Question
Primary deficit equals: (Choose the correct alternative)
(1) (a) Borrowings (b) Interest payments (c) Borrowings less interest payments (d) Borrowings and interest payments both
Solution
The correct option is (c). Primary deficit is the difference between the fiscal deficit and interest payment. It determines the amount of borrowing which is necessary for the government to pay for the expenses other than interest payments.
Primary deficit = Fiscal deficit − Interest payment.
