India’s Capital Productivity Rises Amidst Global Slump

Posted by Reading Time: < 1 minute

Jan. 27 – India’s capital productivity – revenue generated per unit of capital employed – increased 36 percent in fiscal year 2007-08 from 1.13 in financial year 2002 to 1.54 in financial year 2008. This means that revenue generated by companies for every Rs 1 crore (US$204,300) worth of their fixed assets rose from Rs 1.13 crore (US$231,000) in 2001-02 to Rs 1.54 crore (US$315,000) in 2007-08.

Heavy machinery, oil, metals and petrochemical industries benefited most by the increase in capital productivity. As a result of generating more revenue out of the same assets these industries witnessed greater bargaining power and bettered economic prospects.

A raise in capital productivity clearly indicates that Indian companies have invested in and are utilizing more efficient equipment, their production process is more streamlined than before and capital is not being siphoned off to uneconomic processes – a clear indication of industrial growth and development.