A Business Encyclopedia

Primary Deficit

Definition: The Primary Deficit is the difference between the fiscal deficit of current year and the interest paid on the previous borrowings. Thus, primary deficits are government’s borrowings exclusive of interest payment.

Generally, the loan raised by the government is inclusive of the interest amount, and if that amount is deducted from the principal loan amount, the balance amount is called as the primary deficit. The purpose of measuring such deficit is to know the amount of borrowings that government can utilize in the expenses other than the interest payments.

Symbolically, it can be represented as:

Primary Deficit = Fiscal Deficit – Interest payments on the previous borrowings

In case, the primary deficit is zero; then the fiscal deficit becomes equal to the interest payment, which means government resort to borrowings just to pay off the interest payments. Thus, the low or zero primary deficits indicate that the government was forced to resort to the external borrowings to meet out its previous interest obligations, and nothing gets added to the existing loan.

Leave a Reply

Your email address will not be published. Required fields are marked *


Related pages

implementation of bprconciliator definitionbf skinner motivation theorydiminishing marginal utility examplesdelegated powers definemonopolistic competition market structurewhat is the meaning of oligopolydefinition for hire purchasecheque floatstrongly agree likert scaleexample of geocentricoluwadamilola meaningdefinition of hr metricsdefine quantitative techniqueshow cheque truncation system workscrr definitiondemerged companydeontological theory exampleissuing debentureswhat is simplex algorithmretained profit disadvantagesporters modelvogel approximation methoddelphi method of forecastingexplain the term infrastructuredefine divestureteleological theories focus onunitary elastic demand definitionprestige deflaf rbiproportional stratified sampledefinition of judgementaldefine decline stagewhat is the m&m theorydeterminant of elasticity of demandwhat does loafing meangdp ndp gnp nnpemployment provident fund actdivestiture definitionsocial loafing psychology definitionwhat is expectancy theory of motivationasset management ratios definitionconflict management definition pptdefinition ulteriorproportional stratified samplingmacro environment analysis definitioninnovation schumpeterbureaucratic organizational structure definitiontraveler chequewhat is the meaning of debenturestwo way symmetrical public relationsdefine determinant of demanda company with strategic intent is one thatherzberg motivation theorymajor ethical theorieswhat is deontology theorydefinition of acid test ratiowhat does arbitrage mean in financedefinition stratified samplingimportance of the concept of elasticity of demandpolycentric staffing policymeaning of crrdefine disinvestmentdefine a bureaucratic organizationporter's five forces definitionassumption meaning in urduwhat does the law of diminishing marginal utility statedefinition of business process reengineeringautocratic definition leadershipstaggered board definitionpaired comparison methodmarginal costing and decision makingsales projection definitiontheories of dividend