The Story of Village Palampur Notes Class 9 Economics CBSE

Notes of the Class 9 Economics chapter ‘The Story of Village Palampur’ are given here. The notes are given proper headings as it helps students to understand the subject matter in a sequential manner. Click here for more such study materials on Class 9 Economics.

Notes: The Story of Village Palampur

Palampur Village

(i) Palampur is a hypothetical or an imaginary village.

(ii) Farming is the main activity in Palampur; other activities are small scale manufacturing, dairy, transport, shop keeping, etc.

(iii) Palampur is well connected with neighbouring villages and towns.

(iv) Raiganj a big village is 3 kms from Palampur.

(v) An all-weather road connects the village to Raiganj and further to the nearest town of Shahpur.

(vi) Many kinds of transport are available.

(vii) This village has about 450 families belonging to different castes. SCs and STs live in one corner of the village.

(viii) Electricity is available.

(ix) It has 2 primary schools and one high school.

(x) It has one primary health centre and one private dispensary.

(xi) The above facts show that Palampur is a fairly well-developed village.

Factors of Production 

What are the factors of production? 

The aim of production is to produce the goods and services that we want. There are four requirements for production of goods and services. These are known as factors of production.


Land and other natural resources such as water, forests and minerals are the first set of requirements. 


  • The second requirement is labour, which refers to the people who do the work. 
  • Some production activities require highly skilled persons to do the tasks while others require workers who can undertake manual labour. 
  • Each employee contributes to the production process in some capacity. 

Physical capital 

Physical capital, or the inputs required at each production stage, is the third requirement. 

a) Tools, machines, and buildings are fixed capital that may be employed in production over a long time. 

b) Raw materials and money in hand: Money is always needed during production to pay bills and wages and to purchase inputs. Working capital refers to raw resources and money in hand. 

Human capital 

  • The fourth requirement is the knowledge and enterprise (initiative) required to combine land, labour and physical capital to produce a product that can be used or sold. This is referred to as human capital. 
  • Every production integrates factors of production such as land, labour physical capital and human capital. 

Farming in Palampur: Land 

What are the modern practices of farming and their shortcomings? 

Land is fixed in size. 

Farming is the primary source of income for many and critical to the well-being of people who work on farms. The land area under cultivation is virtually fixed, which is a major barrier in increasing farm production. 

Is there a way one can grow more from the same land? 

(i) During the rainy season, kharif farmers plant jowar and bajra, followed by potato planting between October and December. 

(ii) During the winter, farmers produce wheat, while a portion of the land is dedicated to sugarcane, which is harvested once a year. 

(iii) Multiple cropping refers to the cultivation of multiple crops on a single plot of land. 

(iv) Modern farming: 

  • The Green Revolution introduced the Indian farmer to the production of wheat and rice using high yielding varieties (HYVs) of seeds in the late 1960s. 
  • It also brought many modern farming practices such as tractor-driven land ploughing, the use of HYV seeds, chemical fertilisers and pesticides, harvesters and threshers, and so on. 
  • A reliable supply of water through tube wells and pumps was also made available to the farmers. 

Will the land sustain modern farming? 

  • Modern farming methods have overused the available natural resources. 
  • The soil has lost its fertility as a result of the growing use of chemical fertilisers. 
  • Natural resources such as soil fertility and groundwater are depleted and restoring them is difficult. 

Farming in Palampur: Labour 

Who are agricultural labourers? 

Land distribution  

  • Not everyone who works in agriculture owns land or owns enough land to cultivate. 
  • Small farmers in India cultivate relatively small farms. 
  • Medium and large farmers, on the other hand, cultivate vast stretches of land. 

Small and large farm labour 

  • After land, the next most important factor of production is labour. 
  • Small farmer families till their own land. In other words, they offer their own labour for farming. 
  • Medium and large farms hire farm labourers to work in their fields. 

Farm labourers 

  • Farm labourers come from landless households or families with small farms. 
  • The farmer for whom they work pays them wages. 
  • Wages can be paid in cash or in kind, such as in the form of grain. 
  • Wages differ greatly by location, crop and agricultural activity. 
  • Farm labourers may be hired daily for a specific farm activity such as harvesting. Or they may be hired for the entire year. 
  • The government enacted the minimum wage law to protect labourers. 

Farming in Palampur: Capital 

Capital in farming 

1. The majority of small farmers need to borrow money to cover their expenses. 

  • They take loans from large farmers, village moneylenders and traders who supply various agricultural materials. 
  • The interest rate on such loans is very high. 
  • They find it very difficult to repay the loan. 

2. Medium and large farmers have earnings from selling their surplus output, which allows them to secure the necessary capital. 

Surplus farm produce  

  • Farmers retain a part of the produce for the family’s consumption and sell the surplus produce. 
  • Small farmers have little surplus produce because their total production is small and from this a substantial share is kept for their own family needs. 
  • Medium and large farms have more surplus, which they sell in the market. 

Sale of surplus farm produce  

Why is capital needed for agricultural activities? 

  • The farmers’ produce is purchased by market traders, who then sell it to retailers in towns and cities. 
  • Big farmers use the earnings from the sale to arrange working capital for the next season or to increase their fixed capital. 
  • The earnings are also used to make loans to small farmers. 
  • Some farmers utilise their earnings to buy cattle or trucks or to start businesses, or to provide capital for non-farm activities. 

Non-Farming Activities 

Which are the non-farming activities in the economy? 


Aside from agriculture, the dairy industry is a major activity employing many people in rural areas. The milk produced is sold in the surrounding market. 

A small-scale manufacturing 

Small-scale manufacturing, which is done at home or in the fields, employs many rural people. Simple manufacturing procedures are used in this sector. 


Shopkeepers and traders purchase various commodities from wholesale markets in the cities and resell them in villages. Rice, wheat, sugar, tea, oil, biscuits, soap, toothpaste, batteries, candles, notebooks, pens, pencils and some types of cloth are sold in the village’s general stores. 

Which are the non-farming activities in the economy? 

Transport: a fast-developing sector 

Rickshaw, tonga, jeep, tractor, truck, traditional bullock cart and bogie are examples of vehicles used in transportation services. They transport people and products from one location to another, and their owners are compensated for their services.


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