The Story of Village Palampur 1

Overview

The purpose of the story is to introducesome basic concepts relating to productionand this we do through a story of ahypothetical village called Palampur.*

Farming is the main activity inPalampur, whereas several otheractivities such as small scalemanufacturing, dairy, transport, etc. arecarried out on a limited scale. Theseproduction activities need various typesof resources — natural resources, man-made items, human effort, money, etc. Aswe read through the story of Palampur,we will learn how various resourcescombine to produce the desired goods andservices in the village.

Introduction

Palampur is well-connected withneighbouring villages and towns. Raiganj,a big village, is 3 kms from Palampur. Anall weather road connects the village toRaiganj and further on to the nearestsmall town of Shahpur. Many kinds oftransport are visible on this road startingfrom bullock carts, tongas, bogeys (woodencart drawn by buffalos) loaded with jaggery(gur ) and other commodities to motorvehicles like motorcycles, jeeps, tractorsand trucks.

This village has about 450 familiesbelonging to several different castes. The80 upper caste families own the majorityof land in the village. Their houses, someof them quite large, are made of brick withcement plastering. The SCs (dalits)comprise one third of the population andlive in one corner of the village and inmuch smaller houses some of which areof mud and straw. Most of the houses have

electric connections. Electricity powers allthe tubewells in the fields and is used invarious types of small business. Palampurhas two primary schools and one highschool. There is a primary health centrerun by the government and one privatedispensary where the sick are treated.

• The description above shows thatPalampur has fairly well-developedsystem of roads, transport, electricity,irrigation, schools and health centre.Compare these facilities with those inyour nearby village.

The story of Palampur, an imaginaryvillage, will take us through the differenttypes of production activities in thevillage. In villages across India, farmingis the main production activity. The otherproduction activities, referred to as non-farm activities include smallmanufacturing, transport, shop-keeping,etc. We shall take a look at both thesetypes of activities, after learning a fewgeneral things about production.

The Story of Village PalampurThe Story of Village Palampur1

Chapter

1

Picture 1.1 Scene of a village

* The narrative is partly based on a research study by Gilbert Etienne of a village in Bulandshahr district in Western

Uttar Pradesh.

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2 Economics

Organisation of Production

The aim of production is to produce thegoods and services that we want. There

are four requirements for production ofgoods and services.

The first requirement is land, and

other natural resources such as water,forests, minerals.

The second requirement is labour, i.e.people who will do the work. Some

production activities require highlyeducated workers to perform thenecessary tasks. Other activities require

workers who can do manual work. Eachworker is providing the labour necessaryfor production.

The third requirement is physicalcapital, i.e. the variety of inputs requiredat every stage during production. Whatare the items that come under physical

capital?

(a) Tools, machines, buildings: Tools andmachines range from very simple tools

such as a farmer’s plough tosophisticated machines such asgenerators, turbines, computers, etc.

Tools, machines, buildings can be usedin production over many years, andare called fixed capital.

(b) Raw materials and money in hand:

Production requires a variety of rawmaterials such as the yarn used bythe weaver and the clay used by thepotter. Also, some money is alwaysrequired during production to make

payments and buy other necessaryitems. Raw materials and money inhand are called working capital.Unlike tools, machines and buildings,these are used up in production.

There is a fourth requirement too. Youwill need knowledge and enterprise to beable to put together land, labour andphysical capital and produce an outputeither to use yourself or to sell in the

market. This these days is called human

capital. We shall learn more about human

capital in the next chapter.• In the picture, identify the land, labour

and fixed capital used in production.

Picture 1.2 A factory, with several labourers

and machines

Every production is organised bycombining land, labour, physical capitaland human capital, which are known as

factors of production. As we readthrough the story of Palampur, we willlearn more about the first three factorsof production. For convenience, we willrefer to the physical capital as the capital

in this chapter.

Farming in Palampur

1. Land is fixed

Farming is the main production activityin Palampur. 75 per cent of the peoplewho are working are dependent onfarming for their livelihood. They could

be farmers or farm labourers. The well-being of these people is closely related toproduction on the farms.

But remember that there is a basicconstraint in raising farm production.

Land area under cultivation is practicallyfixed. Since 1960 in Palampur, there hasbeen no expansion in land area under

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The Story of Village Palampur 3

cultivation. By then, some of the

wastelands in the village had beenconverted to cultivable land. There existsno further scope to increase farmproduction by bringing new land undercultivation.

larger areas of land more effectively. The

first few tubewells were installed by thegovernment. Soon, however, farmersstarted setting up private tubewells. As aresult, by mid-1970s the entire cultivatedarea of 200 hectares (ha.) was irrigated.

The standard unit of measuring landis hectare, though in the villages youmay find land area being discussedin local units such as bigha, guinthaetc. One hectare equals the area of a

square with one side measuring 100metres. Can you compare the area ofa 1 hectare field with the area of yourschool ground?

2. Is there a way one can grow morefrom the same land?

In the kind of crops grown and facilitiesavailable, Palampur would resemble avillage of the western part of the state ofUttar Pradesh. All land is cultivated inPalampur. No land is left idle. During therainy season (kharif) farmers grow jowarand bajra. These plants are used as cattlefeed. It is followed by cultivation of potatobetween October and December. In thewinter season (rabi), fields are sown withwheat. From the wheat produced, farmerskeep enough wheat for the family’sconsumption and sell the surplus wheatat the market at Raiganj. A part of theland area is also devoted to sugarcanewhich is harvested once every year.Sugarcane, in its raw form, or as jaggery,is sold to traders in Shahpur.

The main reason why farmers are ableto grow three different crops in a year inPalampur is due to the well-developedsystem of irrigation. Electricity came earlyto Palampur. Its major impact was totransform the system of irrigation.Persian wheels were, till then, used byfarmers to draw water from the wells andirrigate small fields. People saw that theelectric-run tubewells could irrigate much

Not all villages in India have suchhigh levels of irrigation. Apart from

the riverine plains, coastal regions inour country are well-irrigated. Incontrast, plateau regions such as theDeccan plateau have low levels ofirrigation. Of the total cultivated area

in the country a little less than 40per cent is irrigated even today. Inthe remaining areas, farming islargely dependent on rainfall.

To grow more than one crop on a piece ofland during the year is known as multiplecropping. It is the most common way ofincreasing production on a given piece of

land. All farmers in Palampur growatleast two main crops; many are growingpotato as the third crop in the past fifteento twenty years.

Picture 1.3 Different crops

Let’s Discuss

• The following Table1.1 shows the land

under cultivation in India in units of

million hectares. Plot this on the graph

provided. What does the graph show?

Discuss in class.

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4 Economics

Cultivated Area (Million Hectare)

1950 120

1960 130

1970 140

1980 140

1990 140

2000 140

2001 140

2004 140

2005 140

2006 140

2007 140

2008 1402010-11 140

Name of crop Month sown Month Harvested Source of irrigation (Rain,tanks, tubewells, canals, etc.)

Picture 1.4 Modern Farming Methods: HYV

seeds, chemical fertilizer etc.

Table 1.1: Cultivated area over the years

• Is it important to increase the areaunder irrigation? Why?

• You have read about the crops grown

in Palampur. Fill the following tablebased on information on the cropsgrown in your region.You have seen that one way of

increasing production from the same

land is by multiple cropping. The otherway is to use modern farming methods

for higher yield. Yield is measured ascrop produced on a given piece of landduring a single season. Till the mid-1960s, the seeds used in cultivationwere traditional ones with relatively lowyields. Traditional seeds needed lessirrigation. Farmers used cow-dung andother natural manure as fertilizers. Allthese were readily available with thefarmers who did not have to buy them.

The Green Revolution in the late 1960sintroduced the Indian farmer tocultivation of wheat and rice using highyielding varieties (HYVs) of seeds.Compared to the traditional seeds, theHYV seeds promised to produce muchgreater amounts of grain on a single plant.As a result, the same piece of land wouldnow produce far larger quantities offoodgrains than was possible earlier. HYVseeds, however, needed plenty of waterand also chemical fertilizers and

Source: Economic Survey 2013-2014

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The Story of Village Palampur 5

• Modern farming methods require thefarmer to start with more cash thanbefore. Why?

Suggested Activity

• During your field visit talk to somefarmers of your region. Find out:

1. What kind of farming methods—modern or traditional or mixed— dothe farmers use? Write a note.

2. What are the sources of irrigation?

3. How much of the cultivated land isirrigated? (very little/nearly half/majority/all)

4. From where do farmers obtain theinputs that they require?

3. Will the land sustain?

Land being a natural resource, it isnecessary to be very careful in its use.Scientific reports indicate that the modernfarming methods have overused thenatural resource base.

In many areas, Green Revolution isassociated with the loss of soil fertilitydue to increased use of chemicalfertilizers. Also, continuous use ofgroundwater for tubewell irrigation hasreduced the water -table below theground. Environmental resources like soilfertility and groundwater are built up overmany years. Once destroyed it is verydifficult to restore them. We must takecare of the environment to ensure futuredevelopment of agriculture.

Suggested Activity

• After reading the following reports fromnewspapers/magazines, write a letterto the Agriculture Minister in your ownwords telling him how the use of

chemical fertilizers can be harmful.

Production Productionof Pulses of Wheat

1965 - 66 10 101970 - 71 12 241980 - 81 11 361990 - 91 14 552000 - 01 11 702010 - 11 18 862012 - 13 18 92

Table 1.2: Production of pulses andwheat (Million tones)

....Chemical fertilizers provide

minerals which dissolve in water andare immediately available to plants.But these may not be retained in the

Source: Directorate of Economics andStatistics, Department of Agriculture andCooperative, 2010-11, 2013 Pocket book onagricultural statistics.

pesticides to produce best results. Higheryields were possible only from acombination of HYV seeds, irrigation,chemical fertilisers, pesticides etc.

Farmers of Punjab, Haryana andWestern Uttar Pradesh were the first totry out the modern farming method inIndia. The farmers in these regions setup tubewells for irrigation, and made useof HYV seeds, chemical fertilizers andpesticides in farming. Some of thembought farm machinery like tractors andthreshers, which made ploughing andharvesting faster. They were rewardedwith high yields of wheat.

In Palampur, the yield of wheat grownfrom the traditional varieties was 1300 kgper hectare. With the HYV seeds, the yieldwent up to 3200 kg per hectare. Therewas a large increase in the production ofwheat. Farmers now had greater amountsof surplus wheat to sell in the markets.

Let’s Discuss

• What is the difference between multiplecropping and modern farming method?

• The following table shows theproduction of wheat and pulses inIndia after the Green revolution inunits of million tonnes. Plot this on agraph. Was the Gr een revolutionequally successful for both the crops?Discuss.

• What is the working capital requiredby the farmer using modern farmingmethods?

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6 Economics

Picture 1.5 Palampur village: Distribution of cultivated land

4. How is land distributed between

the farmers of Palampur?

You must have realised how important landis for farming. Unfortunately, not all thepeople engaged in agriculture havesufficient land for cultivation. In Palampur,about one third of the 450 families arelandless, i.e. 150 families, most of themdalits, have no land for cultivation.

Of the remaining families who own

soil for long. They may escape from

the soil and pollute groundwater,rivers and lakes. Chemical fertilizerscan also kill bacteria and other micro-organisms in the soil. This meanssome time after their use, the soil will

be less fertile than everbefore....(Source: Down to Earth, NewDelhi)

.....The consumption of chemicalfertilizers in Punjab is highest in the

country. The continuous use of chemicalfertilizers has led to degradation of soilhealth. Punjab farmers are now forcedto use more and more chemicalfertilizers and other inputs to achieve

the same production level. This meanscost of cultivation is rising veryfast.....(Source: The Tribune,Chandigarh)

land, 240 families cultivate small plots ofland less than 2 hectares in size.Cultivation of such plots doesn’t bringadequate income to the farmer family.

In 1960, Gobind was a farmer with2.25 hectares of largely unirrigatedland. With the help of his three sons

Gobind cultivated the land. Thoughthey didn’t live very comfortably, thefamily managed to feed itself with a

little bit of extra income from onebuffalo that the family possessed.Some years after Gobind’s death, this

land was divided among his threesons. Each one now has a plot of landthat is only 0.75 hectare in size. Evenwith improved irrigation and modern

farming method, Gobind’s sons arenot able to make a living from theirland. They have to look for additional

work during part of the year.

You can see the large number of smallplots scattered around the village in the

picture. These are cultivated by the smallfarmers. On the other hand, more thanhalf the area of the village is covered by

plots that are quite large in size. InPalampur, there are 60 families of mediumand large farmers who cultivate more

than 2 hectares of land. A few of the largefarmers have land extending over 10hectares or more.

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The Story of Village Palampur 7

Let’s Discuss

• In the Picture 1.5, can you shade theland cultivated by the small farmers?

• Why do so many families of farmerscultivate such small plots of land?

• The distribution of farmers in India andthe amount of land they cultivate is givenin the following Graph 1.1. Discuss inthe classroom.

Number of FarmersCultivated Area

Small farmers Medium andLarge farmers

80%

20%

64%

36%

(Less than 2 ha.)

(More than 2 ha.)

Graph 1.1: Distribution of Cultivated Area

and Farmers

Let’s Discuss

• Would you agree that the distribution

of cultivated land is unequal inPalampur? Do you find a similar

situation for India? Explain.

5. Who will provide the labour?

After land, labour is the next necessary

factor for production. Farming requires agreat deal of hard work. Small farmers

along with their families cultivate their

own fields. Thus, they provide the labourrequired for farming themselves. Medium

and large farmers hire farm labourers towork on their fields.

Let’s Discuss

• Identify the work being done on the

field in the Pictures 1.6 and arrangethem in a proper sequence.

Farm labourers come either from

landless families or families cultivating

small plots of land. Unlike farmers, farm

labourers do not have a right over the

Picture 1.6 Work on

the fields: Wheat crop—

ploughing by bullocks,

sowing, spraying of

insecticides, cultivation

by traditional method,

cultivation by modern

method, and cutting of

crops.

Source: Agricultural statistics at glance 2006:Dept of agriculture and cooperation,Ministry of agriculture, Govt of India.

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8 Economics

crops grown on the land. Instead they arepaid wages by the farmer for whom theywork. Wages can be in cash or in kind

e.g. crop. Sometimes labourers get mealsalso. Wages vary widely from region toregion, from crop to crop, from one farmactivity to another (like sowing andharvesting). There is also a wide variation

in the duration of employment. A farm

Picture 1.7 The conversation between Dala and Ramkali

labourer might be employed on a dailybasis, or for one particular farm activitylike harvesting, or for the whole year.

Dala is a landless farm labourer whoworks on daily wages in Palampur. Thismeans he must regularly look for work. Theminimum wages for a farm labourer set bythe government is Rs 115 (April, 2011) per

day, but Dala gets only Rs 80. There is

Dala and Ramkali are among the poorest native of the village

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The Story of Village Palampur 9

heavy competition for work among thefarm labourers in Palampur, so peopleagree to work for lower wages. Dalacomplains about his situation to Ramkali,who is another farm labourer.

Both Dala and Ramkali are among thepoorest people in the village.

Let’s Discuss

• Why are farm labourers like Dala andRamkali poor?

• Gosaipur and Majauli are two villagesin North Bihar. Out of a total of 850households in the two villages, thereare more than 250 men who areemployed in rural Punjab and Haryana

or in Delhi, Mumbai, Surat, Hyderabador Nagpur. Such migration is commonin most villages across India. Why dopeople migrate? Can you describe(based on your imagination) the work

that the migrants of Gosaipur andMajauli might do at the place ofdestination?

6. The capital needed in farming

You have already seen that the modernfarming methods require a great deal ofcapital, so that the farmer now needsmore money than before.

1. Most small farmers have to borrowmoney to arrange for the capital. Theyborrow from large farmers or thevillage moneylenders or the traderswho supply various inputs forcultivation. The rate of interest onsuch loans is very high. They are putto great distress to repay the loan.

Savita is a small farmer. She plansto cultivate wheat on her 1 hectare ofland. Besides seeds, fertilizers andpesticides, she needs cash to buywater and repair her farminstruments. She estimates that theworking capital itself would cost aminimum of Rs 3,000. She doesn’thave the money, so she decides toborrow from Tejpal Singh, a large

farmer. Tejpal Singh agrees to give

Savita the loan at an interest rate of24 per cent for four months, which isa very high interest rate. Savita alsohas to promise to work on his field asa farm labourer during the harvest

season at Rs 35 per day. As you cantell, this wage is quite low. Savitaknows that she will have to work veryhard to complete harvesting on herown field, and then work as a farm

labourer for Tejpal Singh. The harvesttime is a very busy time. As a motherof three children she has a lot ofhousehold responsibilities. Savitaagrees to these tough conditions as

she knows getting a loan is difficultfor a small farmer.

2. In contrast to the small farmers, themedium and large farmers have theirown savings from farming. They arethus able to arrange for the capitalneeded. How do these farmers havetheir own savings? You shall find theanswer in the next section.

Let's discuss the story so far....

We have read about the three factors ofproduction—land, labour and capital—and how they are used in farming. Let usfill in the blanks given below.

Among the three factors of production,we found that labour is the mostabundant factor of production. There aremany people who are willing to work asfarm labourers in the villages, whereasthe opportunities of work are limited. Theybelong to either landless families or

. They are paid low wages,and lead a difficult life.

In contrast to labour, is a scarce factor of production. Cultivatedland area is . Moreover,even the existing land is distributed

(equally/unequally) amongthe people engaged in farming. There area large number of small farmers whocultivate small plots of land and live in

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10 Economics

conditions not much better than thelandless farm labourer. To make the

maximum use of the existing land,farmers use and

. Both these have led to

increase in production of crops.

Modern farming methods require a

great deal of . Smallfarmers usually need to borrow money to

arrange for the capital, and are put to

great distress to repay the loan. Therefore,capital too is a scarce factor of production,

particularly for the small farmers.

Though both land and capital are

scarce, there is a basic difference between

the two factors of production. is a natural resource,

whereas is man-made. Itis possible to increase capital, whereas

land is fixed. Therefore, it is very

important that we take good care of landand other natural resources used in

farming.

7. Sale of Surplus Farm Products

Let us suppose that the farmers have

produced wheat on their lands using the

three factors of production. The wheat

is harvested and production is complete.What do the farmers do with the wheat?

They retain a part of the wheat for the

family’s consumption and sell the

surplus wheat. Small farmers l ike

Savita and Gobind’s sons have littlesurplus wheat because their total

production is small and from this a

substantial share is kept for their own

family needs. So it is the medium and

large farmers who supply wheat to themarket. In the Picture 1.1, you can see the

bullock cart streaming into the market

each carrying loads of wheat. The traders

at the market buy the wheat and sell it

further to shopkeepers in the towns andcities.

Tejpal Singh, the large farmer, has asurplus of 350 quintals of wheat from all

his lands! He sells the surplus wheat atthe Raiganj market and has good earnings.

What does Tejpal Singh do with his

earnings? Last year, Tejpal Singh had putmost of the money in his bank account.

Later he used the savings for lending tofarmers like Savita who were in need of a

loan. He also used the savings to arrange

for the working capital for farming in thenext season. This year Tejpal Singh plans

to use his earnings to buy another tractor.Another tractor would increase his fixed

capital.

Like Tejpal Singh, other large andmedium farmers sell the surplus farm

products. A part of the earnings is savedand kept for buying capital for the next

season. Thus, they are able to arrange

for the capital for farming from their ownsavings. Some farmers might also use the

savings to buy cattle, trucks, or to set upshops. As we shall see, these constitute

the capital for non-farm activities.

Non-Farm Activities in Palampur

We have learnt about farming as the main

production activity in Palampur. We shallnow take a look at some of the non-farm

production activities. Only 25 per cent

of the people working in Palampur areengaged in activities other than

agriculture.

1. Dairy — the other commonactivity

Dairy is a common activity in many familiesof Palampur. People feed their buffalos on

various kinds of grass and the jowar andbajra that grows during the rainy season.

The milk is sold in Raiganj, the nearby large

village. Two traders from Shahpur townhave set up collection cum chilling centres

at Raiganj from where the milk istransported to far away towns and cities.

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The Story of Village Palampur 11

Let's Discuss

• Let us take three farmers. Each has grown wheat on his field though theproduction is different (see Column 2). The consumption of wheat by eachfarmer family is the same (Column 3). The whole of surplus wheat this year

is used as capital for next year’s production. Also suppose, production istwice the capital used in production. Complete the tables.

Farmer 1

Production Consumption Surplus = Capital for theProduction – next yearConsumption

Year 1 100 40 60 60

Year 2 120 40

Year 3 40

Farmer 2

Production Consumption Surplus Capital for thenext year

Year 1 80 40

Year 2 40

Year 3 40

Farmer 3

Production Consumption Surplus Capital for thenext year

Year 1 60 40

Year 2 40

Year 3 40

Let’s Discuss

• Compare the production of wheat by the three farmers over the years.• What happens to Farmer 3 in Year 3? Can he continue production? What

will he have to do to continue production?

2. An example of small-scale

manufacturing in Palampur

At present, less than fifty people areengaged in manufacturing in Palampur.

Unlike the manufacturing that takesplace in the big factories in the towns

and cities, manufacturing in Palampur

involves very simple production methods

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12 Economics

Mishrilal has purchased amechanical sugarcane crushingmachine run on electricity and has

set it up on his field. Sugarcanecrushing was earlier done with thehelp of bullocks, but people prefer todo it by machines these days.Mishrilal also buys sugarcane from

other farmers and processes it intojaggery. The jaggery is then sold totraders at Shahpur. In the process,Mishrilal makes a small profit.

and are done on a small scale. They are

carried out mostly at home or in the fieldswith the help of family labour. Rarely arelabourers hired.

Let’s Discuss

• What capital did Mishrilal need to setup his jaggery manufacturing unit?

• Who provides the labour in this case?

• Can you guess why Mishrilal is unableto increase his profit?

• Could you think of any reasons whenhe might face a loss?

• Why does Mishrilal sell his jaggery to

traders in Shahpur and not in hisvillage?

3. The shopkeepers of Palampur

People involved in trade (exchange ofgoods) are not many in Palampur. The

traders of Palampur are shopkeepers whobuy various goods from wholesale

markets in the cities and sell them in

the village. You will see small generalstores in the village selling a wide range

of items like rice, wheat, sugar, tea, oil,biscuits, soap, toothpaste, batteries,

candles, notebooks, pen, pencil, even

some cloth. A few of the families whosehouses are close to the bus stand have

used a part of the space to open smallshops. They sell eatables.

Let’s Discuss

• In what ways is Kareem’s capital andlabour different from Mishrilal’s?

• Why didn’t someone start a computercentre earlier? Discuss the possiblereasons.

4. Transport: a fast developing

sector

There are variety of vehicles on the roadconnecting Palampur to Raiganj.Rickshawallahs , tongawallahs, jeep,tractor, truck drivers and people drivingthe traditional bullock cart and bogey arepeople in the transport services. Theyferry people and goods from one place toanother, and in return get paid for it. Thenumber of people involved in transporthas grown over the last several years.

Kareem has opened a computer class

centre in the village. In recent yearsa large number of students have beenattending college in Shahpur town.Kareem found that a number ofstudents from the village are also

attending computer classes in thetown. There were two women in thevillage who had a degree in computerapplications. He decided to employthem. He bought computers and set

up the classes in the front room oftheir house overlooking the market.High school students have startedattending them in good numbers.

Kishora is a farm labourer. Like othersuch labourers, Kishora found itdifficult to meet his family’s needs from

the wages that he received. A few yearsback Kishora took a loan from thebank. This was under a governmentprogramme which was giving cheaploans to poor landless households.

Kishora bought a buffalo with thismoney. He now sells the buffalo’s milk.

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The Story of Village Palampur 13

Let’s Discuss

• What is Kishora’s fixed capital?

• What do you think would be his

working capital?

• In how many production activities is

Kishora involved?

• Would you say that Kishora has

benefitted from better roads in

Palampur?

Further, he has attached a wooden cartto his buffalo and uses it to transportvarious items. Once a week, he goes tothe river Ganga to bring back clay forthe potter. Or sometimes he goes to

Shahpur with a load of jaggery or othercommodities. Every month he gets somework in transport. As a result, Kishorais able to earn more than what he usedto do some years back.

Summary

Farming is the main production activity in the village. Over the years there have

been many important changes in the way farming is practiced. These have allowed

the farmers to produce more crops from the same amount of land. This is an

important achievement, since land is fixed and scarce. But in raising production

a great deal of pressure has been put on land and other natural resources.

The new ways of farming need less land, but much more of capital. The medium

and large farmers are able to use their own savings from production to arrange

for capital during the next season. On the other hand, the small farmers who

constitute about 80 per cent of total farmers in India, find it difficult to obtain

capital. Because of the small size of their plots, their production is not enough.

The lack of surplus means that they are unable to obtain capital from their own

savings, and have to borrow. Besides the debt, many of the small farmers have

to do additional work as farm labourers to feed themselves and their families.

Labour being the most abundant factor of production, it would be ideal if

new ways of farming used much more labour. Unfortunately, such a thing has

not happened. The use of labour on farms is limited. The labour, looking for

opportunities is thus migrating to neighbouring villages, towns and cities. Some

labour has entered the non-farm sector in the village.

At present, the non-farm sector in the village is not very large. Out of every

100 workers in the rural areas in India, only 24 are engaged in non-farm activities.

Though there is a variety of non-farm activities in the villages (we have only

seen a few examples), the number of people employed in each is quite small.

In the future, one would like to see more non-farm production activities in the

village. Unlike farming, non-farm activities require little land. People with some

amount of capital can set up non-farm activities. How does one obtain this capital?

One can either use his own savings, but more often has to take a loan. 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. In Palampur, we saw the neighbouring villages, towns and

cities provide the markets for milk, jaggery, wheat, etc. 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.

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14 Economics

Exercises

1. Every village in India is surveyed once in ten years during the Census and

some of details are presented in the following format. Fill up the following basedon information on Palampur.a. LOCATION:b. TOTAL AREA OF THE VILLAGE:

c. LAND USE (in hectares):

d. FACILITIES:

2. Modern farming methods require more inputs which are manufactured in

industry. Do you agree?

3. How did the spread of electricity help farmers in Palampur?

4. Is it important to increase the area under irrigation? Why?

5. Construct a table on the distribution of land among the 450 families ofPalampur.

6. Why are the wages for farm labourers in Palampur less than minimum wages?

7. In your region, talk to two labourers. Choose either farm labourers or labourersworking at construction sites. What wages do they get? Are they paid in cash

or kind? Do they get work regularly? Are they in debt?

8. What are the different ways of increasing production on the same piece ofland? Use examples to explain.

9. Describe the work of a farmer with 1 hectare of land.

10. How do the medium and large farmers obtain capital for farming? How is it

different from the small farmers?

11. On what terms did Savita get a loan from Tajpal Singh? Would Savita’s conditionbe different if she could get a loan from the bank at a low rate of interest?

12. Talk to some old residents in your region and write a short report on the changesin irrigation and changes in production methods during the last 30 years.(Optional)

Cultivated Land Land not available for cultivation

Irrigated Unirrigated(Area covering dwellings, roads,ponds, grazing ground)

26 hectares

Educational

Medical

Market

Electricity Supply

Communication

Nearest Town

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The Story of Village Palampur 15

13. What are the non-farm production activities taking place in your region? Makea short list.

14. What can be done so that more non-farm production activities can be startedin villages?

References References References References References

ETIENNE, GILBERT. 1985. Rural Development in Asia: Meetings with Peasants , SagePublications, New Delhi.

ETIENNE, G ILBERT. 1988. Food and Poverty: India’s Half Won Battle, Sage Publications,New Delhi.

RAJ, K.N. 1991. ‘Village India and its Political Economy’ in C.T. Kurien (Edited)Economy, Society and Development, Sage Publications, New Delhi

THORNER, DANIEL AND ALICE THORNER. 1962. Land and Labour in India, Asia Publishing

House, Bombay.

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