Consider the following statements : 1. Capital receipts create a liability or cause a reduction in the assets of the Government. 2. Borrowings and disinvestment are capital receipts. 3. Interest received on loans creates a liability of the Government. Which of the statements given above are correct?

Option (a) is correct because capital receipts are defined as government inflows that either create a liability (e.g., borrowings) or reduce assets (e.g., disinvestment), making statements 1 and 2 accurate. Statement 3 is incorrect because interest received on loans is a **Revenue Receipt**, as it is a recurring income that neither creates a liability nor reduces assets. The core concept tested is the classification of government receipts into Capital and Revenue accounts based on their impact on the state's assets and liabilities.