ABSTRACT
Focusing on capital as a factor of production, the chapter makes an assessment of changing use of capital (goods) in terms of capital intensity, the impact of importations, and the difference in the capital endowments of organised and unorganised manufacturing. The assessment of capital use in an economy-wide framework allows capturing the indirect requirements of capital, which are likely to remain unaccounted for even in sector-specific analysis. The changes in capital use per unit of output have been uneven across broad economic activities. The higher proportionate use of indirect capital, particularly in manufacturing, underscores the significance of embodied capital. Interestingly, the indirect use of capital is relevant even for labour-intensive manufacturing. The utilisation of imported capital is observed to have continued over the years and is further intensified during the period. Regarding the endowments of capital, although the organised segment has been relatively endowed, the growth in endowments of capital has been faster for the unorganised latter even though on a low base. The analysis highlights that measures to encourage domestic production of capital goods will have to address the issues of domestic supply within the upstream industries of these sectors.
