Primary deficit
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Yogita Ingle 6 years, 7 months ago
Meaning. Primary deficit is defined as fiscal deficit minus interest payments on previous borrowings. We have seen that borrowing includes not only accumulated debt but also interest payment on the debt. If we deduct 'interest payments on debt' from borrowing, the balance is called primary deficit. It shows how much government borrowing is going to meet expenses other than interest payments. Thus zero primary deficit means that government has to resort to borrowing only to make interest payments. To know the amount of borrowing on account of current expenditure over revenue, we need to calculate primary deficit. Thus primary deficit is equal to fiscal deficit less interest payments. Symbolically:
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