Revenue deficit is defined as the excess of revenue expenditure over revenue receipts. Revenue expenditure includes expenses incurred for purposes other than the creation of physical or financial assets (e.g., salaries, interest payments, subsidies, pensions). Revenue receipts include tax and non-tax revenues. When the government has a revenue deficit, it means its routine expenditures are more than its routine income. To cover this gap, the government needs to borrow. This borrowing is used to finance those expenditures that do not create capital assets.
Revenue deficit in India implies that the Indian Government needs to
Asked in BPSC Prelims Exam 66th · Topic: Fiscal Policy & Revenue (Fiscal Deficits: Concepts, measures, and financing of deficits)
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Answer: B. borrow in order to finance its expenses which do not create capital assets
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