The Trend of Decreasing I.C.O.R in India

This part of the podcast explores the case of India and its I.C.O.R. In the past decade, India has experienced a significant drop in its I.C.O.R. ratio from 7.5 to approximately 4.5. The podcast attributes this to several factors. Firstly, after the global financial crisis, recovery led to overinvestment, resulting in underutilized capacity. As the investments started bearing fruit and consumption improved, it propelled GDP growth while requiring minimal additional investments. Secondly, the government's focus on infrastructure projects with faster turnaround times, such as roads, has increased productivity and created a multiplier effect on jobs and growth. The podcast notes that the decreasing I.C.O.R. indicates improved efficiency in the use of capital, contributing to sustained economic growth. However, it acknowledges that I.C.O.R. may not be a perfect metric, especially for service-based economies, and suggests the need for sector-wise analysis to understand productivity more comprehensively.