Question

Disinvestment by the government is an example of:

• A. Capital receipt
• B. Revenue receipt
• C. Capital expenditure
• D. Revenue expenditure

Answer 1

The Correct Option is A

Disinvestment refers to selling government assets and is categorized as a capital receipt.

Answer 2

Disinvestment refers to the process of selling or liquidating government-owned assets, such as public sector enterprises or other government holdings. This practice is often used by the government to raise funds, reduce fiscal deficits, or promote efficiency in the economy.

Disinvestment is categorized as a capital receipt because it involves the transfer of ownership from the government to private individuals or entities, generating a one-time inflow of capital. Unlike revenue receipts, which are recurring and used for daily governmental expenditure, capital receipts are non-recurring and typically used for funding long-term financial needs.

Thus, disinvestment not only helps in raising funds for the government but also plays a crucial role in restructuring the economy and improving the performance of public enterprises by encouraging private sector participation.