Q. 16

Suppose you are a

Answer :

Revenue deficit means revenue expenditure is more than the revenue receipts. Revenue deficit leads to borrowing.

a. when the government is spending more than what it collects through revenue, it suffers a revenue deficit.

b. higher revenue deficit means higher repayment burden in the future.

c. A high revenue deficit implies that the government has to either curtail its expenditure or increase its tax and non-tax receipts.

The revenue deficit could be controlled:

(i) If the Government raises the rate of taxes especially on rich people and any new taxes wherever possible

(ii) The Government should try to reduce its expenditure and avoid unnecessary expenditure.

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