Consider the following statements : I. Capital receipts create a liability or cause a reduction in the assets of the Government. II. Borrowings and disinvestment are capital receipts. III. Interest received on loans creates a liability of the Government. Which of the statements given above are correct?

Option (A) is correct because Statements I and II accurately define capital receipts as government inflows that either create a future liability (such as borrowings) or involve a reduction in assets (such as disinvestment). Statement III is incorrect—making Option (D) the most tempting but wrong choice—because interest received on loans is a recurring income classified as a **Revenue Receipt**, as it does not impact the government's asset-liability status. The core concept tested is the classification of budgetary receipts based on their effect on the government's balance sheet.