What do you get when interest payments are subtracted from the fiscal deficit?

The revenue deficitCorrect answerYour answerThe effective revenue deficitCorrect answerYour answerThe primary deficitCorrect answerYour answerThe budget deficitCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

The primary deficit is the fiscal deficit less interest payments.
It strips out the cost of past borrowing and shows the shortfall created by this year's decisions alone.
The revenue deficit is a different subtraction: revenue expenditure minus revenue receipts, which says nothing about interest.

Worth noting

A government can run a fiscal deficit made up almost entirely of interest, and then its primary deficit is near zero even as its debt keeps growing.

Concept: Revenue deficit against primary deficit
Typical timeTypical: 45 s
Your timeYours: —

The rule this testsThe Union Budget and the Economic Survey

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Ten questions from Indian Economy & Institutions, at your own pace.

What do you get when interest payments are subtracted from the fiscal deficit?

Explanation