All Courses
Explore Courses UPSC Exam UPSC Test Series Free Notes EduRev Infinity Get the App Login Join for Free
Sign in Open App
UPSC Exam  >  UPSC Questions  >  Gross investment is always greater than net i... Start Learning for Free
Gross investment is always greater than net investment. Defend or refute with valid argument?
Clear all your UPSC doubts with EduRev
Most Upvoted Answer
Gross investment is always greater than net investment. Defend or refu...


Refuting the Statement: Gross Investment vs. Net Investment

1. Definitions:

  • Gross Investment: Gross investment refers to the total amount of investment made by individuals, businesses, and the government in the economy. It includes all capital expenditures, regardless of depreciation.
  • Net Investment: Net investment, on the other hand, is the difference between gross investment and depreciation. It represents the increase in the stock of capital in an economy.


2. Relationship between Gross and Net Investment:

  • Net investment is calculated by subtracting depreciation from gross investment.
  • Given this relationship, it is possible for net investment to be greater than gross investment if depreciation exceeds the total new investment.


3. Scenario:

  • For example, if a company spends $10,000 on new machinery but experiences $15,000 in depreciation on existing assets, the net investment would be -$5,000 (net capital loss).
  • In this scenario, gross investment ($10,000) is indeed less than net investment (-$5,000).


4. Conclusion:

  • Therefore, it is incorrect to state that gross investment is always greater than net investment. Net investment can indeed be greater than gross investment in cases where depreciation exceeds new investment.
Explore Courses for UPSC exam

Similar UPSC Doubts

Read the following passageand answer the itemthat follow. Your answerto these itemshould be based on the passageonly.Passage-1Private investment in general is volatile. Foreign private investment is more volatile because the available investment avenues are significantly greater (i.e., the entire worl d). Therefore, the responsibility of providing employment cannot be left to Foreign Direct investment (FDl).The current FDI inflows are volatile over time and across sectors and regions, which is a necessary consequence of their search for the highest returns. The adverse consequences are unstable employment and an accentuation of income and regional inequalities. A probable positive consequence of foreign investment is the inflow of new technology and its subsequent diffusion. However, the technology diffusion is not at all certain because the existing state of physical and human capital in India may prove inadequate for the diffusion.With reference to the above passage, the following assumptions have been made:1. Relying on foreign investment in the long run is not an economically sound policy.2. Policies must be undertaken to reduce volatility in foreign private investment.3. Policies must be undertaken to strengthen domestic private investment.4. Public investment should be given priority over private investment.5. Substantial public investment in education and health should be undertaken.Which of the above assumptions is/are valid?

Read the following passageand answer the itemthat follow. Your answerto these itemshould be based on the passageonly.Passage-5In India, agriculture still engages about half of workforce, and about 85 per cent of its farms mall and marginal. Compared to China Vietnam, which have experienced fast structural and rural transformation, Indias story is of slow transformation. As a result, poverty reduction in India was at a much slower pace during 1988—2014, compared to China and Vietnam. Indiaspoverty reduction was slow during 1988-2005, but during 2005-2012, it accelerated dramatically—almost three times faster than during the earlier period. What did India do during this period? Research reveals that the relative price scenario changed significantly (by more than 50%) in favour of agriculture in the wake of rising global prices. This boosted private investments in agriculture by more than 5o%. As a result, agri-GDP growth touched 4/1% during 2007-2012 as against 2.4% during 2002—2007. The net surplus or agri-trade touched $25 billion in 2013-2014: real farm wages rose by 7% per annum. All this led to unprecedented fall in poverty.Which one of the following statements best reflects the critical message of the passage?

Top Courses for UPSCView all

Top Courses for UPSC

Gross investment is always greater than net investment. Defend or refute with valid argument?
Question Description
Gross investment is always greater than net investment. Defend or refute with valid argument? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Gross investment is always greater than net investment. Defend or refute with valid argument? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Gross investment is always greater than net investment. Defend or refute with valid argument?.
Solutions for Gross investment is always greater than net investment. Defend or refute with valid argument? in English & in Hindi are available as part of our courses for UPSC. Download more important topics, notes, lectures and mock test series for UPSC Exam by signing up for free.
Here you can find the meaning of Gross investment is always greater than net investment. Defend or refute with valid argument? defined & explained in the simplest way possible. Besides giving the explanation of Gross investment is always greater than net investment. Defend or refute with valid argument?, a detailed solution for Gross investment is always greater than net investment. Defend or refute with valid argument? has been provided alongside types of Gross investment is always greater than net investment. Defend or refute with valid argument? theory, EduRev gives you an ample number of questions to practice Gross investment is always greater than net investment. Defend or refute with valid argument? tests, examples and also practice UPSC tests.
Explore Courses for UPSC exam

Top Courses for UPSC

Explore Courses
SaveJoin the Discussion on the App for FREE
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev
Get App
© EduRev
Education Revolution
Signup to see your scores go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup