With reference to Revenue and Capital accounts in the Budget of India consider the following stateme...........

Indian Economy (CDS) Budgeting and Fiscal policy

With reference to Revenue and Capital accounts in the Budget of India, consider the following statements:

1. All those expenditures of the government which do not result in creation of physical or financial assets fall under revenue expenditure.

2. Loans raised by the government from the Reserve Bank and Commercial Banks fall under capital receipts.

Which of the statements given above is/are incorrect

1 only

2 only

Both 1 and 2

Neither 1 nor 2

छोटे Courses बड़े Results

Master Budgeting and Fiscal policy

Prepare through Micro-courses

Try Now

Explanation:

Statement 1 is incorrect: Revenue Expenditure consists of all those expenditures of the government which do not result in creation of physical or financial assets. It relates to those expenses incurred for the normal functioning of the government departments and various services, interest payments on debt incurred by the government, and grants given to state governments and other parties.

Statement 2 is incorrect: Capital Receipts consist of Loan raised by the government from the public which are called market borrowings, borrowing by the government from the Reserve Bank and commercial banks and other financial institutions through the sale of treasury bills, loans received from foreign governments and international organisations, and recoveries of loans granted by the central government. Other items include small savings (Post-Office Savings Accounts, National Savings Certificates, etc.), provident funds and net receipts obtained from the sale of shares in Public Sector Undertakings (PSUs).