Receipts and Expenditure of the Central Government, 2020-21

Primary deficit equals:

Fiscal deficit - interest payments

The correct answer is Option (4) → Fiscal deficit - interest payments

Primary Deficit: 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.