The concept which tries to ascertain the actual deficit in the revenue account after adjusting for expenditure of capital nature is termed as—

The concept that ascertains the actual deficit in the revenue account after adjusting for expenditure of capital nature is the Effective Revenue Deficit (ERD). While Revenue Deficit is simply the excess of revenue expenditure over revenue receipts [6], it often includes grants-in-aid provided by the Central Government to States for the creation of capital assets [4]. Since these grants result in asset creation (like roads or ponds), they are capital in nature despite being recorded under the revenue account [5]. ERD is calculated by subtracting these specific grants for capital asset creation from the Revenue Deficit [2]. This metric provides a more accurate picture of the government's consumption expenditure by excluding money spent on productive assets [5]. It was introduced in the Union Budget 2011-12 to better reflect the actual shortfall in the revenue account after accounting for these capital-forming transfers.

Sources

1. [3] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 4: Government Budgeting > Effective revenue deficit' and 'effective capital expenditure' > p. 153
2. [6] https://www.investopedia.com/terms/r/revenuedeficit.asp
3. [4] https://www.indiabudget.gov.in/doc/budget_at_glance/bag1.pdf
4. [5] https://mcrhrdi.gov.in/2025/mes2025/week8/Understanding%20Budget,%20Public%20Debt,%20and%20Economic%20Growth.pdf
5. [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 4: Government Budgeting > Effective revenue deficit' and 'effective capital expenditure' > p. 154
6. [2] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 4: Government Budgeting > 4.5 Government Deficits > p. 152