Q. 7

How can revenue d

Answer :

● Revenue deficit is the excess of total revenue expenditure of the government over its total revenue receipt.


● Revenue deficit = expenditure minus total revenue receipt.


● It indicates the dissaving of the government because the government has to make up for the uncovered gap.


● It is done by using the capital receipts either by borrowing or through selling its assets.


● The government usually uses its capital receipt to meet the consumption expenditure which leads to an inflationary situation in the economy.


● The two measures to reduce revenue deficit are:


i. The government should reduce all its unproductive expenditure.


ii. The government should increase its revenue from various tax and nontax revenue sources.


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