Define capital receipts of government. Describe briefly the groups in which these are classified.
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Capital receipts are government receipts that create liabilities or reduce assets.There are three major sources of capital receipts:
- Borrowings: The government borrows from two sources:
- Domestic borrowings: These are the borrowings within the country.
- External assistance: These are the borrowings from foreign governments and bodies (like IMF, World Bank).
- Recovery of loans: The government gives loans to state and local governments in the country. Recovery of this loan constitute capital receipts in the budget.
- Resale of shares of Public Sector Undertakings (Disinvestment): It is a recent source of capital receipts. Since 1991, the government has started the reselling of shares held by it to the general public and financial institution as a step towards privatisation. Resale of such shares by government is termed as "disinvestment in shares".
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