Question : Gross primary deficit is equal to ____________.
Option 1: difference between gross fiscal deficit and interest payments
Option 2: difference between total expenditure and total receipts
Option 3: difference between net borrowings and net capital receipts
Option 4: difference between revenue deficit and capital expenditure
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Correct Answer: difference between gross fiscal deficit and interest payments
Solution : The correct answer is the difference between the gross fiscal deficit and interest payments.
Gross primary deficit refers to the difference between the fiscal deficit of the current year and interest payments made on previous borrowings. It displays the government's budget deficit (interest payments excluded). The estimated borrowings of the nation's government represent the fiscal deficit; thus, the larger the deficit, the larger the government's borrowings will be.