Funds from government borrowings is a part of capital receipts.

True

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False

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Solution

The correct option is A True
Capital receipts refer to those money receipts which creates a liability for the government or cause reduction in assets of the government. Therefore, borrowing is a capital receipt as it creates a liability for the government.

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Q. Short answer type questions:
Explain the basis of classifying government receipts into revenue receipts and capital receipts. Which type of these receipts are borrowings by government and why?

Find Fiscal Deficit from the information given below:

Items (Rs in lakh)

(i) Borrowing by the government 600

(ii) Revenue receipts 100

(iii) Capital receipts 750

(iv) Interest payment 150

Categorise the following government receipts into revenue and capital receipts. Give reasons for your answer.

(i) Receipt from sale of shares of a public sector undertaking.

(ii) Borrowing from public.

(iii) Profit of public sector undertakings.

(iv) Income tax received by government.

The government budget of a hypothetical economy presents the following information, which of the following value represents Budgetary Deficit? (all fig. in crores of Rupees).

A. Revenue Expenditure = 25,000

B. Capital Receipts = 30,000

C. Capital Expenditure = 35,000

D. Revenue Receipts = 20,000

E. Interest Payments = 10,000

F. Borrowings = 20,000

Q. Borrowings is a capital receipt because ________________.

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Funds from government borrowings is a part of capital receipts.

The correct option is A TrueCapital receipts refer to those money receipts which creates a liability for the government or cause reduction in assets of the government. Therefore, borrowing is a capital receipt as it creates a liability for the government.

The correct option is A True
Capital receipts refer to those money receipts which creates a liability for the government or cause reduction in assets of the government. Therefore, borrowing is a capital receipt as it creates a liability for the government.