Estimates of Fixed Capital Stock and Consumption of Fixed Capital in India

Estimates of fixed capital stock by type of assets at a point of time provide a measure of the total capital stock of the country used for production purposes. These estimates coupled with the estimates of domestic product provide data on capital-output ratios which are vital for the planning process. The estimates of gross capital stock minus the consumption of fixed capital based on the Perpetual Inventory Method (PIM) and age of various types of assets give the estimates of net fixed capital stock. These estimates of net fixed capital stock at given point of time provide the correct picture of the replacement value of the capital stock. At present in the National Accounts Statistics (NAS) the consumption of fixed capital is based mostly on the depreciation provision in the accounts of enterprises or ratios based on some bench-mark surveys. It has been felt that these estimates are on the lower side and need to be based on the estimates of capital stock using PIM.