A large revenue deficit as a share of fiscal deficit signals that borrowing is financing mainly

1. Fiscal deficit is total borrowing; revenue deficit is the current-account part of it. 2. If the revenue portion is large, most borrowed money is funding day-to-day spending. 3. That means borrowing is financing **consumption rather than investment**. 4. Borrowing for investment builds assets that can service the debt; borrowing for consumption does not, which is why the ratio is watched. _Source: syllabus Introductory Macroeconomics, Ch 5 "Government Budget and the Economy", section 5.2.1 Measures of Government Deficit_