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

1. A. Rs.48,500 crores
2. B. Rs.51,500 crores
3. C. Rs.58,500 crores
4. D. None of the above

Answer: A

Explanation

The primary deficit is a key indicator of fiscal health, representing the government’s borrowing requirement excluding interest payments on past debts. It is calculated as: Primary Deficit = Fiscal Deficit – Interest Payments. Given: Fiscal Deficit = Rs. 50,000 crores. Interest Liabilities (Interest Payments) = Rs. 1,500 crores. Therefore, Gross Primary Deficit = Rs. 50,000 crores – Rs. 1,500 crores = Rs. 48,500 crores. The non-debt creating capital receipts (Rs. 10,000 crores) are already accounted for in the calculation of the fiscal deficit and are not directly used in the primary deficit calculation from a given fiscal deficit figure. Understanding government budget concepts and deficit calculations is fundamental for UPSC Economy.