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Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Government Budget and Economy

Question:

Receipts and Expenditure of the Central Government, 2020-21

 

(As per cent of GDP)

1. Revenue Receipts (a+b)

(a) Tax revenue (net of states share)

(b) Non-tax revenue

9.0

7.3

1.7

2. Revenue Expenditure of which

(a) Interest payments

(b) Major Subsidies

(c) Defence expenditure

11.7

3.1

1.0

0.9

3. Revenue Deficit (2-1)

2.7

4. Capital Receipts (a+b+c)

(a) Recovery of loans

(b) Other receipts (mainly PSU disinvestment)

(c) Borrowings and other liabilities

4.5

0.1

0.9

3.5

5. Capital Expenditure

1.8

6. Non-debt Receipts [2+5=7(a)+7(b)]

10.0

7. Total Expenditure [2+5=7(a)+7(b)]

(a) Plan expenditure

(b) Non-plan expenditure

13.5

-

-

8. Fiscal deficit [7-1-4(a)-4(b)]

3.5

Primary Deficit [8-2(a)]

0.4

Identify the non-debt creating capital receipts for a government.

Options:

Tax revenue

Borrowings

Recovery of loans

Non-Tax revenue

Correct Answer:

Recovery of loans

Explanation:

The correct answer is Option (3) → Recovery of loans

Here's why the other options are not considered non-debt creating capital receipts:

Tax revenue and Non-Tax revenue: These are both considered revenue receipts, which are income sources for the government's day-to-day operations. They don't involve selling assets or recovering past investments.


Borrowings: This is a form of debt-creating capital receipt. When the government borrows money, it creates a future liability to repay the loan with interest.

Recovery of loans, on the other hand, refers to getting back money that the government had previously loaned out. This doesn't create any new debt, it simply retrieves an existing asset (the loan amount).

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