ABSTRACT
Given the simultaneous presence of labour-intensive and capital-intensive activities in the Indian economy, this chapter provides a categorisation based on the relative use of capital, i.e., the capital-to-labour ratio. This is helpful to address the ambiguity from the notional definitions of the two categories while also providing an additional dimension to probe the structural change driven by the use of labour and capital as the two factors of production. The chapter also provides a framework to identify sectors for targeted interventions based on predefined criteria. The benchmarking exercise shows a large number of sectors as capital-intensive thereby underscoring the more intensive use of capital per person employed, confirming the modernisation in the economy. The increased output contribution of the capital-intensive sectors shows the rising use of capital goods which require a higher expenditure on the R&D. Therefore, an industrial policy should be designed to support indigenous innovation and development through encouraging domestic R&D.
