Question

What are non-debt creating capital receipts ? Give two examples of such receipts.

Answer 1

Capital receipts in layman’s terms is what the government receives in lump sums on a long term basis. It either creates liability or reduce the assets .

Disinvestment of PSUs

Recoveries Of past loans

Sale of treasury bills and other government assets

These are the Non-debt creating capital receipts as there is no liability on the government from these receipts .

Borrowings by the government: market borrowings , borrowings from RBI and from commercial banks and borrowings from abroad(eg:from IMF ,WB etc..)are the debt creating receipts. Because these create a repayment liability on the government .

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