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?
Explanation
Capital receipts involve transactions that either increase liabilities or reduce assets for the government. Revenue receipts, on the other hand, are routine incomes like interest or taxes that don't affect assets or liabilities.
Statement I: Correct * Capital receipts create liabilities (like borrowings) or reduce assets (like disinvestment).
Statement II: Correct * Borrowings and disinvestment are both capital receipts.
Statement III: Incorrect * Interest received is a revenue receipt, not a capital receipt—it's income, not a liability.