The Slow Rate of Industrialisation A Second Look

Ashok V Desai The strongest single factor that has raised capital-output ratios in Indian industry is not lack of demand or diversification but technological incapacity. Equipment industries that started production in the sixties absorbed imported technology imperfectly, produced second-rate equipment and obtained high prices for it. Thereby they foisted high capital costs and low capacity utilisation on industries that had to buy their equipment. Similarly, non-engineering industries showed technological incompetence in dealing with problems of adaptation to local materials and equipment.