Gross National Product and National Income

Explanation :

The lower the ICOR, the lower is the gross capital formation required to secure a particular growth rate of GDP. Post Second Plan, has been a capital intensive phase of development where a large proportion of capital formation is directed to projects in areas with an inevitably high ICOR such as irrigation, development of energy resources, heavy engineering, transport , communications etc. The frequent setbacks to agricultural production because of erratic monsoons and their widespread repercussions on other sectors of the economy have also contributed to a high ICOR.