Which of the following is a debt creating capital receipt of the government?

Option 1 -> Proceeds from sale of PSUs are non-debt creating capital receipts as they reduce assets but don't create liability.

Option 2 -> Recovery of loans are non-debt creating capital receipts as the government receives back what was lent earlier.

Option 3 -> Receipt of interest on loan is a revenue receipt, not a capital receipt, and doesn't create debt.

Option 4 -> Borrowings create a liability for the government as they need to be repaid with interest.

Hence, Option 4: 4 -> Borrowings are debt creating capital receipts because they create a liability for the government. When the government borrows money (through bonds, loans from international organizations, etc.), it creates an obligation to repay the principal amount along with interest in the future. This distinguishes it from non-debt creating capital receipts like disinvestment proceeds or loan recoveries, which don't create any repayment obligation. -> correct