Industrial investment.

The Union Finance Minister, Nirmala Sitharaman, urges industry giants to invest in manufacturing and industrial investment.

In the Gross domestic product (GDP) figures for the quarter that ended June, gross fixed capital formation (GFCF) at 2011-12 prices rose 9.6% to ₹12.77 lakh crore, from ₹11.66 lakh crore in Q1 of FY20, which was the pre-pandemic period.
- The Gross Fixed Capital Formation(GFCF) represents investment demand in the economy.
- It refers to the net increase in physical assets (investment minus disposals).
- It does not account for the consumption (depreciation) of fixed capital.
- It is a component of the expenditure approach to calculating Gross Domestic Product (GDP).

Sluggish export
- The export is under threat because of the global economical slowdown, the Russia-Ukraine war and political instability.
Fiscal deficit
- The high fiscal deficit due to high import costs leads to the government’s inability to support domestic demand.
K-shaped recovery
- A K-shaped recovery is an unusual scenario where certain industries and individuals pull out of a recession, while others stagnate.
- Because of the K-shaped recovery, private consumption is only concentrated in some parts of the income pyramid.
Fed interest hike
- The central bank of America (Federal reserve) hiked the interest rate, which leads flighting up of capital from India to America.

Cut the tax rate
- In the hope of revitalising private investment, the government had in 2019 cut the tax rate for domestic companies from 30% to 22% if they stopped availing of any other tax SOP (standard operating procedure).

Fiscal stimulus packages
- Government has to implement Fiscal stimulus packages for those industries which are struggling.
Public investment
- Public investment has to improve infrastructure and other basic needs.
Lending interest rate
- The Government has to take adequate measures to avail capital at a low-interest rate.

Pic Courtesy: The Hindu

Content Source: The Hindu