Private Capex Share in India’s Gross Fixed Capital Formation (GFCF)

Context: Private capital expenditure’s (capex) share in Gross Fixed Capital Formation (GFCF) dropped to 33% in FY24, marking a significant decline.

What is Gross Fixed Capital Formation (GFCF)?

• Gross Fixed Capital Formation (GFCF) refers to the net investment in fixed assets like buildings, machinery, equipment, and infrastructure within an economy over a period.
• It indicates how much is being invested in productive assets to boost future economic growth.

Components of GFCF

• Public Sector Investment: Government spending on infrastructure, roads, railways, defense, energy and public services.
• Private Sector Investment: Business investments in factories, offices, technology and manufacturing capacity. Includes both listed and unlisted companies.

Why is GFCF Important?

• Higher GFCF ➡️ Economic expansion and capacity building.
• Lower GFCF ➡️ Low business confidence, weaker demand or financial constraints.

Check here: India’s Economic Growth and Development

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