What do you mean by primary deficit? Explain its implications. - Vidyadip

Question

What do you mean by primary deficit? Explain its implications.

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Answer

Primary deficit is equal to fiscal deficit less of interest payments.

Primary Deficit = Fiscal Deficit - Interest Payments

Implications of primary deficit are:

It indicates borrowing requirements of the government to meet fiscal deficit net of interes payments.
It enables us to see the way, the government is currently conducting its financial affairs.

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