Question

Which of the following are regarded as capital receipts of capital budget?

1. Market borrowings
2. Borrowing by government from RBI
3. Loans from foreign governments
4. Small savings
5. Provident funds

Select the correct answer using the codes given below:

1. 1 and 3 only
2. 1, 4 and 5 only
3. 1, 2 and 3 only
4. 1, 2, 3, 4 and 5

Answer 1

Correct Answer - Option 4 : 1, 2, 3, 4 and 5

The correct answer is 1, 2, 3, 4 and 5.

• Capital receipts of the capital budget
  • Market borrowings
  • Borrowing by government from RBI
  • Loans from foreign governments
  • Small savings
  • Provident funds

 

• Capital Receipts:
  • All those receipts of the government which either creates liability or reduces financial asset are capital receipts.
  • Receipts that generate liability or decrease the financial assets of the government.
  • It includes borrowings from the Reserve Bank of India and commercial banks and other financial institutions.
  • It also consists of loans received from foreign governments and international organization and repayment of loans granted by the Union government
• Examples:
  • Market borrowings by the government from the public
  • Borrowings from the RBI
  • Borrowings from commercial banks or financial institutions through the sale of T-BILLS,
  • Loans received from foreign governments or international financial institutions
  • A small saving, post office savings, post office saving certificates, Provident Fund
  • PSU’s Disinvestment
• Capital Expenditure:
  • All those expenditures of the government either result in the creation of physical/financial assets or a reduction in financial liabilities.
  • Spending incurred by the government results in the formation of physical or financial possessions of the union government or a decrease in financial liabilities of the union government.
  • It contains expenditure on procuring land, equipment, infrastructure, expenditure in shares.
  • It also includes mortgages by the Union government to Public Sector Undertakings, state and union territories
• Examples:
  • Purchase of land,
  • Purchase of machinery,
  • Building and equipment’s
  • Investment in shares,
  • Loans and advances by the central government to state governments and UTs.
  • Capital Expenditure is also classified as plan and non-plan capital expenditure.
  • Plan expenditure relates to central Five-year Plan and Non-Plan relates to expenditure not covered under the Five-year