Primary deficit is fiscal deficit minus:
Interest payments
The primary deficit is obtained by subtracting interest payments from the fiscal deficit, so Interest payments is the correct answer.
Primary Deficit = Fiscal Deficit − Interest Payments.
To understand why, recall what each term means. The fiscal deficit is the gap between the government's total expenditure and its total revenue (excluding borrowings); it represents the total amount the government must borrow in a year. A large part of that spending goes towards paying interest on loans taken in earlier years — an unavoidable legacy burden from past borrowing.
By stripping out these interest payments, the primary deficit isolates the borrowing required to cover the government's current-year activities alone. In effect it answers the question: "Ignoring the debts of the past, is the government still spending more than it earns this year?" A shrinking or zero primary deficit is therefore a sign of improving fiscal discipline, even if the overall fiscal deficit stays high because of accumulated interest.
The other choices are incorrect: borrowings actually equal the fiscal deficit rather than being subtracted from it; the revenue deficit is a separate concept (the shortfall on the revenue account only); and capital expenditure is a component of spending, not the item removed to reach the primary deficit.
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