The excess of the government's revenue expenditure over the revenue receipts is called the revenue deficit.
Given the same level of the fiscal deficit, a higher revenue deficit is worse than a lower one. High revenue deficit implies that the government should follow contractionary fiscal policy, that is, increase tax and/or reduce spending. In a less developed countries, it is difficult to force people to pay higher taxes or to cut expenditure on development activities. Thus, the government usually finance its revenue deficit through borrowings. A revenue deficit implies a repayment burden in the future, not matched by any benefits via investment. It leads to rise in the prices and hampers the progress of the economy.
Measures to reduce the revenue deficit are following:
(i) Framing suitable policies
(ii) Proper utilisation of revenue receipts

The excess of the government's revenue expenditure over the revenue receipts is called the revenue deficit.
Given the same level of the fiscal deficit, a higher revenue deficit is worse than a lower one. High revenue deficit implies that the government should follow contractionary fiscal policy, that is, increase tax and/or reduce spending. In a less developed countries, it is difficult to force people to pay higher taxes or to cut expenditure on development activities. Thus, the government usually finance its revenue deficit through borrowings. A revenue deficit implies a repayment burden in the future, not matched by any benefits via investment. It leads to rise in the prices and hampers the progress of the economy.

Following are the points of distinction between revenue expenditure and capital expenditure:

Direct tax is a tax levied on the property and the income of persons. These are paid directly to the state by the consumers. Its burden cannot be shifted by the tax payer on someone else.
For example: Income tax.
Indirect tax is a tax collected by an intermediary (seller) from the person who bears the ultimate economic burden of the tax (buyer). Its burden can be shifted by the tax payer on someone else.
For example: Excise duty

Free play of the market forces are bound to generate trade cycles, also called business cycles.these refer to the phases of recession and depression, recovery and boom in the economy.The government budget plays a significant role in preventing business fluctuations due to inflation or deflation and hence, maintains economic stability.Economic stability stimulates investment, consequently, increasing the rate of growth and development.

The government aims to reallocate resources in a way so that its economic (profit maximisation) and social objectives (public welfare) are fulfilled.The government can influence allocation of resources through implementation of appropriate fiscal policy.Production of goods, which are injurious to health is discouraged through heavy taxation.On the other hand, production of goods which are beneficial for society is encouraged through subsidies.

the government budget is an annual statement of the estimated receipts and expenditure of the government over the fiscal year, which runs from April 1 to 31.
Non-tax revenue receipts are the receipts received by the government in the form of prices paid for government supplied goods and services.The sources of non-tax revenue receipts include payments for postage and railway services.
Capital receipts of the government are those receipts, which either cause reduction in the assets or create a liability for the government.Small savings and deposits in the public provident fund are the two sources of the capital receipts.

The tax multiplier is smaller in absolute value than government expenditure multiplier.
Tax multiplier\(={|-c|\over I-c}\)
And, Government Expenditure Multiplier \(={I\over I-c}\)     (c=Marginal Propensity Consume)
Here,\({c\over I-c}<{I\over I-c}\), because  \(c\le I\). An increase in the government expenditure directly affects the total expenditure.The taxes, on the other hand, enter the multiplier process through their impact on disposable income which influences the household consumption

There is a strong positive relationship between revenue deficit and fiscal deficit.
Revenue Deficit: Revenue deficit refers to the excess of the government's revenue expenditure over revenue receipts.that is,
Revenue Deficit = Revenue Expenditure-Revenue receipts
Fiscal Deficit: Fiscal deficit refers to the total budget expenditure over total receipts, excluding borrowings.That is, 
Fiscal Deficit =Total Budget Expenditure-Revenue Receipts-Non-debt creating capital receipts

Following are the points of distinction between revenue expenditure and capital expenditure:

Revenue Deficit: Revenue deficit is the excess of current revenue expenditure over the current revenue receipts.
Revenue Deficit = Current Revenue Expenditure - Current Revenue Receipts
Current revenue expenditure includes both plan and non-plan expenditure of the government to be met through revenue receipts. Current revenue receipts include the net tax and non-tax revenue receipts of the central government. Until the middle of 1970's, the central government in India enjoyed revenue surplus as the revenue receipts of the central government exceeded the revenue expenditure. The phenomenon of revenue deficit made its appearance during the latter 1970's.
Budgetary Deficit: Budgetary deficit is the excess of total expenditure of the government over its total receipts. Total expenditure includes both revenue expenditure and capital disbursements. Total receipts similarly include both revenue and capital receipts.
Budgetary Deficit = Total Expenditure - Total Receipts
= (Revenue Expenditure + Capital Expenditure) - (Revenue Receipts + Capital Receipts)
It was this concept of budgetary deficit that was understood as deficit financing in India
Fiscal Deficit: Fiscal deficit is the difference between total expenditure of the government and its total revenue receipts and capital receipts excluding the borrowings and other liabilities of the government. Altematively, fiscal deficit is the aggregate of budgetary deficit plus borrowings and other liabilities. Fiscal Deficit can be calculated as below:
Fiscal Deficit = Total Expenditure - Total Revenue Receipts - Capital Receipts excluding borrowings.
Primary Deficit: Primary deficit is the difference between fiscal deficit and interest payments. It is the aggregate of budgetary deficit plus borrowings and other liabilities minus interest payments.
It can be calculated as:
Primary Deficit = Fiscal Deficit - Interest Payments
Alternatively primary deficit can be evaluated as:
Primary Deficit = Budgetary Deficit + Borrowings and Other Liabilities - Interest Payments.
The primary deficit in the central government budget in India was of the magnitude of RS. 19,502 crore in 2000-0 1, which has increased to RS. 31,317 crore in 2001-2002.

Importance of public expenditure has been increased due to the following reasons:
(i) Increase in the Activities of the State: In the modern age, the activities of the state have been increased many times. There has been an extensive and intensive increase in the activities of central, state and local governments. Nowadays, governments undertake various activities such as to run, encourage and regularise the economic activities, to maintain economic stability, to secure poor and backward classes and to increase the rate of economic development, etc. There is a great importance of public expenditure in the completion of these activities.
(ii) Economic Planning: Developing countries like India has adopted the path of economic planning for the removal of problems like poverty, unemployment and for the development of the country. As a result, the government has to incur expenditure on large scale. There is a great importance of public expenditure in economic planning.
(iii) Removing Unemployment. Poverty and Income Inequalities: Public expenditure has a great importance for the reduction of chronic problems like unemployment, poverty and income inequalities.