The government of India recovered a loan of Rs 20 crore from government of Karnataka. While preparing the budget of the current annual year, how will we treat this transaction?

Included in capital receipt

Capital receipts are those receipts of the government which reduce the assets and increase the liability of the government. Here, the government received the loan which it gave to Karnataka government. This will lead to reduction of assets of government of India, hence we will treat this as a capital receipt.