BANKING AFFAIRS

Detailed explanation-1: -The primary deficit is calculated by subtracting interest payments for the borrowings from the current year’s fiscal deficit. The fiscal deficit is calculated by determining the difference between the total income and total expenditure of the government.

Detailed explanation-2: -Calculation of primary deficit is represented by the following formula. Primary deficit = Fiscal deficit – Interest payments. Where, Fiscal deficit = (Total expenditure – Total income of the government) Interest payments refer to the previous year’s pending payments.

Detailed explanation-3: -While fiscal deficit is the difference between total revenue and expenditure, primary deficit can be arrived by deducting interest payment from fiscal deficit.

Detailed explanation-4: -Fiscal deficit is the summation of primary deficit and interest payments as we know, primary deficit is the difference between fiscal deficit and interest payments. Th primary deficit indicates government borrowings on account of current year expenditures and current year receipts of the government.

Detailed explanation-5: -Definition: Gross Primary Deficit is Gross Fiscal Deficit less interest payments. Net Primary Deficit is Net Fiscal Deficit minus net interest payments.