Capital Receipt of State Government includes______.

(a) Market loans

(b) Borrowing from Central Government

(c) Small Saving of the public and provident fund contribution

(d) G. S. T. share from Central Government

Which of the above option is correct?

The correct answer is only (a), (b), (c).

Key Points

Capital Receipt of State Government:

• Capital receipts are one of the components of the Capital Budget that results in the creation of liabilities or the reduction of financial assets.
• Incoming cash flows are also referred to as capital receipts.
• It can be both non-debt capital and debt capital receipts. Capital receipts include loans from the general population, foreign governments, and the Reserve Bank of India (RBI). They are included in the liabilities part of the balance sheet.
• All the receipts of the government that establish liability or minimise financial assets are known as capital receipts. When the government takes loans, it means that these loans will have to be given back and interest will have to be financed on these loans in the future.
• Hence, we can say that It consists of:
  • the money earned by selling assets (or disinvestment) such as shares of public enterprises,
  • the money received in the form of borrowings or repayment of loans by states.
  • Small Saving of the public and provident fund contribution
  • Market loans. Hence, statements (a), (b) and (c) are correct.
• ​G. S. T. share from Central Government is a part of a revenue receipt. Hence, statement (d) is not correct.