Required fields are marked *. The government can take following remedial actions to overcome this financial situation: The government’s revenue deficit has several severe implications, which are as follows: Note: It is to be taken into prime consideration, that revenue deficit includes only those transactions that have a direct impact on the government’s current income and expenditure. On the contrary, if the actual receipts are higher than expected one, it is termed as revenue surplus. Meaning: Revenue deficit is concerned with the revenue expenditures and revenue receipts of the government. The revenue deficit has to be met from the capital receipts that forces a government to either borrow or sell its existing assets, which results in the, Since the government uses more of capital receipts to meet its consumption expenditure, leads to the, With more and more borrowings, the burden to repay the liability and the interest increases that results into. Content Filtrations 6. Definition: The Revenue deficit refers to the financial position wherein the government’s revenue expenditure exceeds its total revenue receipts. Revenue Deficit = Total Revenue Expenditures – Total Revenue Receipts. A high revenue deficit gives a warning signal to the government to either curtail its expenditure or increase its revenue. government is using up savings of other sectors of the economy to finance its consumption expenditure. revenue deficit: Situation in which the net amount received by a company in revenue is less than the net amount projected. 3. Revenue Deficit Meaning. Government should increase its receipts from various sources of tax and non-tax revenue. 4) A Balance of payments deficit may cause a loss of confidence by foreign investors. But the actual revenue of Rs 90 is realised and an expenditure is Rs 70. Privacy Policy 8. Revenue deficit arises when the government’s actual net receipts is lower than the projected receipts. Content Guidelines 2. Revenue Deficit: Meaning, Implications and Measures to Reduce Revenue Deficit! Copyright 10. For example, suppose a company had projected expenses of $100,000 and projected revenues of $150,000. However, Indian Budget is facing revenue deficit for the past several years. For details about Fiscal Deficit, please visit, India's Fiscal Deficit and Revenue Deficit. All Rights Reserved. Therefore, there is always a risk, that investors will remove their investments causing a big fall in the value of your currency (devaluation). If its actual expenses were $125,000 and its actual revenue were $150,000, it would have a revenue deficit of $25,000.