Question

Explain 'Revenue Deficit in a Government budget? What does it indicate?

What is revenue deficit in government budget?

Explain the meaning of Revenue deficit

What is revenue deficit?

Define revenue deficit

Answer 1

Revenue deficit means the excess of revenue expenditure of the government over its revenue receipts.
Revenue deficit = Revenue expenditure − Revenue receipts

Revenue deficit is indicated to the government as follows:

1. Regular receipts of the government are not enough to meet regular expenditures.
2. The government is using up savings of other sectors of the economy to meet its consumption expenditure.
3. This gives a signal to either reduce its expenditure or increase its revenue. Curtail expenditure by taking steps to avoid unproductive expenses and increase revenue from various sources of tax and non-tax revenues