Question : The revenue deficit is calculated as ____________ minus revenue receipts.
Option 1: Total expenditure
Option 2: Capital receipts
Option 3: Capital expenditure
Option 4: Fiscal deficit
Correct Answer: Total expenditure
Solution : The correct answer is (A) Total expenditure minus revenue receipts.
The revenue deficit represents the difference between the government's total expenditure and its revenue receipts specifically. It is a measure of the extent to which the government's revenue falls short of covering its current expenses, excluding capital expenditures.
Total expenditure includes both revenue expenditure and capital expenditure. Revenue expenditure refers to the government's day-to-day expenses, such as salaries, subsidies, interest payments, and maintenance costs, while capital expenditure refers to investments in long-term assets and infrastructure.
Revenue receipts, on the other hand, represent the government's income from various sources such as taxes, grants, dividends, and fees.
By subtracting revenue receipts from total expenditure, the revenue deficit provides an indication of the extent to which the government is relying on borrowings or capital receipts to finance its current expenses.
