With reference to physical capital in Indian economy, consider the following pairs:

Items	Category
1. Farmer’s plough	Working capital
2. Computer	Fixed capital
3. Yarn used by the weaver	Fixed capital
4. Petrol	Working capital

How many of the above pairs are correctly matched?

The correct option is Only two.

Physical capital refers to the variety of inputs required at every stage during production. It is broadly categorized into two types:
1. Fixed Capital: Tools, machines, and buildings that can be used in production over many years. They do not get exhausted in a single production cycle. Examples include a farmer’s plough, computers, generators, and buildings.
2. Working Capital: Raw materials and money in hand that are consumed or used up during the production process. Examples include yarn used by a weaver, clay used by a potter, fuel like petrol, and money used to make daily payments.

Let us analyze each pair based on these definitions:

1. Farmer’s plough - Working capital: Incorrectly matched. A plough is a tool that can be used for many years of farming, making it a part of Fixed capital, not working capital.

2. Computer - Fixed capital: Correctly matched. A computer is a machine used over multiple years for various production and business activities, classifying it under Fixed capital.

3. Yarn used by the weaver - Fixed capital: Incorrectly matched. Yarn is a raw material that is woven into cloth and used up in the production process, classifying it under Working capital.

4. Petrol - Working capital: Correctly matched. Petrol is a fuel input that gets consumed immediately during the production or transport process, classifying it under Working capital.

Since only pairs 2 and 4 are correctly matched, exactly two of the given pairs are correct.