Question

Read the following statements carefully :
Statement 1 : Foreign aids are the capital receipts for the government.
Statement 2 : Disinvestments may lead to a decrease in the assets of the government.
In the light of the given statements, choose the correct option from the following :

• A. Statement 1 is true and Statement 2 is false.
• B. Statement 1 is false and Statement 2 is true.
• C. Both Statements 1 and 2 are true.
• D. Both Statements 1 and 2 are false.

Hint:

Foreign aid inflows and disinvestments are both related to capital receipts, but disinvestments also reduce the government’s asset base.

Answer 1

The Correct Option is C

Statement 1 is true because foreign aids are typically considered as capital receipts for the government, as they involve inflows from foreign countries that do not need to be repaid.
Statement 2 is true because disinvestments involve selling government assets, which can lead to a reduction in the total assets of the government.