The Economic Survey 2024 tabled in Parliament on Monday by the Union Finance Minister Nirmala Sitharaman stated that despite the pandemic and geopolitical tensions. A day before presenting the Union Budget, Sitharaman said that Central governments timely policy maintained the real inflation at 5.4 percent.#WATCH | Economic Survey 2023-2024 tabled in Lok Sabha by Union Finance Minister Nirmala Sitharaman. pic.twitter.com/XxBVhgW4Lq— ANI (@ANI) July 22, 2024What is Gross Fixed Capital FormationGross fixed capital formation (GFCF) is a measure of the amount of new value generated in an economy that is invested rather than consumed. This component counts the value of fixed asset sales less the value of fixed asset purchases made by governments, pure households (as long as they dont have unincorporated businesses), and the business sector. Notably, it does not include purchases or sales of land.Gross Fixed Capital Formation increased by 9%The 2024 Economic Survey highlights a significant boost in capital formation, driven by the governments emphasis on capital expenditure (capex) and a sustained increase in private investment. According to the statistics shared by the finance minister the Gross Fixed Capital Formation (GFCF) that reflects investment in fixed assets like buildings, machinery, and equipment, increased by 9% in real terms during the 2023-24 period. This growth indicates a strong foundation for future economic expansion.With this, healthier balance sheets for both corporations and banks are expected to further bolster private investment. Improved financial health in these sectors typically leads to increased lending and investment activities.Positive trends in the residential real estate market suggest that household sector capital formation is on the rise. This indicates that more households are investing in real estate, contributing to overall economic growth.The governments focus on capex and the resulting uptick in private investment are pivotal in driving economic growth and capital formation. The continued strength in these areas will likely have positive long-term impacts on the economy.Meanwhile, it is important to note that the finance minister will present the Union Budget 2024 on Tuesday.
