Revenue deficit (RD)
RD = Revenue Deficit- How often
- Every yearUnion Budget, 1 February
- Next release
- Mon 1 FebIn 81 days · expected · 11:00 AM
2026-27, the same as in 2025-26.
Events on this chart
Source: Union Budget, released 1 Feb 2026 · Chart: Clarity UPSC
- Previous
- 1.5%2025-26
- Highest
- 1.7%2024-25
- Lowest
- 1.5%2025-26
3 readings since 2024-25.
Story
The part of borrowing that pays for day-to-day spending rather than building assets.
What is happening now As of 2026-27
The Union Budget 2026-27 puts the revenue deficit at ₹5,92,344 crore, 1.5% of Gross Domestic Product (GDP). That is the same share as in 2025-26 (revised estimate) and below 1.7% in 2024-25. The Budget expects revenue spending of ₹41.25 lakh crore (10.5% of GDP) and revenue receipts of ₹35.33 lakh crore (9.0% of GDP), so receipts cover 85.6% of revenue spending. Leaving out the grants that pay for building assets, the cover rises to about 97.3%, and the effective revenue deficit falls to 0.3% of GDP from 0.6%.
The Controller General of Accounts (CGA) puts the provisional revenue deficit for 2025-26 at 1.55% of GDP. In the first half of 2026-27 the deficit ran well ahead of last year's pace: ₹1,38,468 crore from April to September, 23.4% of the year's estimate, against 5.2% at the same point a year earlier.
Why it matters
The revenue deficit shows how much of the Centre's borrowing pays for running costs such as salaries, interest and subsidies. That spending leaves no road, railway line or other asset behind, yet the loans must still be repaid with interest from future taxes.
When the revenue deficit shrinks, a larger part of each year's borrowing goes into assets that help the economy grow. This is why the Fiscal Responsibility and Budget Management (FRBM) Act of 2003 aimed to remove it altogether, and why the Budget reports what share of borrowing pays for capital spending.
What it is
The revenue deficit is the amount by which the Centre's revenue expenditure exceeds its revenue receipts. Revenue receipts are taxes, after the states' share, and non-tax revenue such as dividends, interest and fees. Revenue expenditure runs the government: departments and services, interest on debt, subsidies and grants.
A revenue deficit means part of the year's borrowing pays for current spending rather than for assets. The accounts treat every grant to the states as revenue spending, even when a state uses it to build a road or a school. So the Budget also reports the effective revenue deficit: the revenue deficit minus grants for creating capital assets.
The Union Budget sets the figure each year, and the Controller General of Accounts reports the outcome. When the revenue deficit shrinks, more of the borrowing is left for capital spending.
Read this number
- The publisher
- The Ministry of Finance presents the Union Budget to Parliament every year, usually on 1 February, with targets for spending, receipts and borrowing.
Terms on this page (3)
- CGA
- Controller General of Accounts
- FRBM
- Fiscal Responsibility and Budget Management
- GDP
- Gross Domestic Product
History
- 24 Jul 1991The crisis Budget sets out to cut the fiscal deficit and to reduce the revenue deficit significantly.
- 5 Jul 2004The Fiscal Responsibility and Budget Management (FRBM) Act comes into force with two targets: a fiscal deficit of 3% of Gross Domestic Product (GDP) and no revenue deficit.
- 2008-09The global financial crisis strikes in the year the targets fall due. The government funds a fiscal stimulus and departs from them.
- 2012An amendment to the FRBM Act, made through the Finance Bill, 2012, adds the effective revenue deficit as a fiscal measure.
- 29 Jan 2026The Economic Survey reports the revenue deficit at its lowest share of GDP since 2008-09.
Readings
| Period | Value | Status | Released |
|---|---|---|---|
| 2026-27 | 1.5% | Budget estimate | 1 Feb 2026 |
| 2025-26 | 1.5% | Revised | 1 Feb 2026 |
| 2024-25 | 1.7% | Final | 1 Feb 2026 |
For UPSC
Know the four deficits and how each is worked out (fiscal, revenue, effective revenue and primary), why grants for capital assets count as revenue expenditure, and the 2012 amendment to the Fiscal Responsibility and Budget Management (FRBM) Act that added the effective revenue deficit.