SSC Economics Sample Paper NCERT Sample Paper-6

  • question_answer
    Primary deficit is equal to the:

    A)  Difference between the fiscal deficit and the interest payments.

    B)  Difference between budget deficit and the interest payments.

    C)  Difference between monetized deficit and the interest payments.

    D)  None of the above

    Correct Answer: A

    Solution :

    [a] Gross Primary Deficit is Gross Fiscal Deficit less interest payments. Net Primary Deficit is Net Fiscal Deficit minus net interest payments. Net interest payment is interest paid minus interest receipt. A shrinking primary deficit indicates progress towards fiscal health. The Budget document also mentions deficit as a percentage of GDP. This is to facilitate comparison and also get a proper perspective. Prudent fiscal management requires that the government does not borrow to consume in the normal course.

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