WBCS.LIVE practice question

What is the formula to calculate the 'Primary Deficit' in the Union Budget?

Solve this multiple-choice question and check the correct answer with its explanation below.

Answer options

  1. Fiscal Deficit - Interest Payments
  2. Revenue Deficit - Capital Expenditure
  3. Budgetary Deficit + Borrowings
  4. Total Expenditure - Total Receipts

Correct answer and explanation

Correct answer: Fiscal Deficit - Interest Payments

Explanation: āœ… Correct Answer: A) Fiscal Deficit - Interest Payments šŸ“š Explanation: The Primary Deficit is a highly crucial economic metric that indicates the government's borrowing requirement specifically to meet its current expenses, completely ignoring past debts. It is mathematically calculated by strictly deducting total interest payments on previous borrowings from the current year's Fiscal Deficit. A zero primary deficit simply means the government only needs to borrow to pay old interest.