The proceeds from disinvestment are included as
[amp_mcq option1=”non-tax revenue” option2=”revenue receipts” option3=”capital receipts” option4=”tax revenue” correct=”option3″]
This question was previously asked in
UPSC CAPF – 2022
– Revenue Receipts are those receipts that do not create a liability or lead to a reduction in assets. Examples include tax revenues (income tax, corporation tax, etc.) and non-tax revenues (fees, fines, interest receipts, dividends from PSUs).
– Capital Receipts are those receipts that either create a liability (like borrowings) or lead to a reduction in financial assets (like disinvestment or recovery of loans).
– Disinvestment involves the sale of government’s equity stake in Public Sector Undertakings (PSUs). This reduces the government’s financial assets (its ownership in PSUs). Therefore, the money received from disinvestment is treated as a Capital Receipt.
– Capital receipts are used to finance capital expenditure (like infrastructure development) or to repay debt.
– Disinvestment is a way for the government to raise funds, improve efficiency of PSUs, and promote market competition.