Types of Capital

a) Fixed capital and working capital: Fixed capital can be used many times in the production process. The level of fixed capital does not vary with the level of production in a very short period, (E.g.) farm buildings, tractors, farm tools, etc. Working capital or variable capital or circulating capital can be used only once and they are not available for further use. The level of working capital increases (decreases) with the increase (decrease) in the level of production, (E.g.) raw cotton or lint used to spin yarn, fertilizer used to produce paddy, etc.

b) Sunk capital and floating capital: Sunk capital is meant only for a specific purpose, (E.g.) cane crusher, paddy thrasher etc. They cannot be used for any other purpose. Floating capital can be employed for any use, (E.g.) money.

c) Social capital and private capital: Private capital is owned by individuals and the income or benefit derived from these assets are available only to the individuals who own them (E.g.) tractors, private factories etc. Social capital is owned by the society as a whole and the benefits derived from these assets are shared among the members of the society, E.g. bridge, dam, government owned factories, etc.