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?

Correct Option: I and II only

Statement I is correct because capital receipts either create a financial liability (such as borrowings) or result in a reduction of government assets (such as disinvestment). Statement II is correct as public borrowings create debt liabilities and disinvestment reduces government equity assets, making both capital receipts. Statement III is incorrect because interest received on loans given by the Government is a revenue receipt, as it neither creates a liability nor reduces assets. Therefore, statements I and II are correct.