Economics Chapter 1 The story of Village Palampur – Notes & Study Material

➣ This is a story about a hypothetical village called Palampur.  ➣ To incorporate some fundamental principles relating to development.  ➣ Small scale processing, milking, transport, etc. are carried out on a micro level in the village.  ➣ Various resources are combined to produce the desired goods and services in the village.

Palampur’s Intoduction

(i) Palampur is a hypothetical or an imaginary village.

 

(ii) Farming is the main activity in Palampur; other activities are small scale manufacturing, dairy, transport, shop keeping, etc.

 

(iii) Palampur is well connected with neighbouring villages and towns.

 

(iv) Raiganj a big village is 3 kms from Palampur.

 

(v) An all weather road connects the village to Raiganj and further to the nearest town of Shahpur.

 

(vi) Many kinds of transport are available.

 

(vii) This village has about 450 families belonging to different castes. SCs and STs live in one corner of the village.

 

(viii) Electricity is available.

 

(ix) It has 2 primary schools and one high school.

 

(x) It has one primary health centre and one private dispensary.

 

(xi) The above facts show that Palampur is a fairly well developed village.

Organisation of Production

 

(i) The aim of production is to produce the goods and services that we want.

 

(ii) There are four requirements for production of goods and services. These are known as factors of production.

(iii) First Requirement : The first requirement is land and other natural resources such as water, forests and minerals.

 

(iv) Second Requirement:

(a) The second requirement is labour, i.e., people who will do the work.

 

(b) Some activities require highly educated workers to perform necessary tasks.

 

(c) Other activities require workers who can do manual work.

 

(v) Third Requirement

 

(a) The third requirement is physical capital, i.e., a variety of inputs required at every stage during production.

 

(b) Fixed Capital Tools, machines, buildings, etc.

 

(c) Working Capital Raw material and money in hand.

 

(vi) Fourth Requirement

 

Human Capital We need knowledge and enterprise to be able to put together land, labour and physical capital and produce output either to use ourselves or sell in the market. This is called human capital.

(vii) Land is Fixed

 

(a) Land area under cultivation is practically fixed. Since 1960 in Palampur there has been no expansion in land area under cultivation.

 

(b) Some of the wasteland in the village has been converted to cultivable land.

 

(c) There exists no further scope to increase farm production by bringing new land under cultivation.

 

(viii) Is there a Way One Can Grow More from the Same Land?

 

(a) All land is cultivated in Palampur.

 

(b) During the rainy season (Kharif) farmers grow jowar and bajra, which are used as cattle feed.

 

(c) This is followed by cultivation of potato between October and December.

 

(d) In the winter season (rabi) fields are sown with wheal, which is sold at Raiganj.

 

(e) A part of the land area is also devoted to sugarcane.

 

(f) Farmers are able to grow 3 different crops in a year due to the well developed system of irrigation With tubewells.

 

(g) Multiple cropping has been adopted by farmers in Palampur. It is the most common way of increasing production on a given piece of land.

(h) Another way to increase production is by adopting modern farming methods. Use of HYV seeds, chemical fertilisers and pesticides along with better irrigation facilities brought a great increase in production of wheat and rice, and came to be known as the Green Revolution.

 

(i) Modern farm machinery like tractors and threshers have made ploughing and harvesting easier and quicker.

 

Will the Land Sustain?

 

(i) Land should be judiciously used. In many areas Green Revolution is associated with loss of fertility due to overuse and increased use of chemical fertilisers.

 

(ii) Continuous use and over exploitation has lowered the water table below the ground.

 

(iii) Once destroyed, it will be difficult to restore, so we must take care of the environment to sustain the land and ensure future development.

How is the Land Distributed ?

  

(i) In Palampur there are 450 famalies.

 

(ii) 150 families, most of them dalits have no land for cultivation.

 

(iii) 240 families cultivate small plots of land less then 2 hectares in size. Cultivation of such small plots does not bring sufficient income.

 

(iv) 60 families of medium and large farmers cultivate more than two hectares of land.

 

(v) A few farmers have land extending over 10 hectares.

 

Who will Provide the Labour?

 

(i) Farming requires a great deal of labour.

 

(ii) Small farmers along with their families cultivate their own fields.

 

(iii) Medium and large farmers hire farm labourers to work on their fields who come from landless families or families cultivating small plots of land.

 

(iv) Farm labourers are paid wages which can be in cash or kind.

(v) Wages vary widely from region to region, crop to crop and from one farm activity to another like sowing and harvesting.

 

(vi) There is a wide variation in the duration of employment.

 

(vii) There is heavy competition for getting work; so many times labourers agree to work for low wages.

The Capital Needed in Farming

 

(i) Modern farming methods require a great deal of capital.

 

(ii) Most small farmers have to borrow money from large farmers, village moneylenders or traders.

 

(iii) The rate of interest on such informal loans is very high.

 

(iv) Mostly loans are taken for buying seeds, fertilisers, pesticides etc.

 

(v) Medium and large farmers have their own savings from farming. They are thus able to arrange for the capital needed.

 

(vi) They can get loans from banks at low rates of interest.

 

Sale of Surplus Farm Products

 

(i) Farmers retain a part of the wheat for the family’s consumption and sell the surplus wheat.

 

(ii) Small farmers like Savita have very little surplus wheat because their total production is very less and from this they have to retain a large part for their own family needs.

 

(iii) It is the medium and big farmers who supply wheat to the market, where the traders buy it and sell it further to the shopkeepers in the towns and cities.

 

(iv) Large farmers keep their income from the sale of wheat as working capital for farming in the next season.

Non-Farm Activities

(i) Dairy

(a) Dairy is a common activity in many families of Palampur.

 

(b) People feed their buffaloes on different kinds of grass, jowar and bajra.

 

(c) The milk is sold in Raiganj the nearby village.

 

(d) Two traders from Shahpur town have set up collection cum chilling centres at Raiganj from where milk is transported to far away towns and cities.

Small Scale Manufacturing in Palampur

 

(i) Less than 50 people are engaged in manufacturing.

(ii) Manufacturing in Palampur involves very simple production methods and is done on a small scale.

 

(iii) Manufacturing is carried out mainly at home or in the fields with the help of family labour.

 

The Shopkeepers of Palampur

 

(i) The traders of Palampur are shopkeepers, who buy various goods from wholesale markets in the cities and sell them in the villages.

 

(ii) They sell a wide range of items like rice, wheat, sugar, tea, oil, biscuits, soap, toothpaste, notebook, pen, pencil and even cloth.

 

(iii) Some people who have houses close to the bus stand have used some space to open small shops and sell eatables.

 

Transport a Fast Developing Sector

(i) There are a variety of vehicles on the road connecting Palampur to Raiganj like Rickshawalas, tangawallas, jeeps tractors, truck drivers and people driving the traditional

bullock cart and bogey are the people in the transport services.

 

(ii) They ferry people and goods from one place to another and in return get paid for it.

 

(iii) The number of people in the transport sector has grown over the last several years.