Q. Consider the following statements:
1.When balance of the government’s total receipts and total expenditures turns out to be negative is called as primary deficit.
2.The deficit excluding the interest liabilities for a year is called as fiscal deficit.
Which of the statements given above is/are correct?
Explanation: When balance of the government’s total receipts (i.e., revenue + capital reeipts) and total expenditures (i.e., revenue + capital expenditures) turns out to be negative, it shows the situation of fiscal deficit, a concept being used since the fiscal 1997–98 in India.
- The fiscal deficit excluding the interest liabilities for a year is the primary deficit, a term India started using since the fiscal 1997–98.
- It shows the fiscal deficit for the year in which the economy had not to fulfill any interest payments on the different loans and liabilities which it is obliged to—shown both in quantitative and percentage of GDP forms.
Source: Ramesh Singh