ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Index of Capacity Utilisation for the Indian Manufacturing Sector

Capacity utilisation in industries is estimated in various ways - through time series methods, production models, or by conducting surveys. Most of these measures are used for trend comparisons as they do not reflect actual levels of capacity utilisation. This paper proposes using the audited annual accounts of companies for an alternative method of estimating capacity utilisation for the manufacturing sector at the overall and industry levels. The proposed capacity utilisation index provides an annual estimate of the actual level of capacity utilisation, which captures the economic cycle well. It can be used for cross validation and benchmarking against other estimates of capacity utilisation. A time series of this measure of capacity utilisation will also be useful in macroeconomic analysis

The views expressed in this paper are of the authors and not of the organisation to which they belong.

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