The _________ refers to the excess of government’s revenue expenditure over revenue receipts.
Defining Revenue Deficit in Government Finance
The question asks for the term describing when a government spends more on its day-to-day operations (revenue expenditure) than it earns from its usual sources (revenue receipts).
- Revenue Expenditure: This includes costs like salaries, subsidies, and interest payments.
- Revenue Receipts: This primarily includes taxes and other non-debt creating income.
When Revenue Expenditure exceeds Revenue Receipts, it is termed a revenue deficit. This indicates the government is not covering its regular operational costs through its normal income.
Analyzing the Options
- Revenue Surplus: This occurs when revenue receipts are greater than revenue expenditure. It is the opposite of the situation described.
- Revenue Deficit: This correctly defines the excess of revenue expenditure over revenue receipts.
- Capital Deficit: This relates to the difference between capital receipts and capital expenditure, not revenue items.
- Fiscal Deficit: This is a broader measure, representing the total government deficit (Revenue Deficit + Capital Deficit), including borrowings. It is not specific to the revenue account only.
Therefore, the term that specifically refers to the excess of government’s revenue expenditure over its revenue receipts is the revenue deficit.
Important Questions from Fiscal Policy
- Fiscal consolidation has remained a target of macroeconomic reforms. What was the targeted fiscal deficit as a percentage of GDP under the original FRBM Act 2003 ?
- Which of the following was a major fiscal reform introduced in India as part of the 1991 economic reforms?
In the post-reform era, fiscal prudence became central to macroeconomic stability. Which of the following Acts was enacted in 2003 to institutionalise fiscal discipline in India?
- The intervention of the government whether to expand demand or reduce it constitutes the _________ function.
- A situation in which the government may spend an amount equal to the revenue it collects is:
