Hello @hiten,
First of all thank you very much for using the theme.
Now when we tested the theme in our side we were unable to find such an issue.
All the categories that we have added from the Admin Panel is displaying fine in the widget as you can see in below given screen record.
https://www.useloom.com/share/475a8482a0f44ec481acaf6743645125
So make sure you have added the category properly and assigned them in the posts.
Thank you.
Regards!!