Class 9 Economics

Chapter 1 : The Story of Village Palampur

The chapter “Farming in Palampur” provides an insightful look into the economic activities and social structure of the fictional village of Palampur.

Introduction to Palampur:

Palampur is a small village in India that serves as a representation of rural economic activities and social dynamics.

The chapter explores the factors of production—land, labor, and capital—and their utilization in farming activities in Palampur.

Factors of Production:

Land: Land is a crucial resource for farming in Palampur. The land area under cultivation is fixed, and there has been no expansion since 1960.

Labor: Labor is abundant in Palampur, with many people working as farm laborers for low wages.

Capital: Capital is scarce, especially for small farmers who often need to borrow money for farming activities.

Social Structure:

The village has a mixed population of upper caste and lower caste families, with disparities in land ownership and living conditions.

Lower caste families often work as landless laborers on farms owned by upper caste families, facing challenges such as low wages and debt.

Utilization of Resources:

Natural resources like land, water, and forests are utilized for farming activities.

Man-made items such as tools, equipment, and infrastructure support agricultural production.

Human effort, including farm labor and skilled labor, plays a vital role in economic activities in the village.

Money is used for capital investment, wages, and transactions within the local economy.

Challenges and Opportunities:

Farm laborers face issues like low wages, irregular employment, debt, and lack of social security.

The chapter highlights the importance of sustainable land management and efficient utilization of resources for economic development.

Conclusion:

The story of Palampur provides a nuanced understanding of rural economic activities, social hierarchies, and the interplay of factors influencing agricultural production and livelihoods in a village setting. Overall, the chapter offers valuable insights into the complexities of rural life, resource utilization, and economic challenges faced by individuals in a typical Indian village like Palampur

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Factors of production refers to the inputs or resources that are used for carrying out any production. The production of a commodity requires the use of a number of varied kinds of inputs such as land, labourers, machinery, raw materials, electricity, water, computers, cellular phones, furniture etc. For the sake of simplicity, all these varied kinds of inputs can be classified into four categories depending upon their properties viz. land, labour, capital, and entrepreneur.

The land factor of production includes the natural resource of physical land along with all its minerals, plants, animals etc. on that piece of land which is used for carrying out production.

The Labour factor of production includes the labourers along with raw materials such as water, electricity, chalks, duster, industrial chemicals etc. It essentially Includes all those inputs that can be easily hired and fired or essentially varied as the quantity of production changes.

The Capital factor of production includes both machinery, tools, equipment such as computers etc and also physical infrastructure such as buildings, factories, dams, bridges, roads, airports, railway stations etc.

The Entrepreneur refers to the CEO or the manager or the owner of the company who is responsible for taking all the major decisions, and also for buying or hiring and combining the other three factors of production.

The village Palampur is a relatively well-developed village with the following features:

  • It is a sufficiently big village with 450 families out of which 80 families belong to the upper castes with huge landholdings
  • It has a relatively good means of transportation through bullock carts, bogeys, motor cycles, jeeps, tractors, trucks
  • The village also has all weather roads (metalled) which makes the village well connected to the neighbouring villages and towns
  • It also has large houses made of bricks with cement plastering
  • The village has good electrical connections in all houses and farms, so much so that electricity is used for irrigation (Tube wells) and for running small businesses
  • It has a good schooling system including two primary schools and a high school
  • It also has a good medical infrastructure with both a government health centre and a private dispensary
  • Although farming is the main activity, yet, some supporting non-farm activities such as small manufacturing, transport service, and shop keeping are also practiced.

Land reclamation is a system whereby hitherto unused or barren land is brought into some productive use as cultivation, road construction, setting up buildings, houses, factories etc. Land reclamation is undertaken since the total amount of land available to any country is fixed. For instance, India’s total land area is 3.28 million square kilometres. Hence if the country wishes to expand its production possibilities, then one way of doing it is to make use of the land which has not been used till now for any purpose. Land reclamation ensures that no land is left idle or goes waste. Presently almost all barren land in India has been brought under cultivation, which is why the total area under cultivation in India is essentially stagnant at around 200 million hectares since 2010-11. There has also been no expansion in the land area under cultivation since 1960.

Multiple cropping refers to a system wherein two to three crops are taken from the same piece of land during a year. Such a practice ensures continuous use of land and that no land is left idle or wasted. This helps to increase the production of agriculture output by multiple times this is the foremost method of increasing the total agriculture output and hence marketable surplus in an economy. The system of multiple cropping is different from the single cropping system wherein in the entire year only one crop is taken and for the rest of the year land is left fallow to regain its fertility naturally.

Marketable surplus refers to the total amount of output which is left for selling in the market after the needs of the producer are met. In the case of farmers, marketable surplus refers to the amount of output that the farmer is able to sell in the market after meeting his own requirement for food. For instance if a farmer grows 1000 tonnes of wheat in a season from his land, out of which he keeps 200 tonnes for his own consumption throughout the year and for sharing with his friends and family then he is left over with 800 tonnes for selling in the market. These 800 tonnes of wheat output which the farmer sells is known as marketable surplus.

It is important to increase marketable surplus, as

  • selling of the marketable surplus enables the farmer or any producer to recover his cost of production, generate profits, and fund the purchase of inputs for the growing of crops in the next season.
  • It generates incomes for the farmers with which they are able to fund their other household expenditures
  • a high marketable surplus is essential for feeding the entire population of the country,
  • and for earning essential foreign exchange through exports.

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a. Location:                        Near Raiganj and Shahpur b. Total Area of Village:    226 hectares c. Land Use (in hectares): 
Cultivated Land Land not available for cultivation
 Irrigated Unirrigated  26 hectares
200 hectares 0 hectares
  d. Facilities 
Educational two primary schools and a high school
Medical a government health centre and a private dispensary Market Raiganj and Shahpur Electricity supply
Communication (transportation) bullock carts, bogeys, motor cycles, jeeps, tractors, trucks 
Nearest town Shahpur  

Yes, modern farming methods do require the use of more inputs which are manufactured in industry. The modern farming methods are based on the usage of such inputs as machines such as tractors, pump sets, harvesters, threshers, tubewells and also chemical fertilisers, pesticides etc. which are manufactured in industries. This has led to a significant rise in the cost of cultivation over the years.

The spread of electricity has tremendously helped the farmers in village Palampur, as electricity has enabled the farmers to operate mechanised inputs such as pump sets, harvesters, threshers tubewells etc. This has enabled them to adopt multiple cropping and thus reap more than three crops in a year. Hence the farmers of village Palampur are able to generate huge output and sell their surplus produce in the market and earn profits.

Yes, it is utterly important to increase the area under irrigation. Irrigation refers to the provision of regular and controlled supply of water to the plants for the purpose of cultivation. This is done through man-made sources of water such as tube wells, pumpsets, canals etc. It is important to increase the area under irrigation because plants need a regular supply of water to grow healthily and produce sufficient grain.  Man made sources of irrigation are able to provide regular and controlled supply of water needed by the plants.

By contrast, natural sources of water such as through rain is uncertain and uncontrolled, thus severely restricting and stunting plant growth. As of 2022-23, only half of the total gross sown area has access to irrigation. The remaining half is still dependent on rains, making agricultural output uncertain.

Number Of Families      Landholding Size

150                             0 hectares (landless)

240                             Less than 2 hectares (small & marginal farmers)

60                               More than 2 hectares (medium & Large Farmers)

The wages for farm labourers in Palampur are less than minimum wages because there is a greater supply of landless agricultural workers looking for work and very few employment opportunities. The farm labourers are also usually illiterate and unskilled and hence cannot find jobs in the high value non-farm sector which usually requires skilled labour. They are therefore totally dependent on the big farmers for employment on land thereby significantly reducing their bargaining power. Hence, they are not able to demand the minimum wages as permitted by law.

The different ways of growing more crops from the same piece of land includes adopting multiple cropping and using high yielding variety technology, also known as the new agricultural technology. For instance, if in a village all the land has already been brought under cultivation and no land is left idle, then there is no possibility of increasing the area under cultivation. To further increase the total amount of agricultural produce from the same land then, one crop after the other, season after season should be taken and the land should not be left fellow. Besides use should be made of the hybrid technology which involves the usage of HYV seeds chemical fertilisers chemical pesticides and mechanised inputs

One hectare plot of land is too small to generate any reasonable amount of agricultural output. The produce from such a small piece of land is so small that it does not generate any marketable surplus. The farmer is thence not able to sell any output in the market to generate revenue for meeting his family expense. He is then forced to work on the plots of large and medium farmers or as casual daily page labourers on part time basis to supplement his income. Hence, the farmer works both as a farmer on his own land and as an agricultural labourer on a part time basis on some other farmers’ land.

The medium and large farmers usually obtain institutional sources of credit because they are able to fulfil and furnish all the necessary requirements, such as a collateral, identity proof, residence proof etc. On the other hand, the small farmers are not able to fulfil all the requirements needed for institutional credit. Hence, they are dependent on the Non-Institutional sources of credit, which are highly exploitative and have very harsh repayment conditions such as very high rate of interest and very small term to maturity. It is therefore ironical that the large farmers with greater affordability are able to access cheap credit, while the poor farmers with limited repaying capacity are forced to rely on usurious unorganised credit.

Savita, who is a small farmer got a loan at At very horse conditions from the large farmer Tejpal she was forced to pay a 24% rate of interest for four months. This is much higher than the institutional interest rate of five to 6% per annum. Besides she also had to work on Tejpal’s land as a farm labourer at the rate of Rs100 per day, which is much lower than the government specified minimum wage of 150 to 200 rupees per day.

To start more non-farm production activities in the villages, It is foremost essential to provide adequate education, training and skills to the landless agricultural labourers and small and marginal farmers. Likewise they shall be able get employment and also start their own ventures in the higher value non-farm sectors such as sericulture, bee keeping, poultry, dairy, handicrafts etc. Also, the government needs to encourage more and more entrepreneurs to start their small-scale industries in the villages, so as to generate employment in the rural areas.

Chapter 2: People As Resource

The chapter ‘People as Resource’ emphasizes the transformation of population into human capital through investments in education, training, and healthcare. It discusses how human capital contributes to economic development by enhancing productivity and innovation. The chapter also explores the concept of economic activities across primary, secondary, and tertiary sectors, highlighting the role of each sector in generating employment opportunities. Additionally, it addresses issues related to unemployment, including disguised and educated unemployment, and suggests measures to mitigate these challenges. The chapter concludes with a narrative illustrating how a village transformed from having limited job opportunities to creating numerous employment prospects. Overall, the chapter underscores the significance of human capital in driving economic growth and development.

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Human capital formation refers to the Investments made in human beings through education, skill development, training, better nutrition, health and medical facilities, hygiene and sanitation standards etc. All of these investments get stored in the human being and improves his productive capabilities which then enables him to earn higher incomes for himself, his family and his nation and thus contribute a greater amount to the production of national output. Human beings then become capital and yield high positive returns for themselves and the society.

Japan invested very heavily in human capital formation by providing high quality education and health facilities to its population after the Second World War. It was on the basis of this huge human capital base that Japan became the fastest growing economy and the second largest economy in the world in the Post World War 2 era. It achieved this feat despite being bombarded with atomic bombs during the Second World War, which led to a complete destruction of its two major cities. Japan has a very small land area and is usually ravaged by natural calamities and disasters such as earthquakes and tsunamis. The rise of Japan is therefore mostly accorded to its very high human capital base.

Market Activities are those activities that involve selling and buying of commodities (goods and services) in the market irrespective of their legality. For instance, buying and selling of groceries, clothes, spurious drugs, liquor (illegal) etc. falls in the category of market activities. By contrast, Non-Market activities are those that do not involve any buying and selling of goods and services through the market. These include the work of an NGO, religious organisations, care and affection of a mother, the work of a housewife, personal grooming, small daily production for personal use (cooking your own meal etc.)

Economic activities can be both market and non-market activities. For instance, any new good and service produced in an economy (such as a car) and which is also sold in the market also becomes a market activity. However, the work of an NGO, government organisation, defence, police force is an economic activity as a service is being generated for the use by the public but there is not selling of these services in the market. Hence these are Non-Market activities despite being economics. Identically, the sale of a spurious liquor and banned drugs is a market activity, but not an economic activity as these goods are banned by law.

Gross Enrolment Ratio (GER) refers to the total number of people enrolled in a particular class as a percentage of the total population in the relevant age group. For instance, gross enrolment ratio of primary education is equal to the total number of people enrolled in classes one to five as a percentage of population in the 6 to 14 years of age. GER can also be more than 100% as the number of people enrolled can be both underaged and overaged. Hence in the above example the GER in primary education can include repeaters, kids less than 6 years and more than 14 years of age. 

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The term ‘people as a resource’ refers to viewing the population not as a burden or liability but as a valuable asset for the economy. It emphasizes the idea that individuals possess skills, knowledge, and abilities that can contribute to the overall productivity and development of a nation. By investing in education, training, and healthcare, the population can be transformed into human capital, which enhances the country’s economic growth and prosperity. This perspective highlights the importance of recognizing and nurturing the potential of individuals to drive innovation, productivity, and progress in society.

Human resource differs from other resources like land and physical capital in several key ways:

  1. Living : Human resources is a living factor of production while the others like land and physical capital are non living factors of production.
  2. Intangible Nature: Human resource includes skills, knowledge, and abilities of individuals, which is intangible and cannot be physically touched or measured in the same way as land or physical capital.

  3. Potential for Growth: Unlike land and physical capital, human resource has the potential for continuous growth in its numbers through reproduction, which is not possible in the case of either land or physical capital. 

  4. Adaptability: Human resource is more adaptable and versatile compared to land and physical capital. People can learn new skills, switch professions, and adapt to changing economic conditions, making them a dynamic resource.

  5. Innovation and Creativity: Human resource is the source of innovation, creativity, and problem-solving abilities. Unlike land and physical capital, which have fixed uses, human resource can generate new ideas and solutions to drive progress and development.

  6. Social and Emotional Intelligence: Human resource possesses social and emotional intelligence, enabling collaboration, communication, and teamwork, which are essential for organizational success and societal well-being.

Overall, human resource stands out from other resources due to its dynamic, adaptable, and innovative nature, making it a crucial driver of economic growth and development.

Education plays a crucial role in human capital formation by enhancing the skills, knowledge, and capabilities of individuals, thereby increasing their productivity and contribution to the economy. Some key aspects of the role of education in human capital formation are:

  1. Skill Development: Education provides individuals with the necessary skills and expertise to perform various tasks effectively. It equips them with technical, analytical, and problem-solving abilities that are essential for success in the workforce.

  2. Knowledge Acquisition: Education facilitates the acquisition of knowledge in diverse fields, ranging from science and technology to arts and humanities. This knowledge base enables individuals to adapt to changing job requirements and contribute meaningfully to their professions.

  3. Critical Thinking: Education fosters critical thinking, creativity, and innovation among individuals. It encourages them to question, analyze, and evaluate information, leading to the generation of new ideas and solutions.

  4. Adaptability: Through education, individuals develop adaptability and flexibility to navigate complex and evolving work environments. They learn how to learn, enabling them to update their skills and knowledge continuously.

  5. Economic Growth: A well-educated workforce is essential for driving economic growth and development. Education enhances productivity, efficiency, and competitiveness, leading to higher levels of innovation and prosperity in society.

  6. Social Development: Education not only contributes to economic growth but also promotes social development by fostering values such as tolerance, diversity, and social cohesion. It empowers individuals to participate actively in civic life and contribute to the betterment of society.

In summary, education plays a pivotal role in human capital formation by equipping individuals with the skills, knowledge, and attributes necessary to thrive in the modern economy and contribute positively to the overall development of society.

Health plays a significant role in human capital formation by influencing the productivity, well-being, and overall potential of individuals. Some key aspects of the role of health in human capital formation are:

  1. Productivity: Good health is essential for maintaining high levels of productivity and efficiency in the workforce. Healthy individuals are more likely to perform well, have higher energy levels, and exhibit better cognitive function, leading to increased output and performance.

  2. Reduced Absenteeism: A healthy workforce is less prone to illnesses and absenteeism, resulting in higher attendance rates and continuity in work. This leads to improved productivity and organizational effectiveness.

  3. Longevity and Quality of Life: Investing in healthcare and promoting good health practices can enhance the longevity and quality of life of individuals. Healthy individuals are more likely to remain active in the workforce for longer periods, contributing to human capital accumulation over time.

  4. Skill Development: Health influences the ability of individuals to acquire and develop skills. Good health enables individuals to engage in learning activities, training programs, and skill-building exercises, leading to enhanced human capital formation.

  5. Economic Growth: A healthy population is crucial for sustainable economic growth. By investing in healthcare infrastructure, preventive measures, and health promotion initiatives, countries can ensure a healthy workforce that drives economic development and prosperity.

  6. Social Well-being: Health contributes to the overall well-being and happiness of individuals, fostering a positive work environment and societal cohesion. Healthy individuals are more likely to engage in social activities, contribute to community development, and lead fulfilling lives.

In conclusion, health plays a vital role in human capital formation by influencing the productivity, longevity, and overall well-being of individuals. Investing in healthcare and promoting healthy lifestyles are essential components of building a strong human capital base that drives economic growth and societal progress.

Health plays a crucial role in an individual’s working life in several ways:

  1. Productivity: Good health is directly linked to higher productivity in the workplace. Healthy individuals are more energetic, focused, and efficient, leading to better performance and output in their jobs.

  2. Absenteeism: Maintaining good health reduces the likelihood of absenteeism due to illness. Healthy individuals are less likely to miss work days, ensuring continuity in their tasks and responsibilities.

  3. Job Satisfaction: Good health contributes to overall job satisfaction and well-being. When individuals are healthy, they are more likely to enjoy their work, feel motivated, and have a positive attitude towards their job.

  4. Career Advancement: Health can impact an individual’s ability to advance in their career. Healthy individuals are better positioned to take on new challenges, pursue opportunities for growth, and excel in their professional development.

  5. Work-Life Balance: Maintaining good health is essential for achieving a healthy work-life balance. Individuals with good health are better equipped to manage work-related stress, maintain personal relationships, and engage in leisure activities outside of work.

  6. Longevity in the Workforce: Good health can contribute to longevity in the workforce. Healthy individuals are more likely to continue working into older age, contributing their skills and experience to the workforce for a longer period.

  7. Overall Well-being: Health is a fundamental aspect of overall well-being. Individuals with good health are more likely to experience higher levels of happiness, satisfaction, and fulfillment in their working life.

In summary, health plays a vital role in an individual’s working life by influencing productivity, job satisfaction, career advancement, work-life balance, longevity in the workforce, and overall well-being. Prioritizing health and wellness is essential for individuals to thrive in their professional endeavors and lead fulfilling working lives.

The primary, secondary, and tertiary sectors represent different types of economic activities based on the type of input and the technology used in the production process. The various activities undertaken in each sector are:

  1. Primary Sector:

    • Agriculture: Cultivation of crops, farming of livestock, and production of agricultural commodities.
    • Forestry: Logging, timber production, and management of forest resources.
    • Animal Husbandry: Rearing and breeding of animals for meat, dairy, wool, and other products.
    • Fishing: Capture of fish and other aquatic organisms from natural water bodies.
  2. Secondary Sector:

    • Manufacturing: Processing of raw materials into finished goods through various industrial processes.
    • Construction: Building and infrastructure development using materials like cement, steel, and wood.
    • Utilities: Production and distribution of electricity, water, and gas for domestic and industrial use.
    • Textiles: Manufacturing of fabrics, clothing, and textile products.
    • Automobile Industry: Production of vehicles, parts, and accessories for transportation.
    • Chemical Industry: Manufacturing of chemicals, pharmaceuticals, and chemical products.
  3. Tertiary Sector:

    • Trade: Buying and selling of goods and services through retail and wholesale channels.
    • Transportation: Movement of people and goods via road, rail, air, and sea transport services.
    • Communication: Provision of telecommunication, internet, and media services for information exchange.
    • Banking and Finance: Financial services including banking, insurance, investment, and wealth management.
    • Education: Provision of formal and informal education services at various levels.
    • Healthcare: Delivery of medical services, healthcare facilities, and wellness programs for public health.

These sectors represent the diverse range of economic activities that contribute to the production, distribution, and consumption of goods and services in an economy. Each sector plays a unique role in the overall economic development and growth of a country.

Economic activities are focused on generating income and contributing to economic growth, while non-economic activities are driven by social, personal, or cultural motives that may or may not not be directly linked to monetary gain or market transactions. Both types of activities play important roles in society, with economic activities driving economic prosperity and non-economic activities enriching the social fabric and well-being of individuals. Illegal non-economic activities can also lead to economic deceleration. 

Examples of Economic Activities:

  • Production of goods and services for sale in the market.
  • Employment in sectors such as manufacturing, agriculture, finance, and healthcare.
  • Investment in businesses, stocks, and real estate for financial returns.

Examples of Non-Economic Activities:

  • Volunteer work and community service.
  • Household chores and caregiving within families.
  • Personal hobbies, recreational activities, and artistic pursuits.
  • Illegal activities

Women are often employed in low-paying work due to various social, economic, and cultural factors that contribute to gender disparities in the labor market. Here are some reasons why women may be more likely to be employed in low-paying jobs:

  1. Educational Attainment: In many societies, women have historically had limited access to education and vocational training, leading to lower skill levels and qualifications that may result in lower-paying job options.

  2. Gender Discrimination: Women may face discrimination in hiring, promotion, and pay practices, leading to limited access to higher-paying positions and opportunities for career advancement.
  3. Occupational Segregation: Women are often concentrated in certain industries and occupations that are traditionally undervalued and offer lower wages, such as caregiving, domestic work, and retail.

  4. Unpaid Care Work: Women are disproportionately responsible for unpaid care work, such as childcare, eldercare, and household chores, which can limit their ability to pursue higher-paying employment opportunities.

  5. Workforce Flexibility: Women may prioritize jobs that offer flexibility in terms of hours, location, and family-friendly policies, which can lead to accepting lower-paying positions in exchange for work-life balance.
  6. Lack of Representation: Women are often underrepresented in leadership roles and decision-making positions, which can perpetuate wage gaps and limit their access to higher-paying jobs within organizations.

Addressing the factors that contribute to women being employed in low-paying work requires comprehensive efforts to promote gender equality, eliminate discrimination, provide equal opportunities for education and training, ensure fair wages, and create supportive work environments that empower women to access higher-paying and fulfilling employment opportunities.

Unemployment refers to a situation where individuals who are willing and able to work are unable to find suitable employment opportunities. It is a key economic indicator that reflects the state of the labor market and the availability of jobs for the workforce.

Disguised unemployment and seasonal unemployment are two distinct types of unemployment that arise from different circumstances in the labor market.

Disguised Unemployment:

Disguised unemployment refers to a situation where individuals are employed for a lesser duration than the stipulated minimum of 8 hours per day. Such people appear to be employed but their contribution to actual output is minimal or redundant, so that even if they are removed from work and their work is redistributed among the remaining, there shall be no decline in the total output produced.

Disguised unemployment often occurs in India in sectors like agriculture and low value services where more people are engaged in a task than necessary for efficient production. For instance in India, nearly 50% of nations’ labour force is engaged in agriculture which collectively produces only 15% of the nation’s output. This indicates the gross inefficiencies and low work productivity in the agriculture sector.    

Seasonal Unemployment:

Seasonal unemployment occurs when individuals are unable to find work during certain times of the year due to fluctuations in demand related to seasonal factors. It is often linked to industries or occupations that experience variations in demand based on seasonal changes, such as agriculture, tourism, and retail. Seasonal unemployment is temporary in nature and typically occurs during specific periods when demand for labor is low. Workers affected by seasonal unemployment may experience periods of joblessness followed by reemployment when demand picks up. Example: Workers in the tourism industry, agriculture sector, ice cream manufacturing etc.

Educated unemployment is a peculiar problem in India due to several factors that contribute to the mismatch between the skills possessed by educated individuals and the job opportunities available in the labor market. Here are some reasons why educated unemployment is a significant issue in India:

  1. Quality of Education: Despite the increase in the number of educational institutions and graduates, there are concerns about the quality of education and the relevance of skills acquired by students. Many graduates lack practical skills, industry-specific knowledge, and job-ready competencies, making them ill-prepared for the demands of the labor market.
  2. Sectoral Mismatch: There is often a mismatch between the fields of study chosen by students and the sectors that are experiencing growth and demand for skilled workers. Certain sectors, such as information technology, healthcare, and services, may offer more job opportunities, while traditional sectors like agriculture and manufacturing face limited employment prospects for educated individuals.

  3. Lack of Vocational Training: The emphasis on academic education over vocational training and skill development has resulted in a shortage of workers with technical and practical skills that are in demand by industries. This mismatch between educational qualifications and job requirements contributes to the problem of educated unemployment.

  4. Population Growth: India has one of the highest growth rate of population. At this rate, it is next to impossible to generate sufficient jobs to provide employment opportunity to all the new entrants into labor force.  

Addressing the issue of educated unemployment in India requires a multi-faceted approach that focuses on improving the quality of education, enhancing vocational training programs, promoting entrepreneurship, fostering industry-academia collaborations, and creating a conducive environment for job creation and economic growth. By addressing these underlying factors, India can work towards reducing the prevalence of educated unemployment and better aligning the skills of its workforce with the needs of the labor market.

India can build maximum employment opportunities in several key sectors, and especially the Tertiary Sector that is poised for further high growth and expansion. Some of the fields where India can create significant employment opportunities include:

  1. Information Technology (IT) and Software Services: 

  2. Healthcare and Pharmaceuticals:

  3. E-commerce and Retail: 

  4. Renewable Energy and Sustainability:

  5. Manufacturing and Skill-based Industries: 

  6. Tourism and Hospitality: 

  7. Agriculture and Agribusiness:

  8. Education and Skill Development: 

By focusing on these key sectors and implementing policies that promote innovation, entrepreneurship, skill development, and job creation, India can harness its demographic dividend and build a diverse and resilient economy that offers maximum employment opportunities for its growing workforce.

To address the issue of educated unemployment in India, several measures can be implemented in the education system to better align the skills of graduates with the demands of the job market. Here are some suggestions to mitigate the problem of educated unemployment:

  1. Skill-based Education: Introduce skill-based education and vocational training programs in schools and higher education institutions to equip students with practical skills and industry-relevant competencies. Collaborate with industries to design curriculum that meets the current and future needs of the job market.

  2. Internship and Apprenticeship Programs: Encourage students to participate in internships, apprenticeships, and on-the-job training programs to gain hands-on experience and exposure to real-world work environments. Establish partnerships with companies to provide internship opportunities for students.

  3. Career Counseling and Guidance: Offer career counseling services to help students make informed decisions about their educational and career paths. Provide guidance on emerging job trends, skill requirements, and employment opportunities in different sectors.

  4. Entrepreneurship Education: Promote entrepreneurship education and startup incubation programs to encourage students to explore entrepreneurial ventures and create their own job opportunities. Support aspiring entrepreneurs with mentorship, funding, and resources to launch and grow their businesses.

  5. Soft Skills Development: Emphasize the development of soft skills such as communication, teamwork, problem-solving, and leadership skills alongside technical knowledge. Conduct workshops, seminars, and training sessions to enhance students’ interpersonal skills and employability.
  6. Continuing Education and Lifelong Learning: Encourage lifelong learning and professional development among graduates to stay updated with evolving technologies and industry trends. Offer online courses, certification programs, and upskilling opportunities to enhance the employability of working professionals.

  7. Industry-Relevant Research: Encourage research and innovation in collaboration with industries to address industry challenges, develop new technologies, and create job opportunities in emerging sectors. Support research projects that have practical applications and potential for commercialization.

By implementing these measures in the education system, India can effectively address the issue of educated unemployment and equip graduates with the skills, knowledge, and mindset needed to succeed in the dynamic and competitive job market. Collaboration between educational institutions, industries, government agencies, and other stakeholders is essential to create a holistic ecosystem that nurtures talent, fosters innovation, and promotes sustainable employment opportunities for the educated workforce.

 

Each type of capital—land, labor, physical capital, and human capital—plays a crucial role in the economic development and growth of a country. The significance of each type of capital can vary based on the context and the stage of development. However, human capital is often considered the most valuable and sustainable form of capital for several reasons:

  1. Human Capital: Human capital refers to the knowledge, skills, abilities, and experience possessed by individuals that contribute to their productivity and economic value. Investing in human capital through education, training, healthcare, and skill development enhances the capabilities and potential of individuals to contribute to economic growth and innovation. Human capital is versatile and adaptable, enabling individuals to learn new skills, adapt to changing technologies, and drive progress in various sectors of the economy.

  2. Reasons for Human Capital as the Best Capital:

    • Long-term Sustainability: Unlike other forms of capital that can depreciate or deplete over time, human capital has the potential for continuous growth and improvement. Education and skills acquired by individuals can be leveraged throughout their lifetime, leading to long-term benefits for both individuals and society.

    • Innovation and Creativity: Human capital fosters innovation, creativity, and entrepreneurship, driving technological advancements, new business ideas, and economic diversification. Skilled and knowledgeable individuals can generate new ideas, solve complex problems, and contribute to the development of cutting-edge technologies and industries.

    • Adaptability and Resilience: Human capital is adaptable and resilient in the face of changing economic conditions, market demands, and technological disruptions. Individuals with strong human capital can transition between industries, acquire new skills, and navigate challenges more effectively, enhancing their employability and economic mobility.

    • Social Development: Investing in human capital leads to social development, improved quality of life, and reduced inequalities. Education, healthcare, and skill development initiatives empower individuals to lead healthier, more fulfilling lives, contribute to their communities, and participate actively in the socio-economic progress of the country.

    • Multiplier Effect: Human capital has a multiplier effect on the economy, as educated and skilled individuals tend to earn higher incomes, contribute more to tax revenues, stimulate consumer spending, and drive overall economic growth. The positive impact of human capital investment extends beyond individual benefits to create a ripple effect across the entire economy.

While land, labor, and physical capital are essential factors of production, human capital stands out as the best capital due to its transformative potential, sustainability, adaptability, and capacity to drive innovation, productivity, and inclusive growth in the knowledge-based economy of the 21st century. By prioritizing investments in human capital development, countries can build a skilled workforce, foster a culture of lifelong learning, and position themselves for long-term prosperity and competitiveness in the global marketplace.

 

Chapter 3 : Poverty As A Challenge

The chapter on “Poverty as a Challenge” delves into the complex issue of poverty in India, highlighting its multi-dimensional nature and the various factors contributing to it. The chapter begins by discussing poverty trends in India and the world, emphasizing the concept of the poverty line as a measure of poverty. It explores the causes of poverty, vulnerable social groups, and the challenges faced in poverty reduction efforts. The chapter also sheds light on the anti-poverty measures taken by the Indian government, focusing on the promotion of economic growth and targeted anti-poverty programs. It emphasizes the importance of economic growth in poverty reduction and highlights the significant role it plays in providing opportunities and resources for human development. Furthermore, the chapter expands on the concept of poverty by introducing the idea of human poverty and social exclusion, indicating a broader understanding of poverty beyond just income levels. It encourages a more comprehensive approach to addressing poverty by considering various dimensions and factors that contribute to the deprivation experienced by individuals. In conclusion, the chapter underscores the evolving nature of poverty analysis and the need to adopt a holistic approach to poverty alleviation that addresses not only economic aspects but also social, cultural, and human development dimensions.

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The poverty line in India is measured on the basis of the expenditure method suggested by the Tendulkar Committee and adopted by the Planning Commission. This involves finding the expenditure needed to buy bare minimum amount of food, clothing, fuel, footwear, educational and medical facilities, utensils furniture etc. For food, a calorie requirement of 2400 calorie per person per day in the rural areas and 2100 calories per person per day in the urban areas has been fixed. These calorie requirements can be met by items such as pulses, cereals, vegetables, milk, oil, sugar etc. The quantities are then multiplied by their prices to arrive at the minimum expenditure needed. On this basis the poverty line has been fixed at ₹816 per month per person in rural areas and ₹1000 per month per person in the urban areas. 

The present methodology of poverty estimation in India has been questioned from time to time on several grounds.

  • The first and foremost objection to the current estimation of poverty line is its extremely low level of Rs. 816 per person per month in the rural areas and ₹1000 per person per month in the urban area. At such low levels at which it is very difficult for anyone to lead a dignified life.
  • Secondly, the poverty line has not been updated and re-estimated since 2011. As a result, many new poor are deprived of government facility of subsidised food while some earlier poor who may now have come out of the poverty, are continuing to enjoy the government facility of free and subsidised rations.
  • Third the poverty line estimates do not distinguish between the people just below the poverty line and those way below the poverty line and just above the poverty line. That is, it does not distinguish between the poor, and very poor.
  • Fourth, poverty line estimates are based on a survey of only 1.5 lakh households or 5-6 lakh individuals out of a population of 130 crores.
  • Fifth, they are based on survey recall methods which tend to under report the actual magnitude of income and expenditure and use too complicated methods to be understood by common man.

Therefore, there is a need for continuous evaluation and refinement of the methodology to ensure that it accurately reflects the living conditions and challenges faced by the poor in India.

The poverty estimates available indicate the following trends since 1973:

  • The Percentage of population below the poverty line at the All-India level has more than halved from nearly 55% in 1973-74 to 22% in 2011-12.
  • The Percentage of population below the poverty line at the rural level has nearly halved from nearly 56% in 1973-74 to 26% in 2011-12.
  • The Percentage of population below the poverty line at the urban level has reduced to almost one third from 49% in 1973-74 to 14% in 2011-12.
  • Despite falling poverty ratios, the number of poor below the poverty line actually rose at the All-India level, rural level and the urban level till 2004-05 and fell only thereafter.
  • Poverty has fallen more steeply in urban areas than in rural areas. Hence the rural-urban poverty gap has increased in percentage terms.
  • Even after almost 65 years of independence till 2011, one fifth of the population continues to remain poor.

But according to some recent estimates and the latest released fee figures of monthly per capita expenditure it is now estimated that India has been able to wipe out extreme poverty. It is also projected that the percentage of people below the poverty line may fall below 20% in the coming few years.

The major reasons responsible for poverty in India include the following:

  • The first and the foremost reason is the British rule that lasted for 200 years. The British Rule was responsible for massive de-industrialisation (destruction of native industries & handicrafts), no development of new modern industries as a part of industrial revolution that took place the world over at the same time, and huge Drain of Wealth. As a result, the Indian economy shrunk from 25% of world GDP in 1700 to barely 2% by the time of Independence in 1947. It is during the British rule that poverty appeared on in India for the first time, as there is no previous record of poverty in India.
  • The second major reason is the population explosion that took place immediately after independence. India’s population grew at one of the world’s highest rate of 2.2% per year. At this rate, India’s population doubled every 35 years
  • The third major reason was the low growth rate of the economy for almost 40-45 years after independence, during which India’s growth rate was stuck at nearly for 4%. Such low growth rate of income combined with a high growth rate of population kept the earnings of the people at extremely low and forced people to enter into low value services.
  • Other reasons include highly unequal distribution of income earning assets such as land (failure of land reforms), capital, cattle etc; high indebtedness to fulfil family & social responsibilities causing debt trap & bonded labour etc.

The socioeconomic groups which are the most vulnerable to poverty in India include the following:

  • Lower castes including dalits, Scheduled castes and scheduled tribes
  • Rural landless agricultural labourers
  • Urban casual labourers and daily wagers
  • Trans genders; Physically handicapped
  • Women, girl child, widows; Elders

Hence, while the average poverty ratios for all age groups below poverty line in India is 22%, it is 29% for Scheduled Castes; 43% for people belonging to Scheduled Tribes, and 34% for casual workers in urban areas. The incidence is even higher in case of double disadvantaged group of a landless casual wage labourer plus belonging to Scheduled Castes and Scheduled Tribes. Similarly, trans genders, the Physically handicapped, women, girl child, widows and elders face disadvantage and discrimination in job opportunities and distribution of wealth, leading to their poverty.

Not all states in India have the same poverty ratios. While some states have extremely chronically higher rates of population, the others have low poverty ratios. The interstate disparities in poverty in India are as follows:

  • Poverty is below the national average of 22% in the states of Kerala, Himachal Pradesh, Punjab, Andhra Pradesh, Delhi, Jammu and Kashmir, Tamil Nadu, Haryana, Uttarakhand, Rajasthan, Gujarat, Maharashtra, West Bengal, Karnataka.
  • Poverty is above national average in the states of Uttar Pradesh, Madhya Pradesh, Assam, Orissa, Bihar, Jharkhand, Chhattisgarh
  • Chhattisgarh has the highest poverty (~ 40%), while Kerala has the lowest (~7%) where the poverty is less than one fourth of than in Chhattisgarh.
  • There has been a significant decline in poverty in the southern and western states of Kerala, Maharashtra, Andhra Pradesh, Tamil Nadu, and Gujarat owing to their emphasis on infrastructure and public distribution of food grains. Kerala reduced poverty thorugh human resource development.
  • The Northern states of Punjab, Haryana and Rajasthan have succeeded in reducing poverty due to the adoption of the HYV technology which brough Green Revolution and immense agricultural growth rates. In West Bengal, land reform measures have helped in reducing poverty.

The global poverty trends are as follows:

  • Substantial reduction in global poverty. Fallen from 35% in 1990 to 10.68% 2013.
  • Number of poor in China has come down from 85% in 1981 to 14.7% in 2008 and to 1.9% in 2013.
  • Poverty has also reduced in South East Asia due to massive investments in human capital development and rapid growth process.
  • In sub-Saharan Africa, poverty declined from 16% in 1990 to 5.4% in 2013
  • In Latin America the ratio of poverty has declined from 11% in 1981 to 6.4% in 2008
  • Re-emerged in some of the former socialist countries like Russia where officially it was non-existent earlier.

 

Chapter 4: Food Security in India

The chapter on food security in India highlights the importance of ensuring access to nutritious food for all citizens to achieve food security. It discusses the various factors contributing to food insecurity in the country, including poverty, agricultural challenges, natural disasters, and socio-economic disparities. The chapter identifies vulnerable groups such as landless agricultural laborers, small farmers, urban poor, marginalized communities, women, children, and elderly populations who are at higher risk of food insecurity. Specifically, the chapter mentions that economically backward states like Uttar Pradesh, Bihar, Jharkhand, Odisha, West Bengal, Chhattisgarh, Madhya Pradesh, and Maharashtra have higher incidences of food insecurity due to poverty, limited access to resources, and susceptibility to natural disasters. These states face challenges in ensuring food availability and access for their populations, especially in marginalized and remote areas. The chapter also discusses the role of the Indian government in addressing food security through initiatives such as the public distribution system, buffer stock management, and poverty alleviation programs like Integrated Child Development Services, Food-for-Work, Mid-Day Meals, and Antyodaya Anna Yojana. Additionally, cooperatives and NGOs play a crucial role in supporting food security efforts in the country. Overall, the chapter emphasizes the need for comprehensive strategies to address food insecurity in India, focusing on improving agricultural productivity, enhancing livelihood opportunities, strengthening social safety nets, and promoting inclusive development policies. By targeting vulnerable populations and regions, India can work towards achieving food security for all its citizens and reducing the prevalence of hunger and malnutrition in the country.

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Food security refers to the condition in which all individuals in an economy have physical, social, and economic access to sufficient, safe, and nutritious food that meets their dietary needs and food preferences for an active and healthy life. It encompasses three key dimensions:

  • Availability: Sufficient food is produced, imported, or stored within the country to meet the population’s needs.
  • Accessibility: Food is physically and economically accessible to all individuals, meaning they have the resources to obtain food.
  • Affordability: Individuals have the financial means to purchase an adequate quantity of safe and nutritious food.

Food security in an economy is essential for ensuring the well-being and health of individuals and communities, as it plays a crucial role in reducing hunger, malnutrition, and food-related health issues. It is a fundamental human right and a key component of sustainable development and poverty alleviation efforts worldwide.

The concept of food security has evolved over the years to encompass broader dimensions beyond just the availability of food. Here are some key changes in the understanding of food security:

  • Availability of Adequate Supply: In the 1970s, food security was primarily defined as the “availability at all times of an adequate supply of basic foodstuffs.” This definition focused on ensuring a consistent supply (production) of food to meet the population’s needs.
  • Comprehensive Definition: The 1995 World Food Summit expanded the definition of food security to include physical and economic access to sufficient, safe, and nutritious food to meet dietary needs and preferences for an active and healthy life. This comprehensive definition highlights the importance of not only having enough food but also ensuring its safety, quality, and nutritional value.
  • Amartya Sen’s Contribution: Economist Amartya Sen emphasised that even if there is sufficient production of food in a country, the food may not be available or accessible to the poor as it may be hoarded or exported or diverted for other uses. He therefore introduced the concept of “access” to food through various means, including production, exchange in the market, and social support.
  • Poverty Eradication: The understanding of food security now recognizes that poverty eradication is essential to improving access to food. Addressing poverty and inequality is crucial for enhancing food security and ensuring that all individuals have the means to obtain nutritious food.

Overall, the evolution of the concept of food security reflects a shift towards a more holistic approach that considers not only the availability of food but also factors such as access, affordability, quality, etc.

During times of natural calamities or disasters such as floods, droughts, earthquakes, tsunamis, volcanoes etc, the food security of the nation or affected region can be severely compromised due to various factors:

  • Decreased Food Production: Natural disasters such as droughts, floods, earthquakes, or cyclones can lead to a significant decrease in food production. Crop failures, destruction of agricultural land, and disruption of farming activities etc. can result in food shortages.
  • Disruption of Supply Chains: Natural disasters can disrupt transportation networks, making it challenging to transport food from production areas to markets. This disruption can lead to food scarcity in affected regions.
  • Price Volatility: Reduced food supply and increased demand during disasters can lead to price volatility. Rising food prices can make food unaffordable for vulnerable populations, exacerbating food insecurity.
  • Loss of Livelihoods: Natural disasters can destroy livelihoods, particularly in rural areas dependent on agriculture. Loss of income and employment opportunities can limit people’s ability to purchase food, further worsening food insecurity.

Overall, natural calamities and disasters can significantly disrupt food security by affecting food production, distribution, affordability, and access. Effective disaster management is therefore essential to mitigate the impact of disasters on food security and ensure the availability of food during crisis situations.

The Bengal Famine of 1943 is known as one of the worst ever famines to hit mankind in modern times, during which 30 lakh people perished, out of which 20 lakh perished in Bengal alone within a brief period of just two months. The famine was the result of starvation, malaria, and other diseases which were made worse by malnutrition, unsanitary conditions, and lack of health care facilities.

The Bengal famine is infamous for being a Man-Made famine as it was not caused due to any failure or reduction of crop production. Rather, it was caused by food mis-management and mis-appropriation inflicted by the British government during colonial times. During 1943, Britain was involved in the Second World War (1939-45) and hence bulk of the food produced in India was diverted to Britain to feed its own population and the soldiers fighting on the front. This significantly reduced the availability of food within India, and escalated its price by multiple times, rendering it unaffordable for the poor, and thereby instigating a misery of unsurmountable proportions.  As is obvious from the below given table extracted from AK Sen 1981, the food Production increased from 85 lakh tonnes to 93 lakh tonnes from 1938 to 1942. However, the food availability for the population fell from 85 lakh tonnes in 1938 to 70 lakh tonnes in 1941, precipitating severe malnutrition, starvation, debilitating diseases and epidemics among the general population and the farmers. This in turn significantly decreased both food grain production and food availability in 1943, eventually culminating into a mass scale and wide spread famine.

The significance of the Bengal famine lies in forcing the thinkers and policymakers the world over to change their focus on merely food production to food access, food affordability, food distribution, food availability etc. It made people realise that only food production is not sufficient for ensuring food security and fighting starvation deaths.

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