Under the reform policy of 1991, the government sold off part of the equity of public sector enterprises to the public. In the government budget, the money received from such disinvestment is a:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → non-debt creating capital receipt
Selling part of the equity of PSEs is disinvestment. It reduces the government’s financial assets, so it is a capital receipt. It is not a loan, so nothing has to be repaid: it is non-debt creating.
Borrowings are the debt creating capital receipts. Non-tax revenue is interest, dividends and fees, which do not reduce any asset.
This question uses Liberalisation, Privatisation and Globalisation and Government Budget and the Economy together.
NCERT (2026-27): “5.2.1 Measures of Government Deficit … Non-debt creating capital receipts are those receipts which are not borrowings and, therefore, do not give rise to debt. Examples are recovery of loans and the proceeds from the sale of PSUs. …” Liberalisation, Privatisation and Globalisation: “3.4 Privatisation … Privatisation of the public sector enterprises by selling off part of the equity of PSEs to the public is known as disinvestment …” |