Question 35 from UPSC CSE 2025 - Economics

Question

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

A

Rs.48,500 crores

B

Rs.51,500 crores

C

Rs.58,500 crores

D

None of the above

Accepted Answer

Correct Option: A. Rs.48,500 crores

Strategy: Identify that the Primary Deficit is Fiscal Deficit minus interest payments. Ignore the non-debt creating capital receipts in this step, as they have already been factored into the calculation of Fiscal Deficit. Simply subtract interest liabilities (Rs.1,500 crores) from Fiscal Deficit (Rs.50,000 crores) to get the Gross Primary Deficit (Rs.48,500 crores), making option A correct.

Key Info: Fiscal Deficit represents the gap between the government's total expenditure and the sum of its revenue receipts and non-debt capital receipts. It is an important indicator of the government's total borrowings in a financial year. Non-debt creating capital receipts include recoveries of loans and disinvestment proceeds which do not create future repayment obligations. Interest liabilities refer to interest payments on previous borrowings. Primary Deficit is calculated by subtracting interest payments from the fiscal deficit and demonstrates the deficit exclusive of past debt obligations; it reflects the basic imbalance in government finances, excluding interest payments. Accurate calculation of these deficits is crucial for assessing the sustainability of fiscal policy and understanding the government's fiscal health.

Answer

Option B: Rs.51,500 crores

Answer

Option C: Rs.58,500 crores

Answer

Option D: None of the above

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

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