Which of the following is indicated by a "Zero primary deficit"?

The correct answer is Option 1: Interest on past loans only which government has to borrow

Primary deficit simply means fiscal deficit minus the interest payments. A "Zero primary deficit" indicates that the government's current fiscal operations are in balance, excluding interest payments on past debt. A zero primary deficit means that the government does not need to borrow for current expenditures beyond interest payments. In simple words, a zero primary deficit means that the excess of total expenditure over total receipts (fiscal deficit) is due solely to interest payments on past loans.