ECONOMICS

Lesson 1-The Story of Village Palampur

Points to Remember.
• Farming is the main economic activity of village Palampur.
• Dairy, small scale manufacturing, shop keeping, transport and computer education are
the main non-farming activities of village Palampur.
• Palampur is well connected with neighbouring villages and towns. It has well developed
system of roads, transport, electricity, irrigation, schools and primary health centers.
• Electricity powers all the tube-wells in the fields and is used in various types of small
business. Palampur has two primary schools and one high school. There is a primary
health center run by the government.
• The aim of production is to produce goods and services for our needs.
• Land, labour, physical capital and human capital are the factors of production.
• Two types of physical capital are
• 1. Fixed capital: Tools, machines, buildings etc., which can be used in production over
many years.
2. Working capital: Raw materials and money in hand. These are used up in production.
• There is a basic constraint in raising farm production. Land area under cultivation is
practically fixed.
• The standard unit of measuring land is hectare.
• There are two ways to increase the productivity on the same piece of land.
1. Multiple cropping: To grow more than one crop on a piece of land during the year.
2. Use of modern farming methods: Using High Yielding Variety seeds, chemical
fertilizers and pesticides, better irrigation and machineries.
• The Green Revolution in the late 1960s introduced the Indian farmer the cultivation
of wheat and rice using high yielding varieties (HYVs) of seeds.
• Higher yields were possible only from a combination of HYV seeds, irrigation,
chemical fertilisers, pesticides, etc.
• Farmers of Punjab, Haryana and Western Uttar Pradesh were the first to try out the
modern farming methods in India.
• The disadvantages of using modern farming methods are:
1. Loss of soil fertility.
2. Reduction of water table level below the ground.
3. It is expensive.
• Land is unequally distributed in village Palampur.
• Small farmers along with their families cultivate their own field.
• Large and medium farmers hire farm laboures from landless families or small farmers.
• There is heavy competition for work among the workers of village Palampur. So,
they agree to work even for lower wages.
• Most of the small farmers borrow money to arrange their capital. They borrow from
large farmers or money lenders or traders.
• Large and medium farmers sell the surplus farm products.
• They are able to arrange the capital for farming from their own savings.
• Only 25 per cent of the people working in Palampur are engaged in activities other
than agriculture.
• Dairy — the common activity: People feed their buffalos on various kinds of
grass and the jowar and bajra that grows during the rainy season. The milk is sold
in Raiganj, the nearby large village.
• Small scale manufacturing in Palampur involves very simple production methods.
They are carried out mostly at home.
• The traders of Palampur are shopkeepers who buy various goods from wholesale
markets in the cities and sell them in the village.
• Transport: There are variety of vehicles on the road connecting Palampur to
Raiganj. They ferry people and goods from one place to another, and in return get
paid for it.
• It is important that loan be available at low rate of interest so that even people
without savings can start some non-farm activity.
• Another thing which is essential for expansion of non-farm activities is to have
markets where the goods and services produced can be sold.
• As more villages get connected to towns and cities through good roads, transport
and telephone, it is possible that the opportunities for non-farm activities in the
village would increase in the coming years.