Economics - Chapter - 1,  Story Of Village Palampur, NCERT Notes

Explore our website for concise NCERT notes on Economics Chapter 1: "The Story of Village Palampur." Our notes cover key concepts, definitions, and important points from the chapter, aiding in a better understanding of rural economic activities. Perfect for Class 9 students, these notes enhance exam preparation and conceptual clarity.

1. The purpose of the story is to introduce some basic concepts relating to production and

• This we do through a story of a hypothetical village called Palampur.*

2. Farming is the main activity in Palampur, whereas several other activities such as 

• Small scale manufacturing, 
• dairy, 
• transport, etc. are carried out on a limited scale. 

3. These production activities need various types of resources — 

• natural resources, 
• man- made items, 
• human effort, 
• money, etc. 

4. As we read through the story of Palampur, we will learn how various resources combine to produce the desired goods and services in the village.

Introduction:

1. Palampur is well-connected with neighbouring villages and towns. 

2. Raiganj, a big village, is 3 kms from Palampur. 

3. An all weather road connects the village to Raiganj and further on to the nearest small town of Shahpur. 

4. Many kinds of transport are visible on this road starting from: 

• bullock carts, 
• tongas, 
• bogeys (wooden cart drawn by buffalos) loaded with jaggery (gur) and other commodities 

to motor vehicles like: 

• motorcycles, 
• jeeps, 
• tractors and 
• trucks.

Families:

1. This village has about 450 families belonging to several different castes. 

2. The 80 upper caste families own the majority of land in the village. 

• Their houses, some of them quite large, are made of brick with cement plastering. 

3. The SCs (dalits) comprise: 

• one third of the population and live in one corner of the village and 
• In much smaller houses some of which are of mud and straw. 

Electricity:

1. Most of the houses have electric connections. 

• Electricity powers all the tubewells in the fields and 
• is used in various types of small business. 

Education:

1. Palampur has 

• Two primary schools and 
• One high school. 

Health:

1. There is a primary health centre run by the government and 

• one private dispensary where the sick are treated.

Summed Up:

1. The description above shows that Palampur has fairly 

well-developed 

• system of roads, 
• transport, 
• electricity, 
• irrigation, 
• schools and health centre. 

Compare these facilities with those in your nearby village.

Overview:

1. The story of Palampur, an imaginary village, will take us through the different types of production activities in the village. 

2. In villages across India, 

• Farming is the main production activity. 

3. Economic Activities in Palampur:

The other production activities, referred to as non- farm activities include: 

• Small manufacturing, 
• Transport, 
• Shop-keeping, etc. 

4. We shall take a look at both these types of activities, after learning a few general things about production.

Organisation of Production

Aim of the production:

1. The aim of production is to produce the goods and services that we want. 

2. There are four requirements for production of goods 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 highly educated workers to perform the necessary tasks. 

• Other activities require workers who can do manual work. 

• Each worker is providing the labour necessary for production.

The Third requirement is physical capital, i.e. 

• The variety of inputs required at every stage during production. 

• What are the items that come under physical capital?

(a) Fixed capital.

Tools, machines, buildings: 

• Tools and machines range from very simple tools such as a farmer’s plough to sophisticated machines such as generators, turbines, computers, etc. 

• Tools, machines, buildings can be used in production over many years, and are called fixed capital.

(b) Working Capital.

Raw materials and money in hand: 

• Production requires a variety of raw materials such as the yarn used by the weaver and the clay used by the potter. 

• Also, some money is always required during production to make payments and buy other necessary items. 

• Raw materials and money in hand are called working capital. 

• Unlike tools, machines and buildings, these are used up in production.

There is a fourth requirement too: Human Capital. 

You will need knowledge and enterprise to be able to put together: 

• land, 
• labour and 
• physical capital and 

Produce an output either to use yourself or to sell in the market. 

This these days is called human capital. 

Factors Of Production:

Every production is organised by combining: land, labour, physical capital and human capital, which are known as factors of production.

We shall learn more about human capital in the next chapter.

In the picture, identify the land, labour and fixed capital used in production.

Farming in Palampur

1. Land is fixed

• Farming is the main production activity in Palampur. 

• 75 per cent of the people who are working are dependent on farming for their livelihood. 

• They could be farmers or farm labourers. 

• The well- being of these people is closely related to production on the farms.

• But remember that there is a basic constraint in raising farm production. 

• Land area under cultivation is practically fixed. 

• Since 1960 in Palampur, there has been no expansion in land area under cultivation. 

• By then, some of the wastelands in the village had been converted to cultivable land. 

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

Note:

• The standard unit of measuring land is hectare, 
• though in the villages you may find land area being discussed in local units such as bigha, guintha etc. 
• One hectare equals the area of a square with one side measuring 100 metres. 
• Can you compare the area of a 1 hectare field with the area of your school ground?

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

• In the kind of crops grown and facilities available, Palampur would resemble a village of the western part of the state of Uttar Pradesh. 

• All land is cultivated in Palampur. 

• No land is left idle. 

Agriculture Seasons:

• During the rainy season (kharif) farmers grow jowar and bajra. 
• These plants are used as cattle feed. 

• It is followed by cultivation of potato between October and December. 

• In the winter season (rabi), fields are sown with wheat. 

• From the wheat produced, farmers keep enough wheat for the family’s consumption and sell the surplus wheat at the market at Raiganj. 

• A part of the land area is also devoted to sugarcane which is harvested once every year. 
• Sugarcane, in its raw form, or as jaggery, is sold to traders in Shahpur.

Question:

Irrigation System:

1. The main reason why farmers are able to grow three different crops in a year in Palampur is: 

• Due to the well-developed system of irrigation. 

2. Electricity came early to Palampur. 

• Its major impact was to transform the system of irrigation. 
• Persian wheels were, till then, used by farmers to draw water from the wells and irrigate small fields. 

3. People saw that the electric-run tubewells could irrigate much larger areas of land more effectively. 

4. The first few tubewells were installed by the government. 

5. Soon, however, farmers started setting up private tubewells. 

6. As a result, by the mid-1970s the entire cultivated area of 200 hectares (ha.) was irrigated.

7. Multiple cropping:

• To grow more than one crop on a piece of land during the year is known as multiple cropping. 
• It is the most common way of increasing production on a given piece of land. 
• All farmers in Palampur grow atleast two main crops; many are growing potato as the third crop in the past fifteen to twenty years.

8. The other way is to use modern farming methods

for higher yield. 

• Yield is measured as crop produced on a given piece of land during a single season. 

• Till the mid- 1960s, the seeds used in cultivation were traditional ones with relatively low yields. 

Traditional Farming:

Traditional seeds needed :

• less irrigation. 
• Farmers used cow-dung and 
• other natural manure as fertilizers. 
• All these were readily available with the farmers who did not have to buy them.

Green Revolution:

The Green Revolution in the late 1960s introduced the Indian farmer to: 

• Cultivation of wheat and rice using high yielding varieties (HYVs) of seeds. 

• Compared to the traditional seeds, 
• The HYV seeds promised to produce much greater amounts of grain on a single plant. 
• As a result, the same piece of land would now produce far larger quantities of foodgrains than was possible earlier. 
• HYV seeds, however, needed plenty of water and also chemical fertilizers and pesticides to produce best results.

• Higher yields were possible only from a combination of: 
• HYV seeds, 
• Irrigation, 
• chemical fertilisers, 
• pesticides, etc.

9. Farmers of Punjab, Haryana and Western Uttar Pradesh were the first to try out the modern farming method in India. 

• The farmers in these regions set up tubewells for irrigation, and 
• made use of HYV seeds, 
• chemical fertilisers and 
• pesticides in farming. 
• Some of them bought farm machinery, like tractors and threshers, which made ploughing and harvesting faster. 
• They were rewarded with high yields of wheat.

10. Comparison:

• In Palampur, the yield of wheat grown from the traditional varieties was 1300 kg per hectare. 

• With HYV seeds, the yield went up to 3200 kg per hectare. 
• There was a large increase in the production of wheat. 
• Farmers now had greater amounts of surplus wheat to sell in the markets.

Note:

1. Not all villages in India have such high levels of irrigation. 

2. Apart from the riverine plains, coastal regions in our country are well-irrigated. 

3. In contrast, plateau regions such as the Deccan plateau have low levels of irrigation. 

4. Of the total cultivated area in the country a little less than 40 per cent is irrigated even today. 

5. In the remaining areas, farming is largely dependent on rainfall.

3. Will the land sustain?

Land being a natural resource, 

• It is necessary to be careful in its use. 

Consequences of Modern Farming:

1. Scientific reports indicate that the modern farming methods have overused the natural resource base.

2. In many areas, 

• Green Revolution is associated with the loss of soil fertility due to increased use of chemical fertilisers. 

3. Also, continuous use of groundwater for tubewell irrigation has led to the depletion of the water-table. 

4. Environmental resources, like soil fertility and groundwater, are built up over years. 

5. Once destroyed it is very difficult to restore them. 

6. We must take care of the environment to ensure the future development of agriculture.

4. How is land distributed between the farmers of Palampur?

You must have realised how important land is for farming. 

Unfortunately, not all the people engaged in agriculture have sufficient land for cultivation. 

In Palampur, about: 

• one third of the 450 families are landless, i.e. 150 families, most of them dalits, have no land for cultivation.

Of the remaining families who own land, 

• 240 families cultivate small plots of land less than 2 hectares in size. 
• Cultivation of such plots doesn’t bring adequate income to the farmer family.
• cultivated by the small farmers

You can see the large number of small plots scattered around the village in the picture. These are cultivated by the small farmers. On the other hand, more than half the area of the village is covered by plots that are quite large in size. 

In Palampur, 

• There are 60 families of medium and large farmers who cultivate more than 2 hectares of land. 
• A few of the large farmers have land extending over 10 hectares or more.

5. Who will provide the labour?

After land, labour is the next necessary factor for production. 

Farming requires a great deal of hard work. 

Small farmers along with their families cultivate their own fields. 

• Thus, they provide the labour required for farming themselves. 

Medium and large farmers: 

• Hire farm labourers to work on their fields.

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 crops grown on the land.

•  Instead they are paid wages by the farmer for whom they work. 
• Wages - cash or in kind e.g. crop. 
• Sometimes labourers get meals also. 
• Wages vary widely from region to region, 
• from crop to crop, 
• from one farm activity to another (like sowing and harvesting). 
• There is also a wide variation in the duration of employment. 

A farm labourer might be employed on a daily basis, or for one particular farm activity like harvesting, or for the whole year.

Dala is a landless farm labourer who works on daily wages in Palampur. This means he must regularly look for work. The minimum wages for a farm labourer set by the government is Rs 300 per day (March 2019), but Dala gets only Rs 160. There is heavy competition for work among the farm labourers in Palampur, so people agree to work for lower wages. Dala complains about his situation to Ramkali, who is another farm labourer.

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

6. The capital needed in farming

You have already seen that the modern farming methods require a great deal of capital, 

• So that the farmer now needs more money than before.

1. Most small farmers have to borrow money to arrange for the capital. 

• They borrow from large farmers or 
• The village moneylenders or the traders who supply various inputs for cultivation. 
• The rate of interest on such loans is very high. 
• They are put to great distress to repay the loan.

2. In contrast to the small farmers, the medium and large farmers have their own savings from farming. 

• They are thus able to arrange for the capital needed. 

How do these farmers have their own savings? You shall find the answer in the next section.

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 = little surplus = Mostly kept for their own family needs.

Other large and medium farmers sell the surplus farm products. 

• A part of the earnings is saved and kept for buying capital for the next season. 
• Thus, they are able to arrange for the capital for farming from their own savings. 
• Some farmers might also use the savings to buy cattle, trucks, or to set up shops

Small farmers like Savita and Gobind’s sons have little surplus 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 the market. 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 and cities.

Tejpal Singh, the large farmer, has a surplus of 350 quintals of wheat from all his lands! He sells the surplus wheat at the Raiganj market and has good earnings.

What does Tejpal Singh do with his earnings? Last year, Tejpal Singh had put most of the money in his bank account. Later he used the savings for lending to farmers like Savita who were in need of a loan. He also used the savings to arrange for the working capital for farming in the next 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 and medium farmers sell the surplus farm products. A part of the earnings is saved and kept for buying capital for the next season. Thus, they are able to arrange for the capital for farming from their own savings. Some farmers might also use the savings to buy cattle, trucks, or to set up shops. 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 shall now take a look at some of the non-farm production activities. 

Only 25 per cent of the people working in Palampur are engaged in activities other than agriculture.

1. Dairy — the other common activity

Dairy is a common activity in many families of Palampur. 

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. 

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

2. An example of small-scale manufacturing in Palampur

At present, less than fifty people are engaged in manufacturing in Palampur.

Unlike the manufacturing that takes place in the big factories in the towns and cities, 

Manufacturing in Palampur involves very simple production methods and are done on a small scale. 

They are carried out mostly at home or in the fields with the help of family labour. 

Rarely are labourers hired.

3. The shopkeepers of Palampur

People involved in trade (exchange of goods) are not many in Palampur. 

The traders of Palampur are shopkeepers 

• who buy various goods from wholesale markets in the cities and sell them in the village. 

You will see small general stores 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 whose houses are close to the bus stand have used a part of the space to open small shops. 

• They sell eatables.

4. Transport: a fast developing sector

There are variety of vehicles on the road connecting Palampur to Raiganj. 

• Rickshawallahs, 
• tongawallahs, 
• jeep, tractor, 
• truck drivers and 
• people driving the traditional bullock cart and bogey 

Are people in the transport services. 

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

The number of people involved in transport has grown over the last several years.