Taxes and duties are the main sources of income for a government. Usually, the government receives the money via revenue receipts and capital receipts and then uses the money for both operational and developmental needs. Capital receipts are of two types: capital receipts and non-debt capital receipts. Today I will discuss all about the non-debt capital receipts. Let’s explore!

Definition of Non-debt Capital Receipts

A capital receipt is a type of receipt that can either increase the liability of the government or decrease the government funds. You should keep in mind that capital receipts are not like traditional receipts and these receipts usually consist of market loans, external loans, Government Provident Funds, etc.

What are Non-debt Capital Receipts
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Non-debt Capital Receipt is also a type of capital receipt and it decreases government assets. Non-debt capital receipt is also known as NDCR and this type or receipt only consists of 3% of the government’s total receipts. Some common examples of 3% of the central government’s total receipts are –

  • Recovery of loans
  • Proceeds from the sale of public enterprises, etc.

Types of Non-debt Capital Receipts

There are two types of non-debt capital receipts available. They are –

  • Recoveries of Loans and Advances
  • Miscellaneous Capital Receipts

1. Recoveries of Loans and Advances

This type of non-debt capital receipt includes –

  1. Recovery of loans and advances from state governments
  2. Recovery of loans and advances from union territories with legislature
  3. Recovery of loans that were given to foreign governments
  4. Recovery of loans from PSUs
  5. Recovery of advances from autonomous bodies

2. Miscellaneous Capital Receipts

This type of capital receipt consists of various proceeds from disinvestment in the public sector like –

  1. Disinvestment receipts
  2. Strategic disinvestment
  3. Listing of PSUs in stock markets and
  4. Issue of bonus shares

FAQs about Non-debt Capital Receipts

What are the examples of non-debt capital receipts?

Usually, the government receives non-debt capital receipts from the sale of old assets. This type of receipt doesn’t increase the liability of the government. Some common examples of non-debt capital receipts are the recovery of loans, sale receipt of public enterprises, etc.

What are the sources of capital receipts?

Some common sources of capital receipts are –

  1. Borrowings.
  2. Loan recovery.
  3. Disinvestments.
  4. Savings

What is the difference between capital receipts and revenue receipts?

Capital receipts are not like conventional receipts that you collect from daily business activities. You will get capital receipts from fixed asset sales, debts, and shares. On the other hand, you will receive revenue receipts from your daily cash flow. Some common differences between capital receipts and revenue receipts are –

Capital Receipts Revenue Receipts
This type of receipt doesn’t affect the profit or loss of a business This type of receipt does affect the profit or loss of a business
Capital receipts come from non-operational sources Revenue receipts come from operational sources
This type of receipts are non-recurring These types of receipts are recurring
You can’t use this type of receipt to  create reserve funds You can use this type of receipt to  create reserve funds
Capital receipts are not available for the distribution of profits You can use revenue receipts for the distribution of profits
You will find the capital receipts on the balance sheet You will find the revenue receipts on the income statement

What is nondebt financing?

Non-debt financing usually refers to a type of funding that the business doesn’t need to repay. Some common examples of non-debt financing are savings, scholarships, sponsorships, etc.

What are the sources of non-debt receipts?

Some common sources of non-debt receipts are –

  1. Tax Revenue
  2. Non-Tax Revenue
  3. Recovery of Loans
  4. Disinvestment Revenues

Why non-debt receipts are desirable?

Non-debt receipts are desirable mostly because there is no repayment for this type of receipt. For example, the government receives tax revenues and it is a non-payable fund.

What is the example of non-debt creating capital flow?

Some common examples of non-debt-creating capital flows are FDI, FPI, and Depository Receipts. This type of capital flow doesn’t create any type of repayment therefore they are considered a non-debt creating capital flow.

What is the example of debt-creating capital flow?

Some common examples of debt-creating capital flows are –

  • ECBs
  • FCCBs
  • Rupee Denominated Bonds
  • NRI deposits
  • Banking capital, etc.

What is non-debt expenditure?

Non-debt expenditure is a type of government expenditure where the payments have fewer interest payments and capital repayments. Moreover, this type of expenditure has amortization on both external and domestic debts.

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