Assertion (A): The goal of measuring the primary deficit is to focus on present fiscal imbalances.
Reason (R): The primary deficit includes the interest obligations on accumulated debt.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A) is true but (R) is false.
Assertion (A): The goal of measuring the primary deficit is to focus on present fiscal imbalances. — True. Primary deficit leaves out interest on past debt, so it shows the present gap alone.
Reason (R): The primary deficit includes the interest obligations on accumulated debt. — False. It is the borrowing requirement (fiscal deficit) that includes interest. The primary deficit is the fiscal deficit minus interest payments.
NCERT (2026-27): “5.2.1 Measures of Government Deficit … 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” |