Under the institutional framework of Indian fiscal policy, what does 'Revenue Deficit' signify?

💡 Solution & Explanation

Revenue deficit arises when the government's revenue expenditure exceeds its revenue receipts, meaning that current consumption is being funded through borrowings rather than savings or tax surpluses. Unlike capital expenditure, revenue spending does not create productive physical assets. Fiscal deficit measures total borrowing requirements including capital outlays, whereas revenue deficit strictly targets operational imbalances. This metric is a vital indicator of fiscal prudence monitored under the Fiscal Responsibility and Budget Management Act.