UPSC Previous Year Question | Prelims GS | 2024

With reference to physical capital in the Indian economy, consider the following pairs: 1. Farmer's plough — Working capital 2. Computer — Fixed capital 3. Yarn used by the weaver — Fixed capital 4. Petrol — Working capital How many of the above pairs are correctly matched?

  1. Only one
  2. Only two
  3. Only three
  4. All four

Answer

Correct Answer

Only two

Explanation

Pairs 2 and 4 are correct. A computer is a durable asset used repeatedly in production and is therefore fixed capital. Petrol is consumed during production or operations and is classified as working capital. Pair 1 is incorrect because a farmer's plough is a durable tool used over multiple production cycles, making it fixed capital rather than working capital. Pair 3 is incorrect because yarn is an input consumed in weaving and is therefore working capital, not fixed capital. Exactly two pairs are correctly matched.

Topics: capital and investment, classification of physical capital, fixed and working capital, indian economy