Palampur, a hypothetical village, introduces basic economic concepts of production. Farming dominates, with non-farm activities like dairy and transport playing smaller roles. The chapter explores how land, labor, capital, and human effort combine to produce goods and services, highlighting challenges like land scarcity and unequal distribution.
Village Overview: Palampur, well-connected to Raiganj (3 km) and Shahpur via an all-weather road, has 450 families, including 80 upper-caste landowning families and one-third Scheduled Castes (SCs) living in smaller mud/straw homes. Most houses have electricity, powering tubewells and small businesses. The village has two primary schools, one high school, a government primary health center, and a private dispensary.
Infrastructure: Palampur’s developed road, transport (bullock carts to trucks), electricity, irrigation, and educational/health facilities resemble villages in western Uttar Pradesh, contrasting with less-developed regions.
Economic Activities: Farming is the primary activity (75% of workers), with non-farm activities (25%) including small-scale manufacturing, dairy, transport, and shop-keeping.
Factors of Production: Production requires four factors:
Role in Farming: In Palampur, these factors combine to produce crops and other goods, with land and labor being critical but constrained by availability and skills.
Land Constraints: Farming employs 75% of Palampur’s workforce, but land is fixed at 200 hectares (fully cultivated since 1960). No new land is available, limiting expansion.
Multiple Cropping: To increase output, farmers practice multiple cropping, growing three crops annually: jowar/bajra (kharif, rainy season), potato (October–December), and wheat (rabi, winter). Sugarcane is grown yearly. Surplus wheat and jaggery are sold in Raiganj/Shahpur.
Irrigation: A well-developed irrigation system, enabled by early electricity and tubewells (government-installed, later private), irrigates all 200 hectares by the mid-1970s, unlike many Indian villages where only 40% of cultivated land is irrigated.
Green Revolution: Introduced in the late 1960s, high-yielding variety (HYV) seeds increased wheat yields from 1,300 kg/ha (traditional) to 3,200 kg/ha. HYV seeds require more water, chemical fertilizers, and pesticides, adopted first in Punjab, Haryana, and western Uttar Pradesh. Modern machinery (tractors, threshers) further boosted efficiency.
Environmental Impact: Modern farming overuses soil and groundwater, reducing fertility and depleting water tables. Chemical fertilizers pollute water bodies and kill soil microbes, necessitating sustainable practices.
Unequal Distribution: Of 450 families, 150 (mostly SCs) are landless. Among landowners, 240 families have small plots (<2 hectares), insufficient for adequate income. Sixty medium/large farmers own plots >2 hectares, with some exceeding 10 hectares, covering over half the village’s cultivated area.
Case Study: In 1960, Gobind farmed 2.25 hectares, supporting his family. After his death, the land was divided among his three sons (0.75 hectares each), too small for sustainable income despite modern methods, forcing them to seek additional work.
National Context: India’s land distribution mirrors Palampur’s inequality, with 80% of farmers owning small plots, limiting their economic viability.
Sources of Labor: Small farmers and their families work their fields. Medium/large farmers hire farm laborers, mostly from landless families or small-plot owners, paid in cash, crops, or meals.
Wages and Challenges: Laborers like Dala earn Rs 160/day, below the government’s Rs 300 minimum (2019), due to high competition. Wages vary by region, crop, and task (e.g., sowing vs. harvesting), with irregular employment adding to poverty.
Migration: Limited farm work drives laborers to migrate to cities (e.g., Punjab, Delhi) for jobs in construction or industry, as seen in villages like Gosaipur and Majauli.
Capital Needs: Modern farming requires significant capital for seeds, fertilizers, pesticides, water, and equipment. Working capital (e.g., Rs 3,000 for Savita’s wheat) is critical.
Small Farmers: Lacking savings, small farmers like Savita borrow from large farmers (e.g., Tejpal Singh) at high interest (24% for 4 months) and agree to low-wage labor (Rs 100/day). This debt and labor burden exacerbates their poverty.
Medium/Large Farmers: Farmers like Tejpal Singh use surplus earnings (e.g., 350 quintals of wheat) to save, lend, or invest in fixed capital (e.g., tractors), ensuring financial stability.
Overview: Only 25% of Palampur’s workforce engages in non-farm activities, including dairy, small-scale manufacturing, shop-keeping, and transport.
Dairy: Families feed buffaloes jowar/bajra, selling milk to Raiganj’s chilling centers for transport to towns. Kishora, a laborer, bought a buffalo with a low-interest government loan, boosting income via milk and transport.
Small-Scale Manufacturing: Mishrilal’s electric sugarcane crusher processes jaggery, sold to Shahpur traders. Using family labor and his field, he earns small profits but faces high costs and market limitations.
Shop-Keeping: General stores sell essentials (rice, soap) bought from city wholesalers. Some families near the bus stand run eateries, catering to locals and travelers.
Computer Classes: Kareem’s computer center, employing two women with degrees, serves high school students, capitalizing on demand for skills in Shahpur.
Transport: Rickshaws, jeeps, and bullock carts connect Palampur to Raiganj. Kishora’s buffalo cart transports clay and jaggery, supplementing his income.
Achievements: Multiple cropping and modern farming have increased crop yields, but pressure on land and resources threatens sustainability.
Challenges: Small farmers (80% of India’s farmers) face capital shortages, debt, and low surplus, often working as laborers. Labor is abundant but underutilized in modern farming, driving migration.
Non-Farm Potential: Non-farm activities require less land but need capital and markets. Low-interest loans and better connectivity (roads, phones) could expand these activities, reducing reliance on farming.