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Consider the following statements: I. Capital receipts create a liability or cause a reduction in the assets of the Government. II. Borrowings and d
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The correct answer is option (b): A situation where Government borrowing leads to higher interest rates, which reduces private investment. Watch the detailed video explanation in our Sherlocking Prelims course on UnlockIAS.
This question was asked in UPSC CSE Prelims 2026, GS Paper 1, as Question 59. It falls under Indian Economy > Fiscal Policy & Budget.
This question is rated "moderate". It requires sound conceptual understanding of the topic.
UPSC has asked 45 questions from Fiscal Policy & Budget (under Indian Economy) across multiple years. Visit the topic page to see the full list and year-wise trends.