Differentiate between use-based classification and input- based classification

 Differentiate between use-based classification and input- based classification. 

Ans. Two types of classification can be used to group industries with similar characteristics. They are known as use-based and input-based categories. The use-based category is based on the principle that industries are 'classified according to the final use of the output. Basic goods include any bulk raw material/product used for further production of new items in manufacturing and agriculture. Capital Goods include plants, machinery and goods used for further investments. Intermediate goods are any good/ product as incomplete product or which goes as input in production for further finishing. Consumer durable products directly used by consumers and having a larger durability (more than 2/3 years). Consumer non-durable products that are directly used by consumers and can not be preserved for long periods. Iron and steel are basic commodities for any activity. They are called basic goods. Capital goods are products that are part of physical assets critical for production activity, for example, tractors, boilers and other electrical and non-electrical machinery.