Which of the following statements is true?

A) Wage bill of the government is a capital expenditure.

B) Disinvestment by the government in a company is a capital receipt.

This question was previously asked in
SSC CGL 2022 Tier-I Official Paper (Held On : 13 Dec 2022 Shift 1)
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  1. Only (A)
  2. Neither (A) nor (B)
  3. Both (A) and (B)
  4. Only (B)

Answer (Detailed Solution Below)

Option 4 : Only (B)
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SSC CGL Tier 1 2025 Full Test - 01
100 Qs. 200 Marks 60 Mins

Detailed Solution

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The correct answer is Option 4

Key Points

  • Disinvestment by the government in a company can be either a capital receipt or a revenue receipt, depending on the nature of the transaction.
  • If the government sells its equity shares in a company to the public or to another entity, the proceeds from the sale are considered a capital receipt.
  • This is because the government is selling a capital asset (i.e., its ownership stake in the company) and receiving cash in return.
  • However, if the government sells its goods or services to a company, such as land or buildings, the proceeds from the sale would be considered a revenue receipt.
  • This is because the government is receiving cash for the sale of goods or services, which is a normal business transaction and not the sale of a capital asset.
  • In summary, the classification of disinvestment receipts as capital or revenue depends on the nature of the transaction and the asset being sold.

Additional Information

  •  In accounting and finance, capital expenditures refer to investments made by a company or government that are expected to provide long-term benefits, such as the acquisition of fixed assets like land, buildings, equipment, and machinery.
  • These assets are expected to generate revenue or other economic benefits over a long period of time.
  • On the other hand, the wage bill of the government is typically considered an operating expenditure because it represents the cost of the government's day-to-day operations.
  • This includes the salaries and wages paid to government employees, which are necessary to keep the government functioning and to provide public services.
  • While there may be instances where the government's wage bill is considered a capital expenditure, such as when it is tied to a specific capital project, such as the construction of a new building or infrastructure project, in general, it is considered an operating expenditure rather than a capital expenditure.

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Last updated on Jul 8, 2025

-> The SSC CGL Notification 2025 for the Combined Graduate Level Examination has been officially released on the SSC's new portal – www.ssc.gov.in.

-> This year, the Staff Selection Commission (SSC) has announced approximately 14,582 vacancies for various Group B and C posts across government departments.

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