Economics • Indian EconomyHard
What does the calculation of 'Primary Deficit' in the Union Budget of India signify for fiscal policy analysts?
A. The total outstanding external debt liability accumulated over past fiscal years
B. The fiscal deficit minus interest payments, indicating borrowing requirements excluding servicing of past debt✓ Correct Answer
C. The total capital expenditure allocated toward infrastructure development projects
D. The net revenue generated from disinvestment of public sector enterprises
💡 Solution & Explanation
Primary deficit is calculated by subtracting interest payments on accumulated debt from the fiscal deficit, reflecting the government's current fiscal stance independent of past borrowing burdens. Total external debt represents cumulative sovereign liabilities across international creditors. Capital expenditure funds physical asset creation, while disinvestment proceeds count under capital receipts. A zero primary deficit implies the government borrows solely to pay interest on prior debt obligations.
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