Capital Efficiency Index.
How hard each rupee of capital actually works: the productivity of India's investment, in one number. The companion to the Capital Formation Index.
The call · Formation × Efficiency
Efficiency only means something next to volume. Formation is running 59% above baseline while efficiency sits near it: the trail is drifting right and flat, toward bubble-watch.
The efficiency index
100 = mid-2024 efficiency (trailing 3-month average).
The five pillars
Two are inverted, for ICOR and stalled projects, lower is leaner. Latest reads anchor to official 2025 releases.
Incremental capital-output ratio: rupees of investment needed per unit of extra GDP. Lower is leaner. Inverted.
Source ↗ The Core IAS / Vajiram, 2026Profit relative to capital employed across the listed non-financial universe. Higher is better.
Source ↗ Business Standard / Capitaline, Dec 2025Revenue generated per rupee of assets: how busy the capital base is. Higher is better.
Source ↗ Gravitywell estimate (Capitaline aggregate)Share of manufacturing capacity actually in use. Idle plant is idle capital. Higher is better.
Source ↗ RBI OBICUS / CEIC, 2026Share of outstanding project capital stuck and not commissioning. Lower is leaner. Inverted.
Source ↗ CMIE / Business Standard, 2025Inverted where needed, smoothed, rebased, weighted.
How it's built
Capital intensity (ICOR), corporate RoCE, asset turnover, capacity utilisation, and the stalled-project ratio: the five readouts of whether deployed capital is actually producing.
ICOR and the stalled ratio are 'lower is better': they are reciprocal-rebased so that leaner capital intensity and fewer stuck projects lift the index, not drag it.
Trailing 3-month average to cut noise, rebase each pillar to 100 at the mid-2024 window, then weight: ICOR 30% · RoCE 25% · turnover 15% · capacity 15% · stalled 15%.
Efficiency only means something next to volume. CEI is designed to be plotted against the Capital Formation Index: the gap between the two is the signal.
High formation + high efficiency = genuine boom. High formation + flat efficiency = bubble watch. The trajectory through the quadrant is the firm's headline macro read.
- · ICOR is noisy quarter-to-quarter: only trailing multi-period readings are used, never a single print.
- · RoCE reports annually with a lag: vintages are stamped and the series interpolated, not invented.
- · Sector-mix shifts can flatter asset turnover: the universe is fixed at period start to keep it honest.
- · Capacity utilisation is manufacturing-only: it proxies, not captures, services-sector efficiency.
Data vintage June 2026. Latest reads anchor to official releases: RBI OBICUS (capacity), CMIE (stalled projects, capex), Capitaline / Business Standard (RoCE), and the ICOR framework (MOSPI/PIB). The within-period monthly distribution is Gravitywell's reconstruction; pillar reads reconcile to the cited primary sources. ICOR and RoCE are inherently low-frequency and are interpolated, not invented: vintages stamped, revisions flagged.
Methodology v3.2 (2026-07). Built to the OECD/JRC composite-indicator handbook: distance-to-reference normalisation, 3-month smoothing, weighted aggregation, plus a drop-one-pillar uncertainty band and a data-coverage ratio (shown above). Series are point-in-time; published values are not silently restated.
Volume and quality, monthly.
The Capital Efficiency Index and the quadrant call update every month, with the full pillar breakdown.