Panchmahals is a relatively backward district in east-central Gujarat. The district is susceptible to droughts frequently. As a consequence, the foodgrain production fluctuates quite significantly. The district has a sizeable population of tribals, most of whom live in agro-climatically poorer regions of the district. Even though the district has forest and mineral resources, employment offered by these activities is not significant. There is no industrialization worth the name. The district is thus resource-poor and, therefore, poverty-stricken. The tribals would appear to be the poorest among the poor. A survey of 200 households of the district conducted in 1972-73 indicated that over four-fifths of the households had incomes below the poverty mark. The position of the tribals was even worse. Their poverty is not a result of adverse climatic conditions alone. The poverty is endemic and pervasive. The poor seem to be caught in a vicious circle of poverty. Average per capita income was about 10 per cent below the poverty mark. In order to raise incomes barely to the poverty mark, the district would need 1.5 crore man-days of additional employment every year. An examination of selected labour-intensive low-investment activities such as soil conservation, well-digging and housing construction shows that an investment of between Rs 6 and 20 crores would be required to provide the needed employment. Of these, soil conservation and well-digging have on-going employment effects, which would not require any investment beyond the initial push. It is necessary to undertake a major programme to create additional employment within a short time. A gradual, phased programme, requiring an annual outlay of Rs. 1 crore would show sizeable employment gaps even after a number of years. It would take ten years to cover the present employment shortfall. The vicious circle of poverty, therefore, needs a big push to break it.