Definition Of Revenue Deficit

Revenue deficit results in borrowing.

Definition of revenue deficit. It also indicates the extent to which the government has borrowed to finance the current expenditure. Revenue deficit arises when the government s revenue expenditure exceeds the total revenue receipts. The revenue deficit refers to the financial position wherein the government s revenue expenditure exceeds its total revenue receipts. This means that government s own earnings are not sufficient to meet the day to day functioning of its departments and other provisions of services.

Revenue deficit includes those transactions that have a direct. But the central government often gives grants to the state governments that grant is used by the state governments for assets creation. The definition of revenue expenditure tells that revenue expenditure is on pension the salary of government employee and grants they do not make any productive assets. A revenue deficit not to be confused with a fiscal deficit measures the difference between the projected amount of income and the actual amount of income.

Revenue deficit signifies that government s own earning is insufficient to meet normal functioning of government departments and provision of services. It shows that the income gained is insufficient for the government to carry normal functioning and provisioning. Revenue deficit is the gap between the consumption expenditure revenue expenditure of the government union or the state governments and its current revenues revenue receipts. Revenue deficit indicates the borrowing amount needed by the government.

Simply put when government spends more than what it collects by way of revenue it incurs revenue deficit. Revenue deficit occurs when the net amount received total income total expenses by the government is lesser than the projected amount. If a business or government has a.