Class 9 Economics

Story of Palampur

Rural Economy

The village described in this chapter is somewhat big in size. It is well connected by all-weather road from the nearest town. The village has a primary health centre, school, irrigation facilities and electricity supply.

The percentage of such villages is minuscule in India. Most of the villages do not have proper connectivity with the nearest town. They may not be having hospital and schools. Electricity supply can be quite erratic in many villages.

In a typical village (like Palampur) people of different castes and communities live. A village can have 50 to 500 families. Most of the land is usually owned by upper caste people. Rest of the land is owned by the Other Backward Classes and minorities. The dalits usually comprise the landless labour. They normally live on the outskirts of the village.

Organisation of Production

There are four main requirements for organization of production and they are as follows:


Land is fixed and scarce. There is no method by which the land can be increased. The growth of population has increased pressure on land. Division of property through subsequent generations has resulted in agricultural plots becoming much smaller. This has also affected the scale economies in farming.


Labour is available in plenty because of a huge army of unemployed. Many people from the poor section are illiterate and hence have to work as unskilled labour. The government provides guidelines on minimum wages from time to time. But because of less demand and huge supply of labour, there are many cases where the farm workers may not be getting even the minimum wages.

Physical Capital

Tools, machines and buildings comprise the fixed capital in farming. Money is needed as working capital to buy seeds and fertilisers and also to pay the cost of irrigation.

Knowledge and Enterprise

A farmer also needs the knowledge and enterprise to effectively manage production. In most of the cases, certain knowledge is passed down through generations. Government has also taken initiative in improving the knowledge of farmers.

Improving Farm Productivity

Since land cannot be increased so one needs to find some other methods to improve farm productivity. Use of modern farming techniques, machineries and high yield varieties of seeds can help in improving farm productivity.

Government has made good networks of canals in many parts of the country. This has helped in improving the irrigation facilities. Seeds and fertilisers are made available at subsidized rates for the benefit of farmers.

If proper irrigation facilities are in place, then farmers of a village can grow up to three crops in a year. By doing mixed cropping, they can also improve the productivity substantially.

Disadvantages of Overuse of Land

Exploitation of Groundwater

After the Green Revolution, foodgrain production has increased manifold in India. But the Green Revolution has also brought many problems. There is excess exploitation of groundwater at many places which has resulted in water table going down at many places. Water shortage is becoming a recurring problem in most of the villages.

Misuse of Chemical Fertilisers

Overuse of chemical fertilisers has reduced soil fertility and there is a danger of many farmlands turning barren. Before the advent of the Green Revolution, farmers normally used manure and compost to improve yield. Such a practice was eco-friendly and could be sustained for a longer period. Excess use of chemical fertilisers also contaminates drinking water.