A country’s fiscal deficit stands at Rs. 50,000 crores. It is receiving Rs. 10,000 Crore through non-debt creating capital receipts. The country’s interest liabilities are Rs. 1,500 crores. What is the gross primary deficit?
Explanation
The primary deficit isolates the impact of current fiscal operations by excluding the burden of interest payments on past debt from the fiscal deficit.
The given fiscal deficit (₹50,000 crores) already reflects the gap after accounting for all receipts, including non-debt capital receipts. Hence, the ₹10,000 crores mentioned does not need to be used again in further calculation.
To compute the primary deficit:
Primary Deficit = Fiscal Deficit − Interest Payments
= 50,000 − 1,500
= 48,500 crores
This shows that out of the total borrowing requirement, ₹1,500 crores is due to past debt obligations, and the remaining ₹48,500 crores reflects the current fiscal imbalance.
Thus, the gross primary deficit is ₹48,500 crores.