Economics • Indian EconomyMedium
What does 'Primary Deficit' measure in the context of government finances and fiscal policy?
A. Total government expenditure minus total non-debt revenue receipts
B. Fiscal deficit minus interest payments on previous borrowings✓ Correct Answer
C. Revenue deficit plus net capital investments undertaken by public sector undertakings
D. Budgetary deficit financed exclusively through central bank ways and advances
💡 Solution & Explanation
Primary deficit is calculated by subtracting interest payments on accumulated debt from the total fiscal deficit, reflecting the government's current borrowing requirement independent of past debt servicing obligations. Total expenditure minus non-debt receipts defines the fiscal deficit itself. Revenue deficit measures the shortfall of current revenue receipts over revenue expenditures. Fiscal consolidation targets frequently monitor primary deficit ratios to assess debt sustainability.
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