Class 9 Economics – Chapter 1: The Story of
Village Palampur
NCERT Notes | Summary | Key Questions & Answers
1. Introduction / Chapter at a Glance:
This chapter introduces the concept of a rural economy through a fictional village
named Palampur. It highlights how different resources are used for production —
particularly land, labour, capital, and human skill. Farming is the main activity, but many villagers are also engaged in dairy, transportation, and small-scale businesses. The chapter emphasizes the
importance of modern farming methods, inequality in land distribution, and the
need for non-farm employment.
2. Important Topics in the Chapter:
Four Factors of Production: Land, Labour, Capital, Human Capital
Multiple Cropping and Modern Farming
Land Ownership and Inequality
Need for Capital and Loans
Non-Farm Activities (Dairy, Transport, Shopkeeping)
Role of Education and Skill
Rural Unemployment and Low Wages
3. Key Terms / Glossary:
Term Meaning
Production The process of creating goods and services
Multiple
Cropping
Growing more than one crop on the same land in a year
Fixed Capital Tools and machines used over many years
Working Capital Raw materials and money in hand used for daily operations
Labour People who do the physical or mental work
HYV Seeds High Yielding Variety seeds that produce more output
Non-Farm
Activity
Economic activity not related to farming (e.g., dairy, transport, shop)
Human Capital Knowledge and skills of people used for production
4. Important 2/3 Marks Questions with Answers:
Q1. What are the four factors of production?
Ans: Land, Labour, Capital, and Human Capital.
Q2. Why are wages for farm labourers in Palampur less than minimum wages?
Ans: Farm labourers are employed casually and often for short periods. Small
farmers, burdened by high-interest loans, pay them very low wages, often below
the government-declared minimum wage.
Q3. What is multiple cropping? Give one example. Ans: Growing more than one crop on the same land in a year is called multiple
cropping. Example: Farmers in Palampur grow wheat, sugarcane, and potatoes on the same
field in different seasons.
Q4. What are non-farming activities in Palampur?
Ans: Dairy, small-scale manufacturing, shopkeeping, and transport services.
Q5. How do medium and large farmers arrange capital for farming?
Ans: They usually use their own savings from previous farming income. In
contrast, small farmers borrow from moneylenders at high interest.
Q6. What is the role of human capital in production?
Ans: Educated and skilled workers increase productivity and improve the quality
of work.
Q7. On what terms did Savita get a loan from Tejpal Singh?
Ans: She borrowed ₹3000 at a high interest rate of 24% for four months and also
had to work in his field at a low wage of ₹35/day. If she got a bank loan at low
interest, her condition would be much better.
Q8. Why do villagers need non-farming jobs?
Ans: Farming alone cannot provide employment throughout the year. Non-farm
activities help reduce poverty and unemployment. 5. Conclusion:
This chapter helps us understand how a village economy functions. Palampur
shows that while farming is important, access to capital, better technology, fair
wages, and alternate employment are crucial for rural development. With the
right planning, even a small village can thrive economically.
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