Which of the following is/are included in the capital budget of the Government of India?

1. Expenditure on acquisition of assets like roads, buildings, machinery, etc.
2. Loans received from foreign governments
3. Loans and advances granted to the States and Union Territories

Select the correct answer using the code given below.

The Capital Budget reflects the government's assets and liabilities, encompassing both capital expenditure and capital receipts.

Capital Receipts primarily include:

• Loans raised from the public (market borrowings).
• Borrowings from the Reserve Bank of India (RBI), commercial banks, and other financial institutions through treasury bill sales.
• Loans from foreign governments and international organizations.
• Recoveries of loans granted by the central government.

Capital Expenditure includes:

• Expenditure on acquiring land, buildings, machinery, and equipment.
• Investments in shares.
• Loans and advances to State and Union Territory governments, Public Sector Undertakings (PSUs), and other entities.

Therefore:

• Statement 1 is correct: Expenditure on acquiring assets is part of capital expenditure.
• Statement 2 is correct: Loans from foreign governments are capital receipts.
• Statement 3 is correct: Loans to States and UTs are capital expenditure.

Hence, 1, 2, and 3 are correct.

Sources:

• NCERT Macroeconomics (Class 12) (Relevant chapter on Government Budget and the Economy)