What is a primary deficit?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. Total deficit minus interest payments.
A primary deficit refers to the fiscal deficit minus interest payments on the government’s past borrowings. It shows how much the government needs to borrow to meet current expenses, excluding the burden of servicing existing debt. A high primary deficit indicates heavy reliance on borrowing for present expenditure, while a low or zero primary deficit suggests better fiscal discipline.