Question

Which of the following formulas correctly defines the Primary Deficit?

Options

• \[ \text{Primary Deficit} = \text{Revenue Deficit} - \text{Interest Payments} \]

• \[ \text{Primary Deficit} = \text{Fiscal Deficit} - \text{Interest Payments} \]

• \[ \text{Primary Deficit} = \text{Revenue Expenditure} - \text{Revenue Receipts} \]

• \[ \text{Primary Deficit} = \text{Fiscal Deficit} + \text{Interest Payments} \]

Answer 1

The Primary Deficit is obtained by deducting interest payments from the Fiscal Deficit: \[ \text{Primary Deficit} = \text{Fiscal Deficit} - \text{Interest Payments} \]. This removes the burden of past debt and reveals the fresh borrowing requirement.