Question

As per the government budget, the interest payments are estimated at ₹ 10,000 crores, which is 40% of primary deficit. Calculated fiscal deficit?

Answer 1

Let, Primary defict = x

₹10,000 crores = 40% of x = 0.40 x

x= ₹10,000 crores / 0.40 = ₹25,000 crores

Primary Deficit = Fiscal deficit – Interest payment

₹25,000 crores = Fiscal defict – ₹10,000 crores

Fiscal deficit = ₹25,000 crores + ₹10,000 crores

= ₹35,000 crores