Working Paper Number
Using a state-industry panel data set at the 3 digit national industrial classification (NIC) level of disaggregation for 19 major Indian states over the period 1983-84 to 2007-08, we analyze the contemporaneous and long run impacts of the rate of profit and its components – profit share, capacity utilization rate, and capacity-capital ratio – on investment. Our results show that: (a) the rate of profit has both short and long run positive impacts on investment; (b) the profit share and capacity-capital ratio have only long run positive impacts, and the capacity utilization rate has only a contemporaneous positive impact on investment.
Basu, Deepankar and Das, Debarshi, "Profitability and Investment: Evidence from India’s Organized Manufacturing Sector" (2015). Economics Department Working Paper Series. 183.