With reference to physical capital in Indian economy, consider the following pairs

Practice this UPSC Previous Year Question with a detailed explanation, helping you build strong concepts and improve accuracy for upcoming exams.

With reference to physical capital in Indian economy, consider the following pairs: (UPSC CSE 2024)

	*Items*	*Category*
1.	Farmer’s plough	Working capital
2.	Computer	Fixed capital
3.	Yarn used by the weave	Fixed capital
4.	Petrol	Working capital

How many of the above pairs are correctly matched?

(a) Only one

(b) Only two

(d) All four

Answer:- B

Explanation

Fixed capital represents the long-term assets that contribute to a company’s foundation and growth. These assets, including buildings, machinery, and equipment, are not intended for immediate turnover but serve as the infrastructure necessary for sustained operations over an extended period.

Pair 1 is incorrect: A farmer’s plough is a durable tool that is used repeatedly over many production cycles. It is not consumed in a single production process.
Pair 2 is correct: A computer is a long-term physical asset used repeatedly in the production process (for accounting, design, data processing, etc.).
Pair 3 is incorrect: Yarn is a raw material that gets completely used up during the production of cloth in a single production cycle.
Pair 4 is correct: Petrol is a consumable input used in day-to-day operations and is exhausted during use.