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Kerala PSC Indian Economy Book Study Materials Page 478Book's First Page
18.6 ndian onom alleviation, etc.) and general services (tax Revenue deficit may be shown in the collection, etc.); quantitative form (as how much the gross/total (viii) Grants given by the government to Indian deficit is in currency terms) or in percentage states and foreign countries. terms of the GDP for that particular year (shown as percentage of GDP). Usually, it is shown as a revenue Deficit percentage of the GDP for domestic as well as international analyses. If the balance of total revenue receipts and total revenue expenditures turns out to be negative it is effective revenue Deficit known as revenue deficit, a new fiscal terminology Effective revenue deficit (ERD) is a new term used since the fiscal 1997–98 in India.8 introduced in the Union Budget 2011–12. This shows that the government’s Revenue Conventionally, ‘revenue deficit’ (RD) is the Budget (see the next topic) is running in losses difference between revenue receipts and revenue and the government is earning less revenue and expenditures. Here, revenue expenditures includes spending more revenues—incurring a deficit. all the grants which the Union Government Revenue expenditures are of immediate nature (this gives to the state governments and the UTs— has to be done) and since they are consumptive/ some of which create assets (though these assets non-productive they are considered as a kind of are not owned by the Government of India but expenditure which sums up to a heinous crime in the concerned state governments and the UTs). the area of fiscal policy. Governments fulfil the According to the Finance Ministry (Union Budget gap/deficit with the money which could have been 2011–12), such revenue expenditures contribute spent/intvested in productive areas. to the growth in the economy and therefore, A government might have its revenue should not be treated as unproductive in nature like other items in the revenue expenditures. And on expenditures less than its revenue receipts, i.e., this logic, a new methodology was introduced having (revenue surplus) budget. Such fiscal policy to capture the ‘effective revenue deficit’, which is considered good where the government has been is the Revenue Deficit ‘excluding’ those revenue able to manage some money out of its revenue expenditures of the Government of India which budget which could be spent for the creation of were done in the form of GoCA (grants for productive assets. Yes, another thing that should be creation of capital assets). kept in mind, as how the government has managed The GoCA includes the Government of this surplus and whether the policies which made India grants forwarded to the states & UTs for this happen are judicious enough or not. In the the implementation of the centrally sponsored Second Plan, India emerged as a revenue-suplus programmes such as Pradhan Mantri Gram state, but experts did not appreciate it as it had Sadak Yojana, Accelerated Irrigation Benefit many bad impacts on the economy—higher Programme, Jawaharlal Nehru National Urban tax rates culminated in tax evasion, corruption, Renewal Mission, etc., these expenses though creation of black money, etc. they are shown by the Government of India in its Revenue Expenditures they are involved with 8. a a . Chelliah, he eaning and Significance of the iscal eficit , in Amaresh aghi ed. , Readings in Public asset creation and cannot be considered completely Finance, (New Delhi: Oxford University Press, 2005), ‘unproductive’ like other items put in the basket pp. 387–88. Also see Ministry of Finance, Union Budget of the Revenue Expenditures—the reason why a 1997–98, (New Delhi: Government of India, 1997). new ‘terminology’ was created.