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?

Correct Option

The Gross Primary Deficit represents the fiscal deficit less interest payments. It indicates the government's borrowing requirement for current expenditures, excluding the interest on past debt.

The formula for Gross Primary Deficit is:

Gross Primary Deficit = Fiscal Deficit - Interest Payments

Given:

• Fiscal Deficit = ₹50,000 crores
• Interest Payments = ₹1,500 crores

Calculation:

Gross Primary Deficit = ₹50,000 crores - ₹1,500 crores = ₹48,500 crores.

Incorrect Options

Options (2) and (3) are incorrect because they result from erroneous calculations, such as adding interest payments to the fiscal deficit instead of subtracting them, or incorporating irrelevant figures. The definition of gross primary deficit specifically requires the subtraction of interest payments from the fiscal deficit.

The non-debt creating capital receipts of ₹10,000 crores are not considered in the calculation of gross primary deficit. This figure is relevant for other deficit measures, such as effective revenue deficit, but not for the gross primary deficit.

Option (4) is incorrect as option (1) accurately corresponds to the calculated gross primary deficit.