Match List I with List II.

Choose the correct answer from the options given below :

A-IV, B-III, C-II, D-I

The correct answer is option (3) : A-IV, B-III, C-II, D-I

A. Capital Expenditure -> IV. Repayment of Foreign debts: Capital Expenditure refers to spending by the government on acquiring or maintaining physical assets such as infrastructure, machinery, etc. Repayment of Foreign debts falls under this category because it represents a capital outflow where the government uses its revenue to pay off debts incurred from foreign sources. This expenditure is considered as a capital outlay because it reduces the liability of the government.

B. Revenue Expenditure -> III. Subsidies: Revenue Expenditure consists of recurring expenses incurred by the government in its day-to-day operations and for the provision of public services. Subsidies are payments made by the government to support certain sectors of the economy or to individuals to reduce the cost of goods and services. These payments are typically recurrent and do not lead to the creation of physical assets, hence they are classified under revenue expenditure.

C. Revenue Receipts -> II. Escheats: Revenue Receipts include income generated by the government through various sources such as taxes, fines, fees, etc. Escheats refer to unclaimed financial assets and properties that revert to the state. When these assets are claimed or transferred to the government, they are considered as revenue receipts because they increase the government's income without creating any new liability.

D. Fiscal Deficit -> I. Borrowings: Fiscal Deficit is the difference between the government's total expenditure and its total receipts (excluding borrowings). When expenditures exceed receipts, the government needs to finance the deficit by borrowing money. Therefore, fiscal deficit often results in borrowings either from domestic or international sources to cover the shortfall in revenue. Borrowings are a direct consequence of fiscal deficit as governments resort to loans to finance their expenditure beyond their current receipts.