Difference between primary deficit and fiscal deficit.

1.	Difference between primary deficit and fiscal deficit.
Answer» The primary deficit is defined as the difference between current government spending on goods and services and total current revenue from all types of taxes net of transfer payments. It excludes interest payments on debt. primary deficit = government spending – tax revenues The fiscal deficit is defined as excess of total government expenditure (including loans net of recovery) over total government receipts (excluding borrowings). It measures the total borrowing requirements of the government. Fiscal deficit = primary deficit + interest payments on borrowings. Fiscal deficit indicates total government borrowing requirements including interest whereas primary deficit indicates total government borrowing requirements excluding interest payments.

Answer»

The primary deficit is defined as the difference between current government spending on goods and services and total current revenue from all types of taxes net of transfer payments. It excludes interest payments on debt.

primary deficit = government spending – tax revenues

The fiscal deficit is defined as excess of total government expenditure (including loans net of recovery) over total government receipts (excluding borrowings). It measures the total borrowing requirements of the government.

Fiscal deficit = primary deficit + interest payments on borrowings.

Fiscal deficit indicates total government borrowing requirements including interest whereas primary deficit indicates total government borrowing requirements excluding interest payments.

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