|Consider the following:|
|1. Primary deficit = Fiscal deficit - Interest Payments.|
|2. The Primary deficit shows the extent to which government is borrowing even if there is no interest is to be paid. Which of these statements is/are correct?|
A) Only 1
B) Only 2
C) Both 1 and 2
D) neither 1 nor 2
Correct Answer: C
Solution :[c] Gross Primary Deficit is Gross Fiscal Deficit less interest payments. Net Primary Deficit is Net Fiscal Deficit minus net interest payments. A shrinking primary deficit indicates progress towards fiscal health. The Budget document also mentions deficit as a percentage of GDP. This is to facilitate comparison and also get a proper perspective. Prudent fiscal management requires that the government does not borrow to consume in the normal course.
You need to login to perform this action.
You will be redirected in 3 sec