Organisation of Production

The Story of Village Palampur

  • Village Palampur

Palampur is a small hypothetical village having about 450 families. It is 3 km away from Raiganj — big village. Shahpur is the nearest town to the village.

The village is well connected with neighbouring villages and towns. The village is well connected by the road and most of the houses are electrified.

It has two primary schools and one high school.

There is a government primary health Centre and a primary dispensary.

  • Main Production Activities

Farming is the main production activity in the village Palampur. Most of the people are dependent on farming for their livelihood. Non-farming activities such as dairy, small-scale manufacturing (e.g. activities of weavers and potters, etc.), transport, etc., are carried out on a limited scale.

  • Factors of Production (Or Requirements for Production of Goods and Services)

Land, labour, and capital are the basic requirements for production of goods and services which are popularly known as factors of production. Land includes all free gifts of nature,e.g., soil, water, forests, minerals, etc. Labour means human effort which of course includes physical as well as mental labour. Physical capital is the third requirement for production.Physical capital includes fixed capital (e.g. tools, machines, building, etc.)

Working capital includes raw materials such as seeds for the farmer, yarn for the weaver. and money in hand.

  • Important Changes in Farm Activities

Land area under cultivation is virtually fixed. However, some wastelands in India had been converted into cultivable land after 1960.

Over the years, there have been important changes in the way of farming, which have allowed the farmers to produce more crops from the same amount of land.

These changes include :

(a) Multiple cropping farming

(b) Use of modern farming methods.

Due to these changes (in the late 1960s) productivity of land has increased substantially which is known as Green Revolution. Farmers of Punjab, Haryana and western Uttar Pradesh were the first to try out the modern farming methods in India.

Overuse of fertilizers, pesticides and water is resulting into land degradation. The farmers in Punjab are facing these problems.

  • Labour: After land, labour is the next basic factor of production. Small farmers provide their own labour, whereas medium and large farmers make use of hired labour to work on their fields.
  • There are many landless families in Palampur which provide labours. As the work is less for the number of labourers they are not given minimum wages set by the government.
  • So some labourers migrate to the cities.
  • Capital: After land and labour, capital is another basic factor of production. All categories of farmers (e.g. small, medium and large) require capital. Small farmers borrow from large farmers or the village moneylenders or the traders who supply them various inputs for cultivation.

Modern farming requires a great deal of capital.

  • Sale of Surplus Farm Products

Farmers produce crops on their lands by using the three factors of production, viz. land, labour and capital. They retain a part of produce for self-consumption and sell the surplus in the nearby market. That part of farm produce which is sold in the market is called marketable surplus. Small farmers have little surplus output. It is the medium and large farmers only who have substantial surplus produce for selling in the market.

Non-Farm Activities in Palampur

  • Non-farm activities

Out of every 100 workers in the rural areas in India, only 24 are engaged in non-farm activities. There is a variety of non-farm activities in the villages. Dairy, small scale manufacturing, transport, etc., fall under this category.

Some of the people are engaged in these non-farming activities.

Economic Activities by Men and Women

People as Resource

Population of a nation can be its asset rather than liability.

‘People as resource’ refers to a country’s working people in terms of their existing productive skills and abilities.

When existing human resource is developed by becoming educated and healthy it turns into human capital.

Human capital is superior to other resources like land and physical capital, as it uses these capitals and adds value to them.

Investment in human capital via education and medical care can give high returns in the future. Country like Japan have invested a lot in human resources. They do not have rich natural resources, but still they are called developed nations.

Human beings perform many activities which can be grouped into economic and non-economic.

Economic Activities: Economic activities refer to those activities of man which are undertaken for a monetary gain or to satisfy his/her wants. The activities of workers, farmers, shopkeepers, manufacturers, doctors, lawyers, taxi drivers, etc. fall under this category.

Market Activities and Non-Market Activities

Economic activities are also called as market activities.

Non-market activities are production for self-consumption.

Non-Economic Activities: Non-economic activities are ones that are not undertaken for any monetary gain. These are also called unpaid activities, e.g.., Puja-paath, housekeeping, helping the poor or disabled, etc.

  • Classification of Economic Activities. Various economic activities can be classified into

three main sectors, that is primary sector, secondary sector, and tertiary sector. The primary sector includes activities like agriculture, forestry, animal husbandry, fishing, poultry, farming and mining. In this sector, goods are produced by exploiting nature. In the secondary sector, manufacturing (small and large) and construction activities are included. The tertiary sector (also called service sector) provides various types of services like transport, education, banking, insurance, health, tourism, etc.

  • In India traditionally there is division of labour between men and women.
  • Activities of Women. Women generally look after domestic affairs like cooking of food, washing of clothes, cleaning of utensils, housekeeping and looking after children
  • Human Capital: Human capital is the stock of skill and productive knowledge embodied in human beings. Population (human beings) become human capital when it is provided with better education, training and health care facilities

Quality of Population.

The quality of population depends upon the literacy rate, life expectancy and skills formation acquired by the people of the country.

Role of Education:

Education is the most important component of human resource development. It contributes towards the growth of the society, enhances the national income, cultural richness and increases efficiency of governance.
In view of its contribution towards the growth of the society, government expenditure on education as a percentage of GDP rose from 0.64% in 1951-52 to 3.98% in 2002-03. However, our national goal is 6% of GDP.

Literacy is uneven between males and females. Males are more literate. It also varies with urban and rural area. Urban population is more literate compared to rural.
There were 7.68 lakh schools by 2004-05. But education is diluted by the poor quality of schooling and high drop out rates.
‘Sarv Shiksha Abhiyan’ is a significant step towards providing elementary education to all children below the age of 14.


Health is another very important component of human resource development. Efficiency of workers largely depends on their health.
There has been considerable improvement in the country’s health standard. For instance, the life expectancy at the time of birth in India rose from 37.2 years in 1951 to 63.9 years in 2001. Similarly, infant mortality rate has come down from 147 to 47  by 2010.

Infant mortality rate is the death of the child under one year of age.
India has built up a vast health infrastructure but still much more is needed to be done.


Unemployment: Unemployment is said to exist when people who are willing to work at the prevailing wage rates cannot find jobs. When we talk of unemployed people, we refer to those in the age group of 15-59 years. Children below 15 years of age and the old people above 60 are not considered while counting the number of unemployed.

Nature of Unemployment in India:

Seasonal unemployment occurs when people fail to get work during some months of the year (that is, during off-season). Farm labourers usually face this kind of problem.

Disguised unemployment is another kind of unemployment found in rural areas. Such kind of problem arises due to excessive pressure of population on agriculture. Disguised unemployment refers to a situation where in the number of workers in a job is more than actually required to do the job. The extra number of workers are disguisedly unemployed.
Increase in unemployment is an indicator of depressed economy.

Consequences of Unemployment:

(i) Unemployment leads to wastage of manpower resource.
(ii) Unemployment tends to increase the economic overload that is dependence of the unemployed on the working population.
(iii) Unemployment may lead to increase in social unrest and tension.

Cases of poverty

Poverty as a Challenge

In our daily life we come across many poor people such as land less labourers in villages, people living in jhuggis, daily wage workers at construction sites, child labourers in dhabas, rickshaw-pullers, domestic servants, cobblers, beggars, etc.

About 30 crore people live in poverty.

Poverty : Usually the levels of income and consumption are used to define poverty. In India, poverty can be defined as the lack of common things like food, clothing and shelter , safe drinking water, medical care  and education, which determine quality of life.

Poverty has both dimensions economical and social.

Other Indicators of Poverty:

Now poverty is looked through other social indicators like illiteracy level, lack of access to health care, lack of job opportunities, lack of access to safe drinking water, sanitation, etc. Nowadays, the concept of social exclusion is becoming very common in the analysis of poverty.

Social exclusion means , generally poor are excluded in the community of better off people.


Vulnerability describes the greater probability of certain communities  or individuals of becoming, or remaining, poor in the coming years.

The people from backward cast, individuals like widows, physically handicapped are  more vulnerable.

They possess greater risks at the time of natural disasters.

Poverty Line 

It is based on the income or consumption level.

A person is considered poor if his or her income or consumption level falls below a given ‘minimum level’ necessary to satisfy basic needs.

Poverty line varies with time place.

For the year 2009-10, the poverty line for a person was fixed at  Rs.673 per month for rural area and Rs. 860 for the urban areas.

The poverty line is estimated periodically by conducting sample surveys by National Sample Survey Organisation. ( NSSO)

Estimates of Poverty:

The incidence of poverty in India was around 55 per cent in 1973 which declined to 36 per cent in 1993 and further to 26 per cent in 2000.

The poverty in India is reduced percent wise but number wise it is huge.

Social groups which are most vulnerable to poverty are Scheduled Caste and Scheduled Tribe households.

Inequality of Incomes within a Family:

In poor families, old people, women and female children are denied equal access to family’s available resources. They are the poorest of the poor.

Inter-State Disparities :

The proportion of poor people is not the same in every state. In 20 states and union territories the poverty ratio is less than the national average. Orissa and Bihar are the poorest states of India with poverty ratios of 47 per cent and 43 per cent respectively. Lowest incidence of poverty is found in Jammu and Kashmir with poverty ratio of just 3.5 per cent.

Global Poverty Scenario

Global Poverty Scenario:

There has been substantial decline in global poverty. However, it is marked with great regional differences. Poverty has declined more in China and South-East Asian countries.

World bank has defined poverty as the people earning less than 1.25 $ per day.

The Millennium Development Goals of the United Nations call for reducing the proportion of people below poverty line to half the 1990 level by 2015.

Causes of Poverty :

There are a number of causes for the widespread poverty in India.

One historical reason is the low level of economic development under the British colonial administration.

There are some other reasons.

These are :

1. Rapid growth of population, particularly among the poor is considered a major cause of Indian poverty.

2. Our agricultural sector has failed to generate much employment opportunities for the farm labourers. Similarly, our industries could not provide much job for the job seekers.

3. One of the major causes of poverty is the unequal distribution of land and other resources. Various land reform measures introduced after Independence could not improve the life of millions of rural poor because of their poor implementation.

4. Social factors :

People in India, including the very poor, spend a lot of money on social occasions like marriages, festivals, etc. Poor people hardly have any savings; they are, thus forced to borrow. Unable to pay because of poverty, they became victims of indebtedness.

Joint family system has prevented people from doing hard work.

  • Steps taken by the Government for Poverty Alleviation

Our government’s strategy to poverty reduction has been twofold. One, promotion of economic growth and, two, targeted poverty alleviation programmes.

Poverty Alleviation Programmes:

To address the poor, a need for targeted anti-poverty programmes was strongly felt.

Some of them are given below :

1. Prime Minister Rojgar Yojana (PMRY): The aim of this programme (which was started in 1993) was to create self-employment opportunities for educated unemployed youth in rural areas and small towns.

2. Rural Employment Generation Programme (REGP): REGP was launched in 1995 to create self-employment opportunities in rural areas.

3. Swarna Jayanti Gram Swarojgar Yojana (SGSY): SGSY was started in 1999. The programme aims at bringing the assisted poor families above the poverty line.

4. Pradhan Mantri Gramodaya Yojana (PMGY) was launched in 2000.

5. Antyodaya Anna Yojana (AAY) for ‘the poorest of poor’s and elders.

6. National Food for Work Programme (NFWP) was launched in 2004.

7. National Rural Employment Guarantee Act (NREGA) was passed in September 2005. The Act provides 100-days assured employment every year to every rural household in 200 districts.

The Challenges Ahead :

Though poverty has declined in India, poverty reduction remains India’s most compelling challenge. We will have to do something special to fight against wide regional disparities. We must broaden the definition of poverty from ‘a minimum subsistence level of living to a reasonable level of living’. Bigger challenges before us are: providing health care, education and job security for all the achieving gender equality.

What is food security

Food Security in India

Food security means availability, accessibility and affordability of food to all people at all times.

Availability: Food production in the country, import of food

Accessibility: Food within the reach of every person

Affordability: To have enough money to buy sufficient amount of food.

Food security

The poorest section of the society remains food insecure all the times. People above poverty line might also feel food insecure in times of natural calamity like earthquake, drought, flood, tsunami, etc.

Natural calamities may lead to starvation. Starvation in longer run turns into famine.

A famine is characterised by wide spread deaths due to starvation and epidemics caused by forced use of contaminated water or decaying water or decaying food and loss of body resistance due to weakening from starvation.

Food-insecure in rural areas, the worst affected people are: landless and small farmers, traditional artisans (weavers, potters, blacksmith etc.) providers of services(e.g. barbers, washer men etc), petty self-employed workers and destitute. In the urban areas, persons employed in ill-paid occupations and casual labourers are food insecure.

The social composition also plays a role in food insecurity. The SCs, STs and some sections of OBC ( lower castes) who are landless or with low land productivity are prone to be food insecure.

Large proportion of pregnant and nursing mothers and children under the age of 5 years constitute an important segment of the food insecure population.

  • Hunger: Hunger has chronic and seasonal dimensions. Poor people suffer from chronic hunger and are food insecure all the times. Seasonal hunger is caused by the seasonal nature of agricultural activities in rural areas. In urban areas, seasonal hunger occurs because of the casual type of work. Thus, seasonal hunger exists when people are unable to get work for the whole year.

Need for self-sufficiency in food grains.

  • Our government since Independence realised the need to attain self-sufficiency in food grains because India experienced acute shortage of food grains after partition of the country in 1947.

The need for self-sufficiency arises from the following:

(a) to feed rising population

(b) to fight against droughts, floods, cyclone, etc.

(c) to reduce import of food grains

(d) to control prices of food grains.

  • Food Security System in India. Since the advent of the Green Revolution in the 1960s the country has avoided famine, even during adverse weather conditions.
  • Punjab and Hryan has shown very impressive growth in food production with 7.23 million tonnes in 1964-65 to a record 218 milion tonnes  in 2009-10.
  • India has become self–sufficient in food grains during the last 30 years because of the variety of crops grown all over the country. Also, we have developed a food security system.
  • Still a few states have lagged behind in food production.e.g. Orissa.

Buffer Stock: Buffer stock is the stock of food grains (wheat and rice) procured by the government through the Food Corporation of India (FCI). The FCI purchases wheat and rice for the government from the farmers of surplus states at pre-announced prices. This price is called ‘minimum support price’.

The food is distributed to the poorer strata of society at lower price than market place is known as Issue price.

Public Distribution System

Public Distribution System (PDS)

PDS refers to a system through which the food procured by the FCI is distributed among the poor through government regulated ration shops. Ration shops are also called as fair price shops.The consumers are issued ration cards.

Rationing was introduced in India around 1940 after the Bengal famine.

Kinds of Ration Cards. There are three kinds of ration cards :

(a) Antyodaya cards for the poorest of the poor,

(b) BPL cards for those below poverty line and,

(c) APL cards for those above poverty line.

Three Important Food Intervention Programmes.In the wake of high incidence of poverty levels in mid-1970s, three important food intervention programmes were introduced:

(a) Public Distribution System (in existence earlier)

(b) Integrated Child Development Services (ICDS) in 1975

(c) Food for work in 1977-78.

In 2000, two special schemes were launched viz. Antyodaya Anna Yojana (AAY) and the Annapurna scheme (APS) with special target groups of the poorest of the poor and indigent senior citizens, respectively.

PDS has proved to be the most effective for stabilising prices and making food available to consumers at affordable prices.

But it has faced severe criticism on several grounds.

Granaries are full but hunger prevails. Some of the grains gets rotten or eaten by rats.

Excessive Food Stocks: In July 2002, the stock of wheat and rice with FCI was 63 million tonnes which was much more than the minimum buffer norms of 24.3 million tonnes. The stock reduced thereafter but always remained higher than the buffer norms.

Paradox of Excess Stocks and Starvation: In fact, India has experienced a paradoxical situation in recent years. While the granaries (godowns) of the government are over flowing with excess stocks of food, we also find people without food. The main reason for this unfortunate situation is that many poor families do not have enough money or income to buy food. Sometimes PDS dealers are resorting to malpractice.

In southern and western parts of the country, the cooperatives are playing an important role in food security.

Mother’s dairy, Amul are some of the success stories.

In Maharashtra Academy of Development Science has facilitated a network of NGOs and set up grain banks.

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