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Difficulty: EasyEconomic Developments, Union & State Budgets, and Economic Surveys

In the context of public finance and Union Budget accounting in India, how is the 'Primary Deficit' calculated?

  1. Fiscal Deficit minus Interest PaymentsAnswer
  2. B
    Revenue Deficit minus Capital Expenditure
  3. C
    Fiscal Deficit plus Net Market Borrowings
  4. D
    Gross Domestic Product minus Revenue Receipts

Answer

Primary Deficit is calculated as Fiscal Deficit minus Interest Payments.
The Primary Deficit measures the current year's fiscal imbalance by deducting past debt service obligations (interest payments) from the Fiscal Deficit. Therefore, the statement defining it as 'Fiscal Deficit minus Interest Payments' is correct.

Step-by-Step Solution

1
Identify the basic accounting definition of Primary Deficit in Union Budget presentation.
Primary Deficit reflects the government deficit excluding past debt interest obligations.
It shows how much current government spending (excluding interest liabilities) exceeds current revenues.
2
Apply the official budgetary deficit formula.
Primary Deficit=Fiscal Deficit−Interest Payments\text{Primary Deficit} = \text{Fiscal Deficit} - \text{Interest Payments}
Subtracting interest payments isolates the current fiscal stance of the government from liabilities inherited from previous years.

Key Concept

Deficit Indicators in Union Budget Accounting
Estimated Time:45s
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Topics

Economic Developments, Union & State Budgets, and Economic Surveys

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