The Story of Village Palampur: Summary & Notes

1. Objective of the Chapter

• Introduce basic production concepts through a hypothetical village – Palampur.
• Two sectors covered:
  • Farming (75% engaged)
  • Non-farm activities (25%): dairy, shopkeeping, manufacturing, transport.

2. Factors of Production (Definition-based questions)

Factor	Description
Land	Natural resources: soil, water, forests
Labour	People engaged in work – skilled or unskilled
Capital	🔹 Fixed: Tools, machines, buildings<br>🔹 Working: Raw materials & cash
Human Capital	Knowledge, enterprise to organise production (covered more in next chapters)

3. Farming in Palampur

a. Land is Fixed

• No increase in cultivated land since 1960.
• 200 hectares under irrigation by mid-1970s.

b. Increasing Production: 2 Methods

1. Multiple Cropping (common question)
   • Grow multiple crops on same land in a year:
     • Kharif: Jowar, Bajra
     • Rabi: Wheat
     • Also: Potato & Sugarcane
2. Modern Farming Methods (Green Revolution)
   • HYV Seeds + Chemical Fertilisers + Pesticides + Tube-well Irrigation + Machinery
   • Wheat yield increase:
     • Traditional seed: 1300 kg/ha
     • HYV seed: 3200 kg/ha

c. Limitations of Modern Farming

• Soil fertility depleted by chemical use.
• Overuse of groundwater = Water-table decline.
• Sustainability concern.

4. Land Distribution in Palampur

Category	Details
Landless Families	150 families, mostly Dalits
Small Farmers	< 2 hectares
Medium/Large Farmers	≥ 2 hectares (60 families)

• Unequal distribution – reflects national trend.

5. Labour and Wages

• Small farmers: Use family labour.
• Big farmers: Hire labourers like Dala & Ramkali.
• Wages: Below legal minimum (₹160 vs ₹300 in 2019).
• Job duration not guaranteed.

6. Capital in Farming

Farmer Type	Source of Capital
Small Farmers	Loans from landlords/moneylenders (high interest)
Medium/Large Farmers	Self-financed through own savings

Example: Savita takes loan @ 24% + works as labourer to repay.

7. Surplus and Selling

• Farmers keep some crop → sell surplus wheat in Raiganj market.
• Earnings used to:
  • Reinvest in farming
  • Buy machinery (tractor, etc.)
  • Offer loans or enter non-farming sector

8. Non-Farming Activities in Palampur (25% engaged)

Activity	Example	Exam Clue Type
Dairy	Milk → Raiganj → City	Dairy network
Manufacturing	Mishrilal’s jaggery unit	Cottage industry
Shops	Local stores (tea, biscuits)	Retail sector
Education	Kareem’s computer classes	Skill development
Transport	Kishora’s buffalo cart service	Rural mobility

9. Key Takeaways for Competitive Exams

• Production = Land + Labour + Capital + Human Capital
• Land is limited → strategies: Multiple Cropping & HYV
• Modern farming = high yield but unsustainable
• Small farmers stuck in debt cycle
• Rural economy = diversification is essential
• Palampur has better-than-average rural infrastructure:
  • All-weather road, electricity, health center, schools