A country’s fiscal deficit stands at 50,000 crores. It is receiving 10,000 crores through non-debt-creating capital receipts. The country’s interest liabilities are 1,500 crores. What is the gross primary deficit?
- 48,500 crores
- 51,500 crores
- 58,500 crores
- None of the above
Answer: (a) 48,500 crores
- To find the Gross Primary Deficit, we need to use the following formula:
- Gross Primary Deficit = Fiscal Deficit−Interest Payments
- Given:
- Fiscal Deficit = ₹50,000 crores
- Interest Liabilities = ₹1,500 crores
- Non-debt-creating capital receipts are not needed to calculate the Primary Deficit directly. They are part of the financing of the fiscal deficit, but do not affect the primary deficit calculation.
- Gross Primary Deficit = 50,000 − 1,500 = 48,500 crores
