Which of the following best represents the Revenue Deficit?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. Revenue Expenditure – Revenue Receipts.
Revenue Deficit is the shortfall between the government’s revenue expenditure and its revenue receipts. In simple terms, it shows that the government's day-to-day income (from taxes and other revenues) is not enough to cover its routine (non-capital) expenses such as salaries, subsidies, and interest payments. A Revenue Deficit = Revenue Expenditure – Revenue Receipts. A high revenue deficit indicates that the government is borrowing not just for investment but also for its regular operations, which is fiscally unhealthy in the long term. It reflects poor financial management and can lead to increased public debt.
Other options :
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Primary Deficit – Fiscal Deficit: Incorrect formula; primary deficit is actually Fiscal Deficit – Interest Payments.
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Primary Deficit + Fiscal Deficit: Illogical, as both are components of budget deficits but not related this way.
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Revenue Expenditure + Revenue Receipts: This gives total revenue transactions, not the deficit.