Discussion
If the fiscal deficit of the Union Government is Rs. 75,000 crores relending to State is Rs. 25,000 crores, interest payments are Rs. 25,000 crores, what is the amount of the primary deficit?
Answer: A
The primary deficit is Rs 50,000 crore.
\[\text{Primary deficit} = \text{Fiscal deficit} - \text{Interest payments}\]
\[= 75{,}000 - 25{,}000 = 50{,}000\ \text{crore}\]
It measures the government's borrowing requirement excluding the burden of past debt, and so shows how much of the deficit is due to current decisions.
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