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?

Question

Apedia · Accepted Answer

Correct Answer: I and II only.

Explanation: Statement III is incorrect because interest received by the government is classified as a Revenue Receipt, which neither creates a liability nor reduces any asset. Statements I and II correctly define and provide examples of capital receipts....

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