Economics • Indian EconomyMedium
In the calculation of India's fiscal parameters, how is 'Primary Deficit' derived from the fiscal deficit?
A. Fiscal deficit minus interest payments on previous borrowings✓ Correct Answer
B. Fiscal deficit plus capital expenditures incurred during the year
C. Total revenue expenditure minus tax revenues
D. Gross domestic product minus total government debt
💡 Solution & Explanation
Primary deficit is calculated by subtracting interest payments on past borrowings from the gross fiscal deficit, reflecting the current fiscal stance of the government without accounting for debt servicing obligations incurred from past fiscal policies. Alternative options confuse it with capital outlays or tax revenue balances. It shows how much borrowing is needed to meet expenses other than interest payments.
More Economics Indian Economy questions
- How does the Uttarakhand state government utilize the Tea Development Board to revive and expand tea…
- What is the core economic purpose of the National Monetisation Pipeline launched by the Government of India?
- In the calculation of India's National Income, which sector currently contributes the largest share to the…
- How do recommendations of the Central Finance Commission impact the fiscal fiscal transfers to special…
- Evaluate the composition and mechanics of India's Balance of Payments accounts. Which of the following…