Which of the following deficit indicates, how much government borrowing is going to meet expenses other than interest payments ?

Question

Accepted Answer

The correct option is 1:
The concept being described is the Primary Deficit. The Primary Deficit is defined as the Fiscal Deficit minus the interest payments on previous government borrowings. Essentially, it reflects the borrowing requirements of the government to finance its expenditure *excluding* the payment of interest on past debts. This figure is a crucial indicator because it shows the extent to which current government policies and spending require new borrowing, thus measuring the real fiscal effort or burden being imposed by the government's current program. A zero primary deficit means the government needs to borrow only to pay interest on past loans, indicating that current spending is being met by current revenue.

The incorrect option is 2 (Fiscal deficit):
The Fiscal Deficit is the total borrowing requirement of the government. It represents the excess of total expenditure (both revenue and capital) over total receipts (revenue receipts + non-debt capital receipts). Crucially, the Fiscal Deficit *includes* interest payments, making it a broader measure than the Primary Deficit.

The incorrect option is 3 (Revenue deficit):
The Revenue Deficit occurs when the government's total revenue expenditure exceeds its total revenue receipts. It strictly relates to the mismatch in the government's current account (day-to-day running of the government) and does not involve capital expenditure or borrowing requirements directly in the way the question asks.

The incorrect option is 4 (Budget deficit):
The Budget Deficit (or overall budget deficit, before the concept of Fiscal Deficit became the primary focus) is the difference between total expenditure and total receipts (both revenue and capital, and including borrowing). In modern budgeting, this measure is often less relevant than the Fiscal Deficit, but fundamentally, it does not isolate the borrowing required for expenses *other than* interest payments.