Indian Economic Outlook
. It is a measure of the productivity of investment . A high C-O ratio means a large amount of capital is needed for production as economic growth increases . In other words, higher C-O ratio explains lower productivity/efficiency of capital . C-O ratio can be thought of as a measure of inefficiency with which capital is used . C-O ratio can be measured by dividing the investment or increase in the capital stock of a firm, industry or an economy over a period, with the increase in output over that period . For instance, if C-O ratio is 3:1, it implies that 3 rupees worth of additional capital/investment is required to effect one rupee worth of increase in output . Current expenditure (of government) - Expenditure incurred on day-to-day functioning of govt . is called revenue/current expenditure (RE) . Examples: salaries, pensions, interest payments, subsidies, defense etc (Generally considered as unproductive) .