Loan by Govt.: Capital Receipts

Capital receipts are the funds that the government receives by way of loans and borrowings. The loan by the government is an example of capital receipts. The loan by the government is taken for the purpose of financing the capital expenditure of the government. Capital expenditure is the expenditure that is incurred on the creation of assets and investments that are expected to yield returns over a period of time.

Explanation:

Loan by the government is a form of capital receipts because it is a fund that is borrowed for the purpose of financing the capital expenditure of the government. The capital expenditure of the government is incurred for the creation of assets and investments that are expected to yield returns over a period of time. The loan by the government is not a revenue receipt because it is not a fund that is earned by the government through its normal operations.

The loan by the government is an important source of capital for the government. It enables the government to finance its capital expenditure without having to rely solely on its revenue receipts. The government can use the loan funds for the development of infrastructure, social welfare schemes, and other capital expenditure projects.

Conclusion:

In conclusion, the loan by the government is an example of capital receipts. It is a form of borrowing that the government takes for the purpose of financing its capital expenditure. The loan by the government is an important source of capital for the government, as it enables the government to finance its capital expenditure without having to rely solely on its revenue receipts.