Question

What is revenue deficit?

• A. Difference between revenue expenditure and revenue receipts
• B. Difference between capital expenditure and capital receipts
• C. Difference between export and import
• D. Difference between total expenditure and total receipts

Hint:

A revenue deficit occurs when the government’s revenue receipts are less than its revenue expenditure. This means the government needs to borrow or take other measures to finance the gap.

Answer 1

The Correct Option is A

Step 1: Defining Revenue Deficit:
Revenue deficit refers to the situation when the government’s revenue receipts (such as taxes, fees, etc.) are less than its revenue expenditure (such as payments for goods and services, interest on loans, etc.). A revenue deficit indicates that the government is spending more on its regular operations than it is earning through its regular revenue sources.
Step 2: Analyzing the Options:
- Option (A) Difference between revenue expenditure and revenue receipts: This is the correct definition of revenue deficit. It reflects the shortfall in revenue, where the government’s spending exceeds its income from revenue sources.
- Option (B) Difference between capital expenditure and capital receipts: This is the definition of the capital deficit, not revenue deficit. Capital expenditure refers to long-term investments, and capital receipts refer to funds raised through borrowing or selling assets.
- Option (C) Difference between export and import: This refers to the trade deficit or balance of payments, not revenue deficit.
- Option (D) Difference between total expenditure and total receipts: This is the fiscal deficit, not revenue deficit. Fiscal deficit includes both revenue and capital expenditures.
Step 3: Conclusion and Answer:
The correct answer is (A) because revenue deficit is the difference between revenue expenditure and revenue receipts, which indicates that the government’s regular income is insufficient to cover its regular expenses.