Economics Chapter: Production Activities in Palampur

Palampur: A Village Economy

• Palampur is a well-connected village with a developed system of roads, transport, electricity, irrigation, schools, and health centers.
• The village is focused on farming as the main production activity, which requires four essential components: land, labor, physical capital, and human capital.

Organisation of Production

• Production involves combining land, labor, physical capital, and human capital to produce goods and services.
• Physical capital includes tools, machines, buildings, raw materials, and money, which is essential for production and is referred to as working capital.
• Knowledge and enterprise are also required to combine these factors and produce an output.

Farming in Palampur

• Land area under cultivation is practically fixed, and farmers face the constraint of raising farm production.
• Multiple cropping is a way to grow more from the same land, made possible by well-developed irrigation, which allows farmers to grow three different crops.
• Modern farming methods, including the Green Revolution, introduced high-yielding varieties (HYVs) of seeds, leading to higher yields.

Challenges in Farming

• Overuse of natural resources, such as soil and groundwater, has led to their depletion, making it difficult to restore them.
• Increased use of chemical fertilizers has resulted in soil losing its fertility.

Land Distribution in Palampur

• About one-third of the 450 families in Palampur are landless, including Dalits who have no land for cultivation.
• 240 families cultivate small plots of land less than 2 hectares in size, while 60 families of medium and large farmers cultivate more than 2 hectares of land.

Labour in Palampur

• Small farmers cultivate their own lands, while medium and large farmers hire labourers from landless families or families cultivating small plots of land.
• Farm labourers have no right over the crops grown on the land and are paid wages, which can be cash or in-kind, such as crops.

Capital in Farming

• Modern farming methods require a significant amount of capital, which small farmers often borrow from large farmers, village moneylenders, or traders at high interest rates.
• Medium and large farmers have their own savings from farming and can arrange for the necessary capital.

Sale of Surplus Farm Products

• Farmers retain part of their produce for family consumption and sell the surplus, with only medium and large farmers supplying wheat to the market.