Which of the following is a part of the capital receipt of the Governm

Which of the following is a part of the capital receipt of the Government of India ?

1. Disinvestment receipts
2. Interest receipts
3. Small savings
4. Net market borrowing

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1 and 3 only

2 and 4 only

1, 2, 3 and 4

1, 3 and 4 only

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This question was previously asked in

UPSC CAPF – 2024

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Capital receipts are government receipts that either create a liability or lead to a reduction in the government’s assets. Statement 1, Disinvestment receipts, are proceeds from selling government shares in PSUs, leading to a reduction in financial assets, hence they are Capital Receipts. Statement 2, Interest receipts on loans given by the government, are a form of non-tax revenue that does not create a liability or reduce assets (unless it’s recovery of principal loan amount, which is a capital receipt), so they are Revenue Receipts. Statement 3, Small savings deposits (e.g., PPF, NSC), represent funds borrowed from the public, creating a liability for the government, thus they are Capital Receipts (specifically, part of debt capital receipts if raised via borrowings or liabilities under Public Account). Statement 4, Net market borrowing, involves the government raising funds by issuing bonds etc., creating a liability to repay, hence it is a Capital Receipt (debt-creating). Therefore, 1, 3, and 4 are parts of the capital receipt of the Government of India.

Government receipts are classified into Revenue Receipts (like taxes, interest, dividends) and Capital Receipts (like borrowings, disinvestment, loan recoveries, small savings). This classification is fundamental to understanding the government’s fiscal position.

Capital receipts are used to finance capital expenditure (like infrastructure creation) and repay existing debt. Debt-creating capital receipts increase the government’s debt burden, while non-debt capital receipts (like disinvestment, loan recovery) help finance expenditure without adding to debt.

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