Ask a Question
x

Choose Country Code

x

Direction

x

Ask a Question

  • Ask a Question
  • Scan a Question
  • Post MCQ
  • Note: File extension must be of jpg, jpeg, png, bmp format and file size must not exceed 5 MB
x

Ask a Question

x

Hire a Tutor

Answers and Solutions

What's Your Question?
Answer

Zero Primary Defecit means a government borrows to make earlier interest payments. 

Answer

Hello Sanjay

Primary deficit refers to difference between fiscal deficit of the current year and interest payments on the previous borrowings. Primary Deficit = Fiscal Deficit – Interest Payments.

Implications of Primary Deficit:

It indicates, how much of the government borrowings are going to meet expenses other than the interest payments. The difference between fiscal deficit and primary deficit shows the amount of interest payments on the borrowings made in past. So, a low or zero primary deficit indicates that interest commitments (on earlier loans) have forced the government to borrow.

Answer

Primary deficit is defined as fiscal deficit minus interest payment. It is equal to fiscal deficit reduced by interest payment.

Primary deficit signifies borrowing requirements of the government. A low or zero primary deficit means that while government’s interest requirement on earlier loans have compelled the government to borrow but it is aware of the need to tighten its belt.

Post Answer and Earn Credit Points

Get 5 credit points for each correct answer. The best one gets 25 in all.

Post Answer