorrect.

Topics: budget, economy, fiscal deficit