In the context of India's fiscal policy, how is 'Primary Deficit' calculated?

💡 Solution & Explanation

Primary deficit is calculated by subtracting interest payments on past borrowings from the gross fiscal deficit, showing the actual borrowing requirement of the government excluding interest servicing. If the primary deficit is zero, it implies that the government has to borrow solely to service interest obligations rather than running current operations. Other measures such as revenue deficit focus purely on current revenue receipts and expenditures.