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The production is an activity, which related with the production of goods and services that are required by the people.
The following factors affect the production activity:
Land: land it the most important factor because the person who wants to establish the industry will need a good land for the construction of factory building.
Labor: A factory building alone cannot produce goods and services, it need some people to work there. Thus, cheap labor is next important factor of production.
Capital: capital refers to the money that a factory owner spend for buying land, machines etc.
There are two types of capitals:
Fixed capital: it is the capital that is invested in the assets that lasts for many years. Example: machinery and building.
Working capital: it is the capital that is used to carry out day to day expense in a factory such for buying raw material and paying wages to labor.
There are two ways to increase the production on the same land.
Better irrigation facility: A farmer can easily grow more from the same land if better irrigation facility is available with him. In palampur, the electricity came early and farmers were able to irrigate their crops round the year with help of tube wells.
Using modern methods of farming: modern farming methods include the use of HYV seeds (high yielding variety seeds), machinery such as tractor, pesticides, weedicides and fertilizers. These methods increase the production on the same land.
Green revolution was started in 1960s that promoted the use of HYV seeds, fertilizers, pesticides, tube wells, machines etc to increase the production of crop. But the effect of green revolution was limited to Punjab, Haryana and western Uttar Pradesh.
The use of chemical fertilizers degrades the land, which decrease its fertility and it may even barren the land.
The activities that are not related with farming are called non-farm activities which includes the following: