Which of the following would lead to Gross Fixed Capital formation in India 1 Investment by an entre...........

Economic Affairs Development and Indicators

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Which of the following would lead to Gross Fixed Capital formation in India?

1. Investment by an entrepreneur in plant, machinery and equipment purchase

2. Development of infrastructure like transport, power etc.

3. Increase in salary of the employees

Select the correct answer using codes given below

1 and 2 only

2 and 3 only

1 only

All of the above

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Explanation:

Gross fixed capital formation is essentially net investment. It is a component of the Expenditure method of calculating GDP.

To be more precise Gross fixed capital formation measures the net increase in fixed capital.

Gross fixed capital formation includes spending on land improvements (fences, ditches, drains, and so on); plant, machinery, and equipment purchases; the construction of roads, railways, private residential dwellings, and commercial and industrial buildings. Disposal of fixed assets is taken away from the total.