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Q65 (IAS/2025) Economy › Government Finance & Budget › Fiscal deficit concepts Answer Verified

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?

Result
Your answer: —  ·  Correct: A
Explanation

Gross primary deficit is calculated as Gross fiscal deficit minus Net interest liabilities[1]. In this question, the fiscal deficit is given as ₹50,000 crores and interest liabilities are ₹1,500 crores.

The calculation is straightforward:
Gross Primary Deficit = Fiscal Deficit - Interest Liabilities
Gross Primary Deficit = ₹50,000 crores - ₹1,500 crores = ₹48,500 crores

The information about non-debt creating capital receipts (₹10,000 crores) is not needed for calculating the primary deficit. The primary deficit focuses on present fiscal imbalances by estimating borrowing on account of current expenditures exceeding revenues[1], excluding the burden of past interest obligations. Therefore, option A (₹48,500 crores) is the correct answer.

Sources
  1. [1] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 5: Government Budget and the Economy > Gross fiscal deficit = Net borrowing at home + Borrowing from RBI + Borrowing from abroad > p. 72
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Q. A country's fiscal deficit stands at ₹ 50,000 crores. It is receiving ₹ 10,000 crores through non-debt creating capital receipts. The cou…
At a glance
Origin: From standard books Fairness: High fairness Books / CA: 10/10 · 0/10
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This is a textbook 'Sitter' designed to reward those who read NCERT Macroeconomics. The question contains a classic distractor (₹10,000 cr non-debt receipts) which is already part of the Fiscal Deficit calculation and must be ignored. Strategy: Master the 4 core deficit formulas; don't just memorize definitions, practice the math.

How this question is built

This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.

Statement 1
What is the gross primary deficit for a country whose fiscal deficit is ₹50,000 crores, non-debt creating capital receipts are ₹10,000 crores, and interest liabilities are ₹1,500 crores?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Macroeconomics (NCERT class XII 2025 ed.) > Chapter 6: Open Economy Macroeconomics > National Income Identity for an Open Economy > p. 102
Presence: 5/5
“Gross primary deficit The fiscal deficit minus interest payments. High powered money Money injected by the monetary authority in the economy. Consists mainly of currency. Households The families or individuals who supply factors of production to the firms and which buy the goods and services from the firms. Imports Purchase of goods and services by the domestic country to the rest of the world.”
Why this source?
  • Gives the direct formula: gross primary deficit = fiscal deficit − interest payments.
  • Applying that formula to the given numbers yields 50,000 − 1,500 = 48,500 crores, so the primary deficit can be computed.
Macroeconomics (NCERT class XII 2025 ed.) > Chapter 5: Government Budget and the Economy > Gross fiscal deficit = Net borrowing at home + Borrowing from RBI + Borrowing from abroad > p. 72
Presence: 5/5
“Primary Deficit: We must note that the borrowing requirement of the government includes interest obligations on accumulated debt. The goal of measuring primary deficit is to focus on present fiscal imbalances. To obtain an estimate of borrowing on account of current expenditures exceeding revenues, we need to calculate what has been called the primary deficit. It is simply the fiscal deficit minus the interest payments Gross primary deficit = Gross fiscal deficit – Net interest liabilities Net interest liabilities consist of interest payments minus interest receipts by the government on net domestic lending.”
Why this source?
  • States gross primary deficit equals gross fiscal deficit minus net interest liabilities (interest payments minus interest receipts).
  • Confirms that subtracting interest obligations from the fiscal deficit is the correct adjustment to obtain primary deficit.
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