How can revenue deficit be reduced? Suggest a few measures.

● 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.