The 'Effective Revenue Deficit' is a concept introduced in the Indian Union Budget to exclude from the Revenue Deficit those revenue expenditures that actually go towards the creation of ___ assets, such as rural roads or housing.
- Unfunded
- quantitative
- durable (or capital / physical)
- isoquant
Answer: durable (or capital / physical)
Standard Revenue Deficit treats all grants given to states for building rural infrastructure as mere 'consumption' expenditure, which artificially inflates the deficit and makes the government look fiscally undisciplined. The Effective Revenue Deficit corrects this by subtracting grants used for creating durable capital assets. This provides a more accurate picture of the government's truly unproductive, consumption-driven borrowing.