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Gross Fixed Capital Formation (GFCF)
Context
The share of private capital expenditure (capex) in India’s Gross Fixed Capital Formation (GFCF) has dropped to a ten-year low of 33 per cent in FY2024, according to a report by ICRA.
What is GFCF?
- Capital Formation is defined as that part of country’s current output and imports which is not consumed or exported during the accounting period, but is set aside as an addition to its stock of capital goods.
- Total Capital Formation can be broadly classified into
- Gross Fixed Capital Formation (GFCF)
- Change in stock of raw materials, semi-finished and finished goods.
- GFCF (Gross Fixed Capital Formation) refers to the investment in fixed assets (like buildings, machinery, etc.) that adds to the country's productive capacity.
- Statistics: It makes up about 30% of India's nominal GDP. Private capex now forms only 33% of GFCF—this is the lowest in the last 10 years.
- It is the second-largest component after private final consumption expenditure.
- Private Capex refers to the portion of these investments made by private companies.
PYQQ. A decrease in tax to GDP ratio of a country indicates which of the following? (2015)
Select the correct answer using the code given below:
Solution: (a) |
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