Q.Distinguish between Fiscal Deficit and Primary Deficit. What does a zero Primary Deficit imply?

Fiscal deficit is the government's total borrowing need for the year; primary deficit strips the interest-on-old-debt portion out of that figure, isolating the borrowing driven purely by this year's own decisions. …

Fiscal Deficit = Total Expenditure − (Revenue Receipts + Non-debt Capital Receipts) — the government's entire borrowing requirement for the year, covering both current spending needs and the interest burden inherited from past borrowing.

Primary Deficit = Fiscal Deficit − Interest Payments — the same borrowing requirement, but with the interest-payment component (a legacy of past debt, not a reflection of this year's own fiscal choices) removed.

A common error is thinking a zero Primary Deficit means the government is not borrowing at all — it can still be borrowing a substantial amount (equal to interest payments) under a zero Primary Deficit; …