Economics • Indian EconomyEasy
In government budgeting in India, how is 'Primary Deficit' calculated?
A. Fiscal Deficit minus Interest Payments✓ Correct Answer
B. Revenue Deficit minus Capital Expenditure
C. Fiscal Deficit plus Borrowings
D. Total Expenditure minus Total Revenue
💡 Solution & Explanation
Primary deficit is calculated as the fiscal deficit of the current year minus interest payments on previous borrowings. This financial metric reveals the actual borrowing requirements of the government excluding the burden of servicing past debt, offering a clearer picture of fiscal health. In contrast, fiscal deficit accounts for total borrowing needs including interest liabilities.
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