Falling Rate of Profit in India s Industry

Ranjit Sau The Marxian law of falling tendency of the rate of profit has taken hold of several developed capitalist economies of the world, with the rising strength of labour that squeezes profitability. To test the law empirically not only the value categories are to be translated in terms of prices, but one has also to extend the investigation from the level of national accounts to that of company accounts which this paper does. The large companies of India have not experienced any secular decline in the rate of profit, although they might have seen cyclical variations. The explanation for the steady trend lies in the falling share of wages and salary in value added, which also indicates the existence of objective ground for class conflict. The government takes away about one-half of the industrial output in the shape of interest, and direct and indirect taxes.