Despite being a high saving economy, capital formation may not result in significant increase in output due to

The correct answer is D (high capital-output ratio). The capital-output ratio tells you how much capital is needed to produce one unit of additional output. If it is high, a large investment yields only a small rise in output, so a high savings and investment rate does not translate into proportionate growth. This is the efficiency problem behind the idea of a high ICOR, which is a standard reference point in growth economics.

• A (weak administrative machinery): This can waste investment through delays and leakages, but the question asks for the reason capital itself fails to raise output. It is an institutional factor, not the direct link between capital and output.
• B (illiteracy): Low literacy affects labour productivity over the long run. It does not explain why a given stock of capital gives little output.
• C (high population density): Dense population may put pressure on resources, but it does not by itself reduce the output per unit of capital in the way the question describes.

The concept sits in the growth models of Harrod-Domar and Solow, and it connects to Mains questions on investment efficiency and the quality of capital formation in India.

Trap: Aspirants pick A because it sounds like a governance failure, but the question is looking for the direct cause at the level of capital and output.