Question

What are non-debt creating capital receipts? Give two examples of such receipts

Answer 1

Non-debt creating capital receipts are those receipts which are not borrowings and hence do not give rise to debt. For example:

1) Sale of shares: A receipt from the sale of shares of public enterprise is a capital receipt as it leads to the reduction in assets of the government and disinvestment.

2) Recovery of loans: Government grant loans to state government or union territories. Recovery of these loans is a capital receipt as it reduces the assets of the government.