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    Question

    Which of the following statements is incorrect about

    the capital receipts?  
    A Loans from foreign governments and bodies constitute capital receipts. Correct Answer Incorrect Answer
    B Disinvestment proceeds and dividend distribution are part of capital receipts. Correct Answer Incorrect Answer
    C Recoveries of loans from state governments are constituents of capital receipts. Correct Answer Incorrect Answer
    D Market borrowings from the public and borrowings through the sale of Treasury-Bills (short term borrowings) are part of capital receipts. Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    Capital receipts and capital payments together constitute the Capital Budget. The capital receipts are loans raised by the Government from the public (these are termed as market loans), borrowings by the Government through the sale of Treasury Bills, the loans received from foreign Governments and bodies, disinvestment receipts and recoveries of loans from State and Union Territory Governments and other parties. Capital payments consist of capital expenditure on acquisition of assets like land, buildings, machinery, equipment, as also investments in shares, etc., and loans and advances granted by the Central Government to the  State and the Union Territory Governments, Government companies, Corporations and other parties.

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