Multiple Choice Questions on Consider the following statements I Capital receipts create a liability or cause a reduction in the ........... for UPSC Civil Services Examination (General Studies) Preparation

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Multiple Choice Questions

Consider the following statements I Capital receipts create a liability or cause a reduction in the ...........

Economic Affairs Public Finance and Debt Management
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    Consider the following statements:

    I. Capital receipts create a liability or cause a reduction in the assets of the Government.

    II. Borrowings and disinvestment are capital receipts.

    III. Interest received on loans creates a liability of the Government.

    Which of the statements given above are correct?

    This questions was previously asked in
    UPSC CSE 2025 (General Studies-1)
    View All IAS Previous Year Papers

     I and II only

    Correct Answer

     II and III only

    Incorrect Answer

    I and III only

    Incorrect Answer

    I, II and III

    Incorrect Answer
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    Explanation:

    - Statement I

    - Correct. Capital receipts either create a liability for the government (borrowings) or lead to a reduction in government assets (disinvestment).

    - Statement II

    - Correct. Borrowings, which create a liability, and disinvestment, which reduces assets, are indeed capital receipts.

    - Statement III

    - Incorrect. Interest received on loans is not considered a liability; rather, it is a revenue receipt, as it represents income from assets owned by the government.

    - Correct Answer: Option 1, I and II only

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