Option 1 -> Borrowing from abroad is a source of financing the deficit, not deducted to arrive at primary deficit.
Option 2 -> Net factor income from abroad is related to national income calculations (GNP vs GDP), not deficit calculations.
Option 3 -> Net Interest liabilities are deducted from Gross Fiscal Deficit to arrive at Gross Primary Deficit.
Option 4 -> Transfer payments are government expenditures already included in fiscal deficit calculations.
Hence, Option 3: Net Interest liabilities -> The Gross Primary Deficit is calculated by subtracting Net Interest Liabilities (interest payments on government borrowings) from Gross Fiscal Deficit. This measure helps assess the current fiscal situation by excluding the burden of past borrowings. Formula: Gross Primary Deficit = Gross Fiscal Deficit - Net Interest Liabilities. It indicates whether the government's current revenues can meet current expenditure excluding interest obligations -> correct