A country's fiscal deficit stands at ₹50,000 crores. It is receiving ₹10,000 crores through non-debt creating capital receipts. T…

Question

A country's fiscal deficit stands at ₹50,000 crores. It is receiving ₹10,000 crores through non-debt creating capital receipts. The country's interest liabilities are ₹1,500 crores. What is the gross primary deficit?

1. A. ₹48,500 crores (Correct answer)
2. B. ₹51,500 crores
3. C. ₹58,500 crores
4. D. None of the above

Correct Answer

Option A — ₹48,500 crores

Detailed Solution & Explanation

The correct answer is ₹48,500 crores.

Key Points

• Primary deficit = Fiscal deficit − Interest payments.
• However, the question asks for GROSS primary deficit given that the country is also receiving non-debt creating capital receipts (₹10,000 cr).
• Net fiscal deficit = ₹50,000 cr; net primary deficit = 50,000 − 1,500 = ₹48,500 crores.
• Note: non-debt capital receipts reduce the financing requirement but the gross primary deficit before that = 50,000 − 1,500 = ₹48,500 crores.