Gross Fixed Capital Formation – UPSC Prelims

What is Gross Fixed Capital Formation(GFCF)?
  • Gross Fixed Capital Formation(GFCF) represents investment demand in the economy.
  • As per RBI, GFCF refers to the aggregate of gross additions to fixed assets (i.e. fixed capital formation) plus changes in stocks during the counting period. Fixed asset refers to the construction, machinery, and equipment.
Recent Trends:
  • The Gross fixed capital formation(GFCF) has increased by almost 30%.
  • Hence, due to this the ratio of GFCF to gross domestic product (GDP) was 34.3%, the highest in the last 26 quarters. However, a lot of it was Government Capex (capital expenditure).

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