Q1. With reference to India's manufacturing sector and the Make in India initiative, consider the following statements:
- An increase in manufacturing's share in GVA necessarily implies that India's share in global merchandise exports has also increased proportionately.
- Gross Fixed Capital Formation (GFCF) is an indicator of investment in fixed assets and can provide insights into the economy's capacity-creation process.
- Capacity utilisation is relevant to investment decisions because persistently high utilisation can create incentives for firms to undertake fresh capacity expansion.
- A rise in manufacturing FDI as a share of total FDI necessarily means that manufacturing FDI has increased in absolute terms.
Which of the statements given above are correct?
(a) 2 and 3 only
(b) 1 and 4 only
(c) 1, 2 and 3 only
(d) 2, 3 and 4 only
Answer: (a)
Explanation:
- Statement 1 — Incorrect: Manufacturing's domestic contribution to GVA and India's share in global merchandise exports are different indicators. The article specifically notes that manufacturing's GVA share increased while India's global merchandise-export share remained around 1.7%.
- Statement 2 — Correct: GFCF captures expenditure on fixed/real assets such as machinery and infrastructure and is an important indicator of productive investment.
- Statement 3 — Correct: Higher capacity utilisation means existing productive capacity is being used more intensively. Sustained high utilisation can strengthen the incentive to create additional capacity.
- Statement 4 — Incorrect: A higher share of manufacturing FDI in total FDI does not necessarily mean manufacturing FDI increased in absolute terms; the denominator may have changed.
