Technology and how the factors combine

Detail

1. Technology as the enabler

• Technology means using scientific knowledge for a practical purpose.
• Class 8 example: a camera turns light into electrical signals and makes a digital image.

• Every production activity uses some technology. It may be as simple as a plough or as advanced as a robot.

• Technology is not a separate factor in the classic list of land, labour, capital and entrepreneurship. It works through the other factors:

• it sits inside capital, as machines and software;
• it sits inside labour, as skills and know-how;
• the entrepreneur decides which technology to use.

2. Technology in India today

• UPI (Unified Payments Interface) is a real-time system that moves money between bank accounts through a mobile phone.
• Volume rose from 1.78 crore transactions (FY 2016-17) to over 24,162 crore (FY 2025-26). Value reached about ₹314 lakh crore (FY 2025-26) [2].
• July 2026 was the highest month so far, with 2,366 crore transactions [2].
• UPI handles 81% of India's retail payment transactions by volume [3].

• The IMF has recognised UPI as the world's largest real-time payment system, with 49% of global real-time transactions [4].

• Weather updates for farmers: advance warnings help farmers decide when to sow, spray or harvest.

• GPS finds the shortest routes for goods. This lowers fuel use and delivery time.
• Drones spraying fertiliser: the Namo Drone Didi scheme is a Central Sector Scheme (fully funded by the Centre).
• It gives drones to women Self Help Groups (SHGs). The outlay is ₹1,261 crore for 2023-24 to 2025-26 [5].
• SHGs rent out drone services to farmers for spraying liquid fertilisers and pesticides [5].
• Aims: higher efficiency, better crop yield, lower costs and more income for SHGs [5].
• In 2023-24, Lead Fertiliser Companies gave 1,094 drones to SHGs, and 500 of them came under the scheme. The target for 2024-25 was 3,090 SHGs in the first phase [5].

• The drone package includes 15 days of drone-pilot training [5]. This shows capital (the drone) and labour (the skill) arriving together.

• Robots assisting in surgery: capital-intensive, high-skill technology in services.

3. New replaces old, but not always

• Creative replacement: email replaced posted letters because it is faster and cheaper.
• But not always: pulleys and wheelbarrows are still used. Old tools survive when they are cheap, simple and good enough for the job.
• Lesson: firms pick the technology that fits their cost and need. They do not always pick the newest one.

4. Technology and access to skills and jobs

• SWAYAM (Study Webs of Active Learning for Young Aspiring Minds) offers free MOOCs (Massive Open Online Courses, meaning online courses anyone can join) from Grade 9 onwards. Subjects include robotics, aquaculture and textile printing.

• As of June 2026, it has over 18,580 courses, more than 6.1 crore enrolments and 53.7 lakh certifications [6].

• National Career Service (NCS) is a jobs portal (www.ncs.gov.in) covering jobs from plumbing to accounting.

• It offers one place for job search and matching, job fairs, career counselling, vocational guidance and skill-course information [7].

• As of 14 July 2025, more than 6.43 crore vacancies had been mobilised on it, from government, private and public-sector employers [7].

• Technology removes geographical barriers to knowledge and work. A student in a village can take the same course as a student in a city.

5. Technology shifts the production function

• A production function shows the link between inputs and output: Q = f(L, K). Here Q = output, L = labour and K = capital.
• Better technology shifts the function upward. The same inputs now give more output. This is a rise in productivity (output per unit of input).
• Worked example:
• Old method: 10 workers + 2 machines → 100 shirts a day. Labour productivity = 100 ÷ 10 = 10 shirts per worker.

• New software cuts cutting errors: the same 10 workers + 2 machines → 130 shirts a day. Productivity = 13 shirts per worker, a 30% rise with no extra inputs.

• The detailed analysis is in production-and-costs.

6. How the factors connect (Class 8, "How are the Factors Connected?")

• The factors complement each other. Each one needs the others.

• If one factor is missing (no land for a factory) or misused (skilled workers left idle), production becomes inefficient or stops.

• The mix depends on the product:

Labour-intensive (more workers, less machinery)	Capital-intensive (more machines and technology, fewer workers)
Agriculture, construction, handicrafts	Semiconductor chips, satellites (Class 8); steel, automobiles (Class 9)

• Capital–labour ratio (K/L) is capital used per worker. It gives a simple test:
• Firm A: ₹10 lakh of machines, 50 workers → K/L = ₹20,000 per worker, so it is labour-intensive.
• Firm B: ₹10 crore of machines, 20 workers → K/L = ₹50 lakh per worker, so it is capital-intensive.

7. What decides the technique (Class 9 garment-maker case)

A technique of production is the particular mix of labour and capital used to make a good. It answers the basic economic question, "How to produce?"

• Cost of capital:
• Machines are costly → the firm uses more labour.

• Machines are affordable → the firm moves towards automation (machines doing work that people did before).

• Available technology:

• Advanced technology is available → more machine use.

• Only limited technology → manual production.

• Nature of the product:

• Customised or designer clothes → skilled labour.

• Mass-produced garments → machines.

• Labour cost and availability:

• Cheap, plentiful labour → labour-intensive methods.

• Costly or scarce labour → machines.

• Laws and regulations:

• Labour laws and incentives for machinery also change the choice.
• Example: a subsidy on machines lowers the cost of capital, so firms move towards machines.

8. New techniques change the mix

• Farm mechanisation (tractors, harvesters, drones) reduces the need for farm labour.

• This can free workers for other sectors. It can also displace workers if no other jobs exist.

• 3-D printing (building an object layer by layer from a digital design) lets handloom-style products be made at scale.

9. Supply chains

• Inputs are found in different geographic places. Businesses buy them from many locations and combine them.
• A supply chain is the network of people, organisations, resources, activities and technology involved in making and selling a good.
• Risk: depending on far-off sources instead of local inputs can stop production when the chain breaks.
• Example: during COVID-19, factory shutdowns and transport breaks abroad stopped the supply of parts.

• Missing parts meant finished goods could not be made.

• Mobile phones, the Class 8 flowchart: India was the world's second-largest mobile-phone manufacturer after China in 2025 (Class 8). PIB confirms India is the second-largest mobile-manufacturing country and has become a net exporter of phones [8][9].

• Production grew from ₹2.14 lakh crore (FY 2019-20) to ₹5.5 lakh crore (FY 2024-25) [9].
• Exports grew about 8 times, from ₹0.27 lakh crore (FY 2019-20) to ₹2 lakh crore (FY 2024-25) [9].
• Smartphones were India's single largest export item in 2025, ahead of diesel and cut diamonds [8].
• India had 2 mobile factories in 2014 and over 300 later [10]. 99.2% of mobile phones used in India are made in India [9].
• The weak link: domestic value addition (the share of a product's value created inside India) in electronics is only 18–20% [11]. Many parts, such as chips and displays, are still imported, so the chain can still break.

• The Government has notified a ₹62,500 crore Mobile Phone Manufacturing Scheme to raise domestic value addition [12].

• Human effort runs through every stage:

• Software, electrical and mechanical engineers and project managers design and improve the product.
• The entrepreneur decides how resources are used.
• Finance pays for the land, factory, machinery and skilled workers.

• The inputs fit together "like puzzle pieces".

• Technique choice, automation and supply-chain disruption are analysed in production-and-costs. Labour-intensive and capital-intensive production, automation, technology and supply chains are indexed there.

Prelims Hooks

• SWAYAM stands for Study Webs of Active Learning for Young Aspiring Minds. It offers free MOOCs from Grade 9 onwards, not only for college students.
• National Career Service is a jobs portal under the Labour Ministry, www.ncs.gov.in. It had over 6.43 crore vacancies mobilised by July 2025 [7].
• UPI handles 81% of India's retail digital payments by volume [3]. The IMF calls it the world's largest real-time payment system, with a 49% share [4].
• Namo Drone Didi is a Central Sector scheme, not a Centrally Sponsored one. It gives drones to women SHGs, with an outlay of ₹1,261 crore for 2023-24 to 2025-26 [5].
• Technology shifts the production function upward: more output from the same inputs. It is not a movement along the function.
• Trap: steel and automobiles are capital-intensive (Class 9). Agriculture, construction and handicrafts are labour-intensive (Class 8).
• Class 9 lists five factors that decide the technique: cost of capital, available technology, nature of product, labour cost/availability, laws and regulations.
• India is the world's 2nd-largest mobile-phone maker, after China. Smartphones became India's top export item in 2025 [8].
• A supply chain includes technology and activities, not only firms. The textbook example of disruption is COVID-19.

Mains Points

• Labour-intensive vs capital-intensive dilemma (GS-III, employment):
• India has plenty of labour, which favours labour-intensive methods for jobs.
• Global competition in chips, electronics and steel needs capital and technology.

• Policy has to support both, for example textiles and handicrafts for jobs and PLI-type schemes for high-tech manufacturing.

• Automation and mechanisation (farm machines, drones, robots) raise productivity but can displace low-skill workers.

• Platforms like SWAYAM and NCS help workers reskill and find new jobs.

• Namo Drone Didi shows how technology can create new rural livelihoods instead of only cutting jobs [5].

• Supply-chain resilience:

• COVID-19 showed the risk of depending on far-off inputs.
• India's jump in mobile production and exports [9] hides low domestic value addition of 18–20% [11].

• Real self-reliance (Atmanirbhar Bharat) needs local making of components, not just assembly [12].

• Digital public infrastructure (UPI) as technology that lowers transaction costs for small firms and entrepreneurs. It links technology directly to entrepreneurship and formalisation [2][4].