The Story of Village Palampur
Palampur is a hypothetical village used to illustrate basic economic concepts related to production, helping students understand how various resources are combined to produce goods and services. The narrative is partly based on a research study of a village in the Bulandshahr district in Western Uttar Pradesh.
I. Village Profile and Infrastructure
Location and Connectivity:
Palampur is well-connected to its surrounding areas. It is 3 km away from Raiganj, a large village, and also connected to Shahpur, a small town, via an all-weather road.
Demographics and Social Structure:
The village is home to approximately 450 families from various castes.
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The 80 upper caste families own the majority of land and live in larger brick houses.
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SCs (Dalits) constitute one-third of the population, residing in smaller houses made of mud and straw in a distinct corner of the village.
Infrastructure:
Palampur boasts a “fairly well-developed system of roads, transport, electricity, irrigation, schools and health centre”.
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Electricity: Most houses have electric connections, which power tubewells for irrigation and various small businesses. Electricity came early to Palampur and transformed irrigation by replacing Persian wheels with electric-run tubewells.
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Education: There are two primary schools and one high school in the village.
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Healthcare: Palampur has one government-run primary health center and one private dispensary.
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Transport: The roads feature a diverse range of vehicles, including traditional bullock carts, tongas, and bogeys (wooden carts drawn by buffaloes), alongside modern vehicles like motorcycles, jeeps, tractors, and trucks, used for transporting people and goods.
II. Organization of Production – Factors of Production
Production is the creation of desired goods and services, and it requires four main factors:
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Land: This factor encompasses natural resources like water, forests, and minerals.
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Labour: This refers to the people who perform the work. This can range from highly educated workers required for complex tasks to manual laborers for physical work.
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Physical Capital: These are the inputs required at every stage of production.
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Fixed Capital: These are tools, machines (such as ploughs, generators, turbines, computers), and buildings that can be used for many years in production.
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Working Capital: This includes raw materials (like yarn for a weaver or clay for a potter) and money in hand used for payments and purchasing other necessary items. Unlike fixed capital, these are used up in the production process.
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Human Capital: This is the “knowledge and enterprise to be able to put together land, labour and physical capital and produce an output”. It’s the ability to organize and manage the other factors of production.
III. Farming in Palampur (Main Production Activity)
Farming is the primary economic activity in Palampur, with “75 per cent of the people who are working” dependent on it for their livelihood, either as farmers or farm laborers.
Land as a Fixed Resource:
A fundamental constraint in farming is that the “land area under cultivation is practically fixed”. Since 1960, there has been no expansion in cultivated land, as all cultivable wasteland had already been converted. This means there is no further scope to increase farm production by bringing new land under cultivation.
Increasing Production from the Same Land:
Despite fixed land, farmers in Palampur have increased production using two main methods:
1. Multiple Cropping: This is the most common method. Farmers grow multiple crops in a year:
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Rainy season (kharif): Jowar and bajra (used as cattle feed).
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Between October and December: Potatoes.
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Winter season (rabi): Wheat.
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Annually: Sugarcane, which is harvested once a year and sold as raw sugarcane or jaggery to traders in Shahpur.
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This intensive cropping is possible due to Palampur’s “well-developed system of irrigation”, with electricity transforming irrigation from Persian wheels to electric-run tubewells early on. By the mid-1970s, the “entire cultivated area of 200 hectares (ha.) was irrigated”.
2. Modern Farming Methods (Green Revolution): Introduced in India in the late 1960s, these methods involved the use of High Yielding Variety (HYV) seeds for wheat and rice.
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Requirements: HYV seeds need “plenty of water and also chemical fertilizers and pesticides” to produce optimal results. They also require farmers to start with more cash than before.
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Impact: The Green Revolution led to a “large increase in the production of wheat”. For example, wheat yield in Palampur increased from “1300 kg per hectare” with traditional seeds to “3200 kg per hectare” with HYV seeds. This allowed farmers to sell “greater amounts of surplus wheat in the markets”. Farmers in Punjab, Haryana, and Western Uttar Pradesh were among the first to adopt these methods, investing in tubewells, HYV seeds, fertilizers, pesticides, and farm machinery like tractors and threshers.
Sustainability Concerns:
Modern farming methods, while increasing production, have “overused the natural resource base”.
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Soil Degradation: There is a “loss of soil fertility due to increased use of chemical fertilisers”. Chemical fertilizers can pollute groundwater, rivers, and lakes, and kill beneficial soil microorganisms, making the soil “less fertile than ever before” over time.
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Groundwater Depletion: The “continuous use of groundwater for tubewell irrigation has led to the depletion of the water-table”. Environmental resources like soil fertility and groundwater are built up over many years, and their destruction is difficult to reverse.
Land Distribution:
Land ownership in Palampur is highly unequal.
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Landless Families: “About one third of the 450 families are landless, i.e. 150 families, most of them dalits”.
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Small Farmers: 240 families cultivate “small plots of land less than 2 hectares in size”. These plots often do not provide “adequate income” for the farmer’s family. For instance, Gobind’s sons each inherited 0.75 hectares of land, and even with improved irrigation and modern methods, they struggled to make a living and had to seek additional work.
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Medium and Large Farmers: 60 families cultivate “more than 2 hectares of land”, with some large farmers owning “over 10 hectares or more”. These large plots cover more than half the village area.
Labour in Farming:
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Small farmers and their families provide their own labour for cultivating their fields.
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Medium and large farmers “hire farm labourers” to work on their fields.
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Farm Labourers: These labourers come from landless families or those cultivating small plots. They “do not have a right over the crops grown on the land” and are paid wages, which can be in cash or kind (sometimes including meals). Wages vary greatly depending on the region, crop, and specific farm activity (like sowing or harvesting).
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Exploitation and Low Wages: Despite government-set minimum wages (e.g., Rs 300 per day in March 2019), labourers often receive less. For example, Dala, a landless farm labourer, received only Rs 160 per day due to “heavy competition for work among the farm labourers” in Palampur. This competition forces people to agree to lower wages.
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Migration: Due to limited work opportunities and low wages in the village, many people, like Dala and Ramkali, are among the poorest. This leads to migration to “rural Punjab and Haryana or in Delhi, Mumbai, Surat, Hyderabad or Nagpur” for work.
Capital in Farming:
“Modern farming methods require a great deal of capital,” meaning farmers need more money than before.
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Small Farmers: Most small farmers “have to borrow money” from large farmers, village moneylenders, or traders who supply inputs for cultivation. The interest rates on these loans are “very high”, leading to great distress for repayment. Savita, for example, borrowed Rs 3,000 from Tejpal Singh at an “interest rate of 24 per cent for four months” and had to promise to work on his field for a low wage of Rs 100 per day during harvest season, despite her own workload.
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Medium and Large Farmers: In contrast, these farmers “have their own savings from farming” and are thus able to arrange for the necessary capital. They sell their surplus farm products, save a portion of their earnings, and use it to buy capital for the next season (e.g., Tejpal Singh using his earnings to buy another tractor, increasing his fixed capital). They might also use savings to buy cattle, trucks, or set up shops for non-farm activities.
Sale of Surplus Farm Products:
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Small farmers have “little surplus wheat” because their total production is small, and a substantial share is kept for family consumption.
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It is primarily the “medium and large farmers who supply wheat to the market”. They sell their surplus to traders in markets located in Raiganj and Shahpur.
IV. Non-Farm Activities in Palampur
Only “25 per cent of the people working in Palampur are engaged in activities other than agriculture”. These activities generally require less land and can be started with some capital.
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Dairy: This is a common activity. People feed their buffalos various grasses, jowar, and bajra, and then sell the milk in nearby villages like Raiganj. Traders from Shahpur have even set up collection-cum-chilling centers in Raiganj to transport milk to distant towns and cities.
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Small-Scale Manufacturing: Less than fifty people are involved in manufacturing in Palampur. This sector uses “very simple production methods” and is typically carried out at home or in the fields with family labour, rarely hiring outside laborers. An example is Mishrilal, who purchased an electric-run sugarcane crushing machine to produce jaggery, which he sells to traders in Shahpur, making a small profit.
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Shop-keeping: Traders in Palampur buy goods from wholesale markets in cities and sell them in general stores within the village, offering a variety of items like rice, wheat, sugar, oil, and household goods. Some families near the bus stand run small shops selling eatables. Another example is Kareem, who opened a computer class center after noticing many students attending college and computer classes in Shahpur. He employed two village women with computer application degrees, bought computers, and set up classes, which high school students attend in good numbers.
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Transport: This is a “fast developing sector”, with a growing number of people involved. Rickshawallahs, tongawallahs, jeep, tractor, and truck drivers, along with traditional bullock cart drivers, ferry “people and goods from one place to another,” earning an income. Kishora, a farm labourer who struggled to meet his family’s needs, took a loan under a government program (providing cheap loans to poor landless households) to buy a buffalo. He now sells milk and transports various items using a wooden cart attached to his buffalo, for example, bringing clay for potters or taking jaggery to Shahpur. This has enabled him to earn more than before.
V. Key Themes and Challenges
The story of Palampur highlights several important economic themes and challenges:
Scarcity of Land and Capital for Small Farmers:
Land is a fixed resource and is unequally distributed, limiting opportunities for small farmers. Capital is also scarce for them, forcing reliance on high-interest loans, which puts them in distress.
Abundance of Labour:
There is “heavy competition for work among the farm labourers,” leading to low wages and difficult living conditions. This often results in migration to other villages, towns, and cities in search of work.
Impact of Modern Farming:
While modern farming methods (Green Revolution) have significantly increased agricultural production, they raise serious concerns about environmental degradation, including loss of soil fertility and depletion of groundwater. These methods also increase the need for capital.
Importance of Non-Farm Activities:
These activities offer crucial alternative livelihoods, require less land, and have the potential to expand, especially with improved access to low-interest loans and good market connectivity.
Interdependence:
The village’s economy demonstrates the interconnectedness of different economic activities (e.g., farming and transport, dairy and markets) and the vital role of infrastructure (roads, electricity, irrigation) in facilitating production and trade.