1.4.2. An example of small-scale manufacturing in Palampur

At present, less than fifty people are engaged in manufacturing in Palampur. Unlike the manufacturing that takes place in the big factories in the towns and cities, manufacturing in Palampur involves very simple production methods and are done on a small scale. They are carried out mostly at home or in the fields with the help of family labour. Rarely are labourers hired.

In Palampur, small-scale manufacturing is limited to fewer than fifty people. This type of manufacturing is characterized by simple production techniques. Unlike large factories, small-scale manufacturing occurs mainly at homes or fields, utilizing family members for labor instead of hiring workers. This means that the production is casual and is often supplemental to the main agricultural work in the village.

Think of a family making scarves at home versus a large factory producing shirts in bulk. In the home, a few family members might use sewing machines to create a few scarves to sell at the market, which is a small-scale manufacturing process. In contrast, the factory operates on an assembly line to produce thousands of shirts quickly.

Mishrilal has purchased a mechanical sugarcane crushing machine run on electricity and has set it up on his field. Sugarcane crushing was earlier done with the help of bullocks, but people prefer to do it by machines these days. Mishrilal also buys sugarcane from other farmers and processes it into jaggery. The jaggery is then sold to traders at Shahpur. In the process, Mishrilal makes a small profit.

Mishrilal is a farmer who has modernized his sugarcane processing by investing in an electric sugarcane crushing machine. Previously, this task required the labor of bullocks, which is far less efficient. By switching to machines, Mishrilal can produce jaggery more quickly and in larger quantities. He also sources sugarcane from other farmers, allowing him to expand his production. The jaggery he makes is sold to traders, though the profit he earns remains modest.

Imagine someone who switches from using a hand juicer to an electric juicer for making juice. The electric juicer works faster and can handle more fruit at once, leading to more juice production. Like the juicer, Mishrilal’s machine helps him process sugarcane much more efficiently than before.

Let’s Discuss: What capital did Mishrilal need to set up his jaggery manufacturing unit? Who provides the labour in this case? Can you guess why Mishrilal is unable to increase his profit? Could you think of any reasons when he might face a loss? Why does Mishrilal sell his jaggery to traders in Shahpur and not in his village?

Mishrilal needs capital to purchase his machine and set up his manufacturing unit. The labor comes from his family members, as he rarely hires outside workers. Despite having a machine, Mishrilal's profits are limited. This could be due to high operational costs, market competition, or fluctuations in sugarcane prices. Mishrilal sells his jaggery to traders in Shahpur because they offer better market reach and possibly higher prices due to demand.

Consider a baker who can only bake a few pastries at home. If he wants to expand, he needs to invest in an oven and hire help. However, if he only sells locally, his profit remains small. Selling in a nearby city, where the demand is higher, could increase his sales, just like Mishrilal selling his jaggery to traders in Shahpur.

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