From a macroeconomic perspective, which indicator best captures the government’s borrowing requirement excluding interest payments on past debt?

Correct — C. Begin with the fiscal deficit, the government's total borrowing requirement:
Fiscal deficit = Total expenditure − (Revenue receipts + Non-debt creating capital receipts)

Part of that borrowing only services interest on past debt. Remove it:
Primary deficit = Fiscal deficit − Interest payments

What remains is borrowing for this year's gap alone → option (c).

Why the others are wrong

• (a)
  Revenue deficit — Revenue deficit = revenue expenditure − revenue receipts. It covers only the revenue account, and interest payments sit inside it as revenue expenditure, so nothing is excluded.
• (b)
  Fiscal deficit — Fiscal deficit is the whole borrowing requirement, interest included. The stem wants borrowing excluding interest, which is the fiscal deficit minus interest payments.
• (d)
  Budget deficit — Budget deficit is total expenditure over total receipts, revenue and capital. It strips out no interest, and India stopped showing it from the 1997–98 budget.

The Union Budget reports several deficits, each measuring a different gap.

Revenue deficit looks only at day-to-day receipts and spending. Fiscal deficit adds capital spending and counts everything the government must borrow.

Primary deficit takes interest out of the fiscal deficit. In NCERT's words, its goal is to focus on present fiscal imbalances, apart from the cost of debt already taken.

Key facts

• Revenue deficit = Revenue expenditure − Revenue receipts.
• Fiscal deficit = Total expenditure − (Revenue receipts + Non-debt creating capital receipts), and it shows the government's total borrowing requirement.
• Primary deficit = Fiscal deficit − Interest payments.
• India stopped showing the budget deficit from the 1997–98 budget.

Common traps

• Picking fiscal deficit whenever a stem says 'borrowing requirement'. Look for the qualifier 'excluding interest'.
• Assuming interest lies outside the revenue deficit. Interest payments are revenue expenditure.

No directly related past PYQ was found.