Economic Survey 2022: On the investment front, the Economic Survey expects a strong growth of 15 per cent in ‘Gross Fixed Capital Formation (GFCF)’ in FY 2021-22. At the same time, he also hopes that in this case India will also achieve the level of pre-coronavirus.
According to the Economic Survey, “Government policies emphasize on accelerating the growth cycle through capital expenditure and spending on infrastructure. It has increased to 29.6 percent, which is the highest level in the last 7 years.
What is Gross Fixed Capital Formation?
Gross Fixed Capital Formation (GFCF) is an estimate of how much capital is to be spent on fixed assets by the government and the private sector. Here fixed capital means the expenditure incurred by a government or private company on machinery, vehicles, software, new residential buildings, roads etc. in that financial year or quarter.
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In this way, GFCF gives an idea of the fluctuating expenditure on manufacturing of fixed assets such as machinery or buildings in the economy. After all, it is believed that new machines or other types of capital goods are needed to maintain the pace of development.
If a country does not buy new machinery and is working with old machinery, then its level of production will fall as compared to other countries and it will be left behind them. This will slow down the pace of development of that country. That is why it is believed that if ‘Gross Fixed Capital Formation’ is happening at a faster pace in a country, then the pace of development of that country will also be high. It is an indicator of the level of investment in the economy.
Finance Minister presented economic survey
Finance Minister Nirmala Sitharaman presented the Economic Survey in Parliament on Monday, 31 January. The Economic Survey has projected the GDP growth rate to be between 8 and 8.5 percent in the next financial year 2022-23. The survey said that India has a sufficient fiscal budget to increase capital expenditure.
At the same time, GDP growth has been estimated at 9.2 percent in the current financial year, while the growth of agriculture sector is expected to be 3.9 percent and industrial growth is expected to be at 11.8 percent. On the supply front, capital expenditure and exports are expected to be the main growth engines in the next financial year.
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