🧷 Authentic Classroom Explanation by IAS Monk

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📌 The Question:

A country’s fiscal deficit stands at ₹50,000 crores. It is receiving ₹10,000 crores through non-debt creating capital receipts. The country’s interest liabilities are ₹1,500 crores. What is the gross primary deficit?

(a) ₹48,500 crores
(b) ₹51,500 crores
(c) ₹58,500 crores
(d) None of the above

✅ Correct Answer: (a) ₹48,500 crores

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🧠 Curiosity Raiser

Why do economists remove interest payments while assessing fiscal health?
Because interest reflects past borrowing, while primary deficit shows current policy stance.

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📘 Enrichment Notes (Numerical Precision)

🔹 Given Data

• Fiscal Deficit = ₹50,000 crores
• Interest Payments = ₹1,500 crores
• Non-debt capital receipts are already adjusted in fiscal deficit

🔹 Formula

Gross Primary Deficit = Fiscal Deficit − Interest Payments

🔹 Calculation

= 50,000 − 1,500
= ₹48,500 crores

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Key Concept Recall

• Fiscal Deficit → total borrowing requirement
• Primary Deficit → fiscal deficit excluding interest burden
• Indicates whether the government is living within current means

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🧘‍♂️ IAS Monk Whisper

Interest tells the story of yesterday; primary deficit reveals today’s discipline.