Which of the following items form a part of capital receipt 1 Borrowing by the government from comme...........

Economic Affairs Public Finance and Debt Management

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Which of the following items form a part of capital receipt?

1.Borrowing by the government from commercial banks

2.Profits on investments made by the government

3.Grants-in-aid from foreign countries

4.Fund raised from National Savings Certificates

Select the correct answer using the codes given below:

1 and 4 only

1, 2 and 4 only

3 only

2 and 3 only

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Explanation:

1 and 4 only

"Borrowing by the government from commercial banks" - Borrowings by the government, especially from commercial banks, contribute to capital receipts. These borrowings result in liabilities that the government needs to repay in the future.

"Profits on investments made by the government" - Profits on investments made by the government are considered revenue receipts, not capital receipts. Revenue receipts are generated from the government's ongoing operations.

"Grants-in-aid from foreign countries" - Grants-in-aid from foreign countries are considered revenue receipts. They are a form of assistance that does not need to be repaid and is meant to support the government's ongoing expenses.

"Funds raised from National Savings Certificates" - Funds raised from National Savings Certificates contribute to capital receipts. These represent borrowings from the public, and the government is obligated to repay the amount along with interest.

Therefore, the correct answer is 1, "1 and 4 only."

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