Question

Primary deficit it's implications and measures

Answer 1

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Answer:

Implication- It indicates, how much of the government borrowings are going to meet expenses other than the interest payments. The difference between fiscal deficit and primary deficit shows the amount of interest payments on the borrowings made in past. So, a low or zero primary deficit indicates that interest commitments (on earlier loans) have forced the government to borrow.

Measures-

1. Revenue deficit = Total revenue expenditure – Total revenue receipts.

1. Revenue deficit = Total revenue expenditure – Total revenue receipts.2. Fiscal deficit = Total expenditure – Total receipts excluding borrowings.

3. Primary deficit = Fiscal deficit-Interest payments.

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