Gross investment
Topic: National Income Accounting: GDP, GVA and Welfare · NCERT: Class 12, Ch 2 "National Income Accounting"
Meaning
Gross investment is the part of a year's final output that consists of capital goods, such as machines, buildings and additions to inventories. It includes capital goods that only replace worn-out capital, so part of it adds nothing new to the capital stock. In India's accounts, investment is measured as Gross Fixed Capital Formation (GFCF, spending on fixed assets) + change in stocks + valuables (gold, jewellery and similar items).
Example
In 2024-25, India's GFCF was ₹63.33 lakh crore, about 33.7% of GDP. Total investment (GFCF + change in stocks + valuables) was ₹69.23 lakh crore, about 36.8% of GDP (Provisional Estimates, constant 2011-12 prices).
Don't confuse with
- Net investment: net investment = gross investment − depreciation. Only net investment is a true addition to the capital stock.
Related concepts
- Final goods
- Intermediate goods
- Consumer goods
- Consumer durables
- Capital goods
- Double counting
- Stock variable
- Flow variable
- Investment
- Depreciation