The correct answer is Primary deficit. Explanation & Key Takeaways: Primary deficit: • Primary deficit is referred to as the difference that exists between the fiscal deficit of the current year and the interest payment that was needed to be paid in the previous fiscal year. • It is one of the three important measures of determining the government deficit. • It shows the requirement of borrowing from the government and excludes any kind of interest. • It also highlights the number of government expenses that need to be met through borrowing other than the interest payment. • While fiscal deficit deals with the government’s total borrowings including the interest payment, primary deficit deals with the government’s borrowings excluding the interest payments. • Generally, when a loan is raised by the government it includes the interest payment amount also. • This amount when subtracted from the principal loan amount indicates the primary deficit. • Primary deficit = Fiscal deficit – Interest payments • Fiscal deficit = (Total expenditure – Total income of the government) • Interest payments refer to the previous year’s pending payments.