The primary deficit (PD) is clearly a cause for concern as it exceeds the budget estimates (BE) for the financial year 2020-21.
According to the information, PD is at a high level since June 2020. It was observed that the PD in June was ₹ 29,263 crore, while BE for the whole year was 927,912.39 crore. Since then, PD has been on the rise and reached .6 61,741.68 crore in November 2020. This was 55,129 crore in December 2020 and 78 58,781 crore in January 2021.
In fact, PD has been more BE throughout the year. Further, the actual number of primary losses in the current financial year is much higher than all the months of the previous financial year. BE to PD in January 2021 is 210.59%. It is 184.72% over the same period in 2019-20. Similarly, BE from PD was 197.51% (FY 2020-21) in December to 2020 and 164.47% in 2019-20 last year.
The primary deficit is the difference between the fiscal deficit of the current year and the interest paid by the government on the debt received in the past. This indicates that government borrowing is used to pay interest on debt rather than capital expenditure. The increase in primary deficit is not a sign of a healthy economy. This means that the government is spending more on interest payments rather than making money, sources say.
Asked whether the primary deficit has increased due to the payment of interest on loans borrowed by the government, Finance Minister Bugna Rajendranath Reddy said, “The government has decided to continue welfare schemes and help the poor and middle class.” Took a loan for “
Growing since bifurcation
Since the bifurcation of the state in 2014, the primary deficit has been increasing. There has been an unprecedented increase in interest payments during the last five years. The primary loss in 2015-16 was ₹ 12,014 crore. This increased to 19,211.46 crore in 2016-17. This was 5 18,525 crores in 2017-18 and 98 20,098 crores in 2018-19. Revised Estimates for the Financial Year 2019-20. 24,100 crore. The government estimated that the primary loss during the current financial year would be ₹ 27,912 crore.
“Any borrowing or loan, which does not lead to creation of assets or reduction in liabilities, will not help the economy in the long run,” said an official.
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