Economy · Types of Deficit & Deficit Financing
The concept being tested: Gross Primary Deficit (fiscal deficit minus interest payments).
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?
Gross Primary Deficit is defined as Fiscal Deficit minus Interest Payments — it strips out the cost of servicing past borrowings to show the deficit generated by the current year's spending alone. Here the fiscal deficit is already given as ₹50,000 crores, so the only other figure needed is interest liabilities of ₹1,500 crores. Gross Primary Deficit = ₹50,000 crores minus ₹1,500 crores = ₹48,500 crores, which matches ₹48,500 crores. The ₹10,000 crores of non-debt creating capital receipts (recoveries of loans, disinvestment proceeds and the like) is extra information that has already been absorbed into the given fiscal deficit figure; it plays no further role in converting fiscal deficit into primary deficit, and is placed in the stem purely to test whether the aspirant applies the correct two-term formula or drags in an unrelated number.
What UPSC was testing
The question is a straightforward formula-application test, but UPSC deliberately supplies a third figure, non-debt creating capital receipts, that belongs to the fiscal-deficit calculation and not the primary-deficit one; aspirants who reflexively use every number given in the stem fall into the ₹58,500 crores trap.
How often this comes up
This concept has appeared 13 times in UPSC Prelims General Studies Paper I between 2015 and 2025 — in 2015, 2016, 2017, 2018, 2021, 2022 and 2025.
The option-by-option autopsy for this question — why each of the other three is wrong, and which neighbouring concept each one was built from — is in the app.
Other past-year questions touching Types of Deficit & Deficit Financing.