Gross Fixed Capital Formation (GFCF)
Gross Fixed Capital Formation (GFCF), generally regarded as "net investment", measures the value of net fixed capital acquisitions by the business sector, governments and pure households. It includes spending on plant and machinery and construction of roads, railways, buildings, and excludes disposal of fixed assets, land purchases and depreciation.
GFCF is a component of the expenditure on GDP, and thus shows something about how much of the new value added in the economy is invested rather than consumed. Generally speaking, developing countries often devote a higher % of GDP to investment to enable rapid economic growth.
Fluctuations in GFCF are often considered to show something about future business activity, business confidence and the pattern of economic growth. In times of economic uncertainty or recession, business investment in fixed assets will be reduced, since it ties up additional capital for a longer interval of time. Conversely, in times of robust economic growth, fixed investment will increase, because the observed market expansion makes it likely that such investment will be profitable in the future.
Base year = 2011-12. Current Prices.
Gross Fixed Capital Formation (GFCF), generally regarded as "net investment", measures the value of net fixed capital acquisitions by the business sector, governments and pure households. It includes spending on plant and machinery and construction of roads, railways, buildings, and excludes disposal of fixed assets, land purchases and depreciation.
GFCF is a component of the expenditure on GDP, and thus shows something about how much of the new value added in the economy is invested rather than consumed. Generally speaking, developing countries often devote a higher % of GDP to investment to enable rapid economic growth.
Fluctuations in GFCF are often considered to show something about future business activity, business confidence and the pattern of economic growth. In times of economic uncertainty or recession, business investment in fixed assets will be reduced, since it ties up additional capital for a longer interval of time. Conversely, in times of robust economic growth, fixed investment will increase, because the observed market expansion makes it likely that such investment will be profitable in the future.
Base year = 2011-12. Current Prices.
SUBJECT Variables
INVESTMENT
- India attracted INR 7,943 crores of net investment in 2022-23. The net investments increased by 11.4% over the previous year. A downward trend in GFCF implies that companies have not been adding capacities and making new investments resulting in the culling of existing workforce.
- India's GFCF saw an increase of 11% in Q2 2023-24 compared to a 8% in the preceding quarter ago.
- India's GFCF in 2022-23 is estimated to be 29.2% of its GDP
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