Economics • Indian EconomyMedium
Examine the structural definition of 'Revenue Deficit' in the context of Indian public finance and budgetary management. What does this specific deficit measure?
A. The excess of government revenue expenditure over revenue receipts✓ Correct Answer
B. The total borrowing requirements of the government from external international financial institutions
C. The gap between total capital disbursements and net public debt repayments
D. The shortfall in tax revenues resulting from uncollected corporate income assessments
💡 Solution & Explanation
Revenue deficit occurs when government revenue expenditure exceeds revenue receipts, implying that the administration is borrowing funds to finance day-to-day operational consumption rather than asset creation. Effective revenue deficit represents revenue deficit minus grants given to states for the creation of capital assets. Prudent fiscal consolidation targets necessitate the progressive elimination of revenue deficits.
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