MPPSC 2025 Prelims Paper-I · Question 33 of 100

Correct — D, Madhya Pradesh. Capital intensity in manufacturing is a ratio, not a total: it is fixed capital per worker in the registered factory sector, the kind of figure reported through the Annual Survey of Industries. Madhya Pradesh tops it not because it has the country's biggest industrial base — it does not — but because its factory sector is dominated by a small number of very large, capital-heavy plants (petroleum refining at Bina in Sagar district, the Satna-Katni cement belt, fertiliser and power-linked units) while its factory workforce is comparatively small. A large numerator over a small denominator gives the highest capital-labour ratio.

• (a)Gujarat — Gujarat does have some of India's most capital-heavy plants (refining and petrochemicals), but it also carries one of the country's largest factory workforces — chemicals, textiles, ceramics, engineering — which dilutes capital per worker. Leading in total investment is not the same as leading in capital intensity.
• (b)Maharashtra — Maharashtra leads on the size of the factory sector — number of factories, output and employment — and that breadth is exactly what pulls a per-worker ratio down. A diversified industrial structure with a very large workforce lowers capital intensity.
• (c)Tamil Nadu — Tamil Nadu's manufacturing is famously labour-absorbing — textiles and garments, leather, auto components, light engineering. It ranks near the top on factory employment, which is precisely why it ranks lower on fixed capital per worker.

Capital intensity is the capital-labour ratio: fixed (or invested) capital divided by the number of workers in the factory sector. Being a per-worker measure, it tells you how much plant and machinery stands behind each job — not how large a state's industry is. High capital intensity comes from process industries such as refining, petrochemicals, cement, fertiliser, metals and power, which need huge fixed assets but employ few people. Low capital intensity comes from labour-absorbing industries such as textiles, garments, leather and food processing.

Most candidates pick Maharashtra, Gujarat or Tamil Nadu because those states dominate every headline manufacturing statistic. A ratio question rewards a different instinct: ask which state has heavy plant and few workers. Madhya Pradesh's registered manufacturing is narrow and process-heavy, so it can top a per-worker measure while sitting well below the big three on output and employment.

• Capital intensity = fixed capital per worker; because it is a ratio, the size of a state's industry does not decide the ranking.
• The Annual Survey of Industries (ASI), conducted by the National Statistical Office under MoSPI, is India's principal source of factory-sector statistics; it covers factories registered under the Factories Act, 1948.
• Process industries — petroleum refining, petrochemicals, cement, fertiliser, metals, power — are capital intensive; textiles, garments, leather and food processing are labour intensive.
• Madhya Pradesh's registered manufacturing is dominated by a few large plants, including the Bina refinery in Sagar district and the Satna-Katni cement cluster, alongside a relatively small factory workforce.

• Equating 'largest manufacturing state' with 'highest capital intensity' — the first is a total, the second a ratio
• Forgetting that ASI covers only registered factories, leaving out the unorganised sector where most manufacturing jobs are
• Assuming a labour-intensive state is somehow less industrialised

MPPSC asks the state ranking straight from a data table, so the year in the stem matters. UPSC rarely asks the ranking but does test the concept — which industries are capital intensive, and what ASI or the IIP actually measure.

No directly related past PYQ was found.

• practice — not a real PYQ

  Capital intensity in the manufacturing sector is best measured by:

  • (a)Total output per factory
  • (b)Fixed capital per worker
  • (c)Number of factories per lakh of population
  • (d)Wages as a share of gross value added

  Answer(b) Fixed capital per worker — the capital-labour ratio.

• practice — not a real PYQ

  The Annual Survey of Industries (ASI), India's principal source of factory-sector statistics, covers:

  • (a)All enterprises, including household and unregistered units
  • (b)Factories registered under the Factories Act, 1948
  • (c)Only public sector undertakings
  • (d)Only units with foreign direct investment

  Answer(b) Factories registered under the Factories Act, 1948 — the registered/organised manufacturing sector.