A 'Revenue Deficit' implies that the government is borrowing money to finance its routine, day-to-day consumption expenditures rather than for creating productive assets.

Revenue Deficit occurs when the government's net revenue expenditure exceeds its net revenue receipts. Since this deficit is used to fund current consumption (like salaries, subsidies, and pensions) rather than capital formation, it is considered highly undesirable as it adds to the debt burden without generating future income streams to repay it.