In News:

• Last month, Union Finance Minister Shri Nirmala Sitharaman asked captains of industry what was holding them back from investing in manufacturing.
• She likened industry to Lord Hanuman from the Ramayana by stating that industry did not realise its own strength and that it should forge ahead with confidence.

What’s in today’s article:

• Present Scenario (GFCF, Private consumption)
• Consumer Sentiment (Survey results, Capacity utilisation, etc.)
• About IIP

Present Scenario:

• In the GDP figures for the April-June 2022 quarter, 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.
• Gross Fixed Capital Formation –
  • Gross fixed Capital Formation (GFCF) represents investment demand within the economy.
  • As per RBI, GFCF refers to the mixture of gross additions to fixed assets (i.e., fixed capital formation) and changes in stocks throughout the enumeration amount.
    • Fixed asset refers to the development, machinery, and equipment.
  • GFCF isn’t a measure of total investment, because only the worth of net additions to fixed assets is measured, and every one variety of monetary assets, further as stocks of inventories and other operational prices are excluded.
• Private final consumption expenditure, an essential pillar of India’s economy, climbed 26% year-on-year for the June quarter.
  • However, the ₹22.08 lakh crore of private spending in April-June 2022 was a significant ₹54,000 crore, or 2.4%, less than that spent in the preceding quarter.
• Private Final Consumption Expenditure –
  • Private final consumption expenditure is defined as expenditure on goods and services for the direct satisfaction of individual needs.
  • Whereas government consumption expenditure includes goods and services produced by government, as well as purchases of goods and services by government that are supplied to households.

What is the consumer sentiment?

• Private companies invest when they are able to estimate profits, and that comes from demand.
• The Centre for Monitoring Indian Economy’s (CMIE) consumer sentiment index is still below pre-pandemic levels but is far higher than what was seen 12-18 months ago.
• Manufacturing firms recorded a sequential uptick in new orders while infrastructure firms displayed optimism on the overall business situation, turnover and employment.
• Capacity utilisation is now much better than what it was during the pandemic when it had slipped to 67-68%.
  • Capacity utilization refers to the manufacturing and production capabilities that are being utilized by a nation or enterprise at any given.

What is Index for Industrial Performance?

• The Index of Industrial Production (IIP) is an index which shows the growth rates in different industry groups of the economy in a stipulated period of time.
• It is a composite indicator of the general level of industrial activity in the economy.
• IIP is compiled and published monthly by the National Statistical Organization (NSO), Ministry of Statistics and Programme Implementation.
• IIP measures the performance of the economy on the basis of eight core industries, with 2011-12 as base year.