Which of the following correctly defines the primary deficit?
- A.Fiscal deficit minus interest payments
- B.Revenue expenditure minus revenue receipts
- C.Total expenditure minus total receipts including borrowings
- D.Revenue deficit minus grants for creation of capital assets
Show answer
The fiscal deficit of a year contains the cost of servicing past borrowing as well as fresh spending, so taking out interest payments leaves the primary deficit, which shows how far the present year's expenditure exceeds its receipts on its own account.
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