Question

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?

Answer 1

Revenue receipts are those money receipts which do not create any corresponding liabilities or cause any reduction in the assets of the government. Example: tax and receipts of the government when it sells it shares of companies.

Capital receipts refers to those money receipts which either create a liability for the government or cause reduction in assets of the government.Thus, borrowings and other liabilities and recovery of loan are included in capital receipts.