UPSC CSE Prelims
Question 97
Consider the following statements :
- Capital receipts create a liability or cause a reduction in the assets of the Government.
- Borrowings and disinvestment are capital receipts.
- Interest received on loans creates a liability of the Government.
Which of the statements given above are correct?
View correct answer and explanation
Correct answer: A
Correct Option: A (I and II only)
Explanation: Capital receipts either create government liabilities or reduce assets; borrowing increases debt and disinvestment sells government holdings. Interest received on loans is a revenue receipt, not an additional government liability.
Statement / Pair / Item-wise Analysis:
I: True-capital receipts have liability-creating or asset-reducing effects.
II: True-borrowing and disinvestment qualify as capital receipts.
III: False-interest earned on government loans is revenue income.
Option-wise Analysis:
A. Correct-this matches the facts and the item-wise assessment above.
B. Incorrect-includes III despite the item-wise findings; omits I which the answer requires.
C. Incorrect-includes III despite the item-wise findings; omits II which the answer requires.
D. Incorrect-includes III despite the item-wise findings.