Which of the following is/are included in the capital budget of the Government of India? 1. Expenditure on acquisition of assets like roads, buildings, machinery, etc. 2. Loans received from foreign governments 3. Loans and advances granted to the States and Union Territories Select the correct answer using the code given below.

1. The capital budget of the Government of India deals with capital receipts and capital expenditures. Capital receipts create liabilities or reduce financial assets, while capital expenditures create physical or financial assets or reduce liabilities. 2. Statement 1: Expenditure on the acquisition of assets like roads, buildings, machinery, etc., creates physical assets and is thus classified as capital expenditure. It is included in the capital budget. (Correct) 3. Statement 2: Loans received from foreign governments increase the liabilities of the Government of India. Receipts that create liabilities are classified as capital receipts and are part of the capital budget. (Correct) 4. Statement 3: Loans and advances granted by the Central Government to States and Union Territories create financial assets for the Central Government. Therefore, this is classified as capital expenditure and is included in the capital budget. (Correct) 5. Since all three items fall under the capital budget (either as capital expenditure or capital receipt), the correct option includes 1, 2, and 3.