Identify the correct statements from the following.
(A) Borrowings are non-debt creating capital receipt.
(B) Revenue deficit is same as borrowings of the government.
(C) When a government spends more than it collects by way of revenue, it incurs a budget deficit.
(D) The revenue deficit includes only such transactions that affect the current income and expenditure of the government.
Choose the correct answer from the options given below:
Identify the correct statements from the following.
(A) Borrowings are non-debt creating capital receipt.
(B) Revenue deficit is same as borrowings of the government.
(C) When a government spends more than it collects by way of revenue, it incurs a budget deficit.
(D) The revenue deficit includes only such transactions that affect the current income and expenditure of the government.
Choose the correct answer from the options given below:
Solution
Option 1 -> Incorrect. Statement (A) is wrong as borrowings are debt-creating capital receipts, not non-debt creating.
Option 2 -> Incorrect. Statement (B) is wrong as revenue deficit equals revenue expenditure minus revenue receipts, not borrowings.
Option 3 -> Statement (C) is correct - when government spends more than it collects by way of revenue, it incurs a deficit. Statement (D) is correct - revenue deficit includes only transactions affecting current income and expenditure.
Option 4 -> Incorrect. Statement (A) is wrong as it wrongly classifies borrowings as non-debt creating.
Hence, Option 3: (C) and (D) only -> Statement (C) correctly describes that excess of government spending over revenue collection leads to budget deficit. Statement (D) correctly explains that revenue deficit involves only revenue transactions (current income like taxes and current expenditure like salaries, subsidies), excluding capital transactions. Borrowings are debt-creating capital receipts (not non-debt creating), and revenue deficit is not the same as borrowings - it's the difference between revenue expenditure and revenue receipts -> correct