question_answer

Explain 'revenue deficit in a Government budget? What does it indicate?

Answer:

Revenue deficit is equal to the excess of total revenue expenditure over the total revenue receipts. In short:

Revenue deficit = Total revenue expenditure -Total revenue receipts

Revenue deficit indicates the extra amount of current expenditure which cannot be met by revenue receipts. This shows the extent of borrowings which are required to meet this deficit. Revenue expenditure increases without a corresponding increase in the revenue receipts, revenue deficit increases and this calls for additional borrowing. This means liability of the government deficit increases and this calls for additional borrowing. This means liability of the government increases.