The chapter introduces students to economics as a discipline dealing with efficient use of resources namely Land, Labour, Capital and Enterprise. Through examples and stories the chapter builds on types of economic activities with special focus on activities in a hypothetical village of Palampur.
About the Hypothetical Village Palampur
Palampur is well-connected with neighbouring villages and towns. Raiganj, a big village, is 3 kms from Palampur. An all-weather road connects the village to Raiganj and further on to the nearest small town of Shahpur.
Many kinds of transport are visible on this road starting from bullock carts, tongas, bogeys loaded with jaggery (gur) and other commodities to motor vehicles like motorcycles, jeeps, tractors and trucks.
This village has about 450 families belonging to several different castes. 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. The 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.
Most of the houses have electric connections.
Electricity powers all the tube wells in the fields and is used in various types of small business. Palampur has two primary schools and one high school.
There is a primary health centre run by the government and one private dispensary where the sick are treated.
This is a Hypothetical Situation of a developed village in which production activities also take place. Farming is the main production activity. The other production activities, referred to as non-farm activities include small manufacturing, transport, shop-keeping, etc.
What is the Aim of Production? What are its requirements?
The main aim of production is to provide required goods and services. There are four requirements of production:
Land and other natural resources such as Water, Forests and Minerals.
Labour: people who will do the work. Some production activities require highly educated workers to perform the necessary tasks.
Physical Capital: the variety of inputs required at every stage during production. Tools, machines, buildings can be used in production over many years, and are called fixed capitaland Raw materials and money in hand are called working capital.
Human Capital: knowledge and enterprise to be able to put together land, labour and physical capital and produce an output.
Every production is organised by combining land, labour, physical capital and human capital, which are known as factors of production.
Land Is Fixed
Farming is the main production activity in the villages.
As in the Village Palampur 75 per cent of the people who are working are dependent on farming for their livelihood.
The wellbeing of these people is closely related to production on the farms.
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. Hence, many wastelands were converted into cultivable land.)
The standard unit of measuring land is hectare, though in the villages, in villages there are local units such as bigha, guintha etc.
One hectare equals the area of a square with one side measuring 100 metres.
How can the issue of limited land be resolved? What are the ways of efficient use of land for agriculture?
● There are ways by which this land issue can be resolved and one can grow more crops from the same land.
● Different crops are grown in different seasons like during the rainy season Kharif Crops ( jowar and Bajra) are grown. In winters Rabi Crops are grown.
● This also requires a good Irrigation System with help of tube wells and other various sources.
Not all villages in India have such high levels of irrigation. Apart from the riverine plains, coastal regions in our country are well-irrigated. In contrast, plateau regions such as the Deccan plateau have low levels of irrigation. Of the total cultivated area in the country a little less than 40 per cent is irrigated even today. In the remaining areas, farming is largely dependent on rainfall.
What is Multiple Cropping?
The Practice of growing more than one crop on a piece of land during the year is known as multiple cropping.
What are Modern Farming Methods?
Modern agriculture and farming is a must because modern farming methods can increase production and can feed the world. The economy of some countries is mostly dependent on agriculture and farming related business. A major part of the population is directly or indirectly involved with agriculture and farming business.
● There are various methods by which agriculture is being enhanced.
● The use of High Yielding Variety seeds (HYVs).
● Use of Pesticides, Fertilisers and modern Farm Machinery like tractors etc.
● Modern Irrigation Techniques (Tubewells, dams, pump sets etc).
What is the Green Revolution?
Green Revolution is the term given to the introduction of high-yielding varieties of seeds and the increased use of fertilisers and irrigation which provided the increase in production needed to make India self-sufficient in food grains, thus improving agriculture in India.
- The father of the Green revolution is Norman Borlaugh.
Why was the initial spread of the Green Revolution limited to some states in India?
Higher yields were possible only from a combination of HYV seeds, irrigation, chemical fertilisers, pesticides etc. HYV seeds need plenty of water and regular chemical fertilisers and pesticides to produce best results. This initial investment was relatively expensive and the affluent farmers of Punjab, Haryana and Western Uttar Pradesh were the first to try out the modern farming method in India.
Modern farming methods have overused the Natural Resource Base. Explain?
Green Revolution is associated with the loss of soil fertility due to increased use of chemical fertilisers. 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 years, it is very difficult to restore them. Chemical fertilisers provide minerals which dissolve in water and are immediately available to plants. But these may not be retained in the soil for long.
They may escape from the soil and pollute groundwater, rivers and lakes. Chemical fertilisers can also kill bacteria and other microorganisms in the soil. which reduces the fertility of the land.
Distribution Of Land
All the people engaged in agriculture have sufficient land for cultivation. According to the case study, In Palampur, about one third of the 450 families are landless, i.e. 150 families, most of them dalits, have no land for cultivation.
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.
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.
Labour provides the labour required for farming themselves. Medium and large farmers hire farm labourers to work on their fields. Labour can be hired on a daily wage or for a particular activity like harvesting, or for the whole year.
These people also face heavy competition due to which the agrre to work on a lower wage.
What is the need of Capital?
The modern farming methods require a great deal of capital, farmers need a lot of money for their agricultural production.
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.
The medium and large farmers have their own savings from farming. They are thus able to arrange for the capital needed.
● Dairy is the common activity yet essential in many villages.
● People feed their Cow, Buffaloes on different kinds of grass and sell their milk in different parts of the village or maybe in nearby villages or towns.
● Small scale manufacturing is also done in the villages but unlike the other big cities and towns.
● It is done by the family members or neighbours in their homes.
● There are various shop keepers in the villages, those who purchase goods from wholesale markets in the cities and then sell them in the village.
● E.g small general stores in the village selling a wide range of products like Tea, Cookies etc.
● There are various vehicles and people like 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.