Economy of ancient India

Wed,March 13, 2019 12:23 AM


Today lets discuss the economic history and India since ancient times and also try to understand the massive economy that India was. This is in continuation with the article published on 6th, March 2019, in these columns.

Indian Story

Ancient and Medieval India
-Indus valley civilization(currently India, Pakistan and parts of Afghanistan), which flourished thousands of years ago, had an advanced and flourishing economic system. The Indus civilization's economy appears to have depended significantly on trade, which was facilitated by advances in transport.
-Its citizens practiced agriculture, domesticated animals, made sharp tools and weapons from copper, bronze and tin and traded in terracotta pots, beads, gold and silver, coloured gem stones such as turquoise and lapis lazuli, metals, flints, seashells and pearls. They used ships to reach Mesopotamia( currently parts of Iraq) and some Middle East countries where they sold gold, copper and jewellery.
-Though agriculture was the main economic activity of the people across the subcontinent, with simultaneous urbanization, a number of urban centers grew. This gave a major fillip to trade and commerce. The ancient Indians had trade contacts with far off lands like the Middle East, the Roman Empire and the South East Asia. Many Indian trading colonies were settled in other countries.

-Village economy, with agriculture being the predominant occupation, was not just self-sustaining, but also provided raw materials for industries like textile, food processing and crafts. Besides farmers, other classes of people also flourished, like the barbers, carpenters, doctors, goldsmiths, weavers, etc.
-Towns and urban areas were centers for trade not only within the country but also took active part in trading across the seas. Products like the muslin of Dhaka, calicos of Bengal, shawls of Kashmir, textiles and handicrafts, agricultural products like pepper, cinnamon, opium and indigo were exported to Europe, Middle East and South East Asia in return for gold and silver.
-Around 600 BC, the 16 Mahajanapadas minted punch-marked silver coins. The period was marked by intensive trade activity and urban development. By 300 B.C., when Middle East was under the Greek Seleucid and Ptolemaic empires, the Mauryan Empire (c. 321 -185 BC) united most of the Indian subcontinent. The political unity and military security facilitated a common economic system and enhanced trade and commerce, with increased agricultural productivity.
-The empire spent considerable resources in building roads and maintaining them throughout India. The improved infrastructure combined with increased security, greater uniformity in measurements, and increasing usage of coins as currency, enhanced trade. Before this period and for the next 1500 years, India generated wealth in huge amount.
-For most of the ancient past and till the 17th century AD, India is estimated to have had the largest economy of the ancient and medieval world, controlling between one third and one fourth of the world's wealth.

The gross domestic product of Mughal India in 1600 AD was estimated at about 24.3% the world economy, the second largest in the world. By this time the Mughal Empire had expanded to include almost 90 per cent of South Asia, and enforced a uniform customs and tax-administration system. In 1700 AD the exchequer of the Emperor Aurangzeb reported an annual revenue of more than £100 million.

The British exploitation

-It took the English a hundred years to discover this wealth. Initially, they came to plunder, but soon discovered the rewards of trade. They found that India produced the world's best cotton yarn and textiles and in enormous quantities. What the Indians wanted in exchange from the Europeans was gold and silver, for which they had an insatiable appetite.
-Hence, there was a constant flow of gold to India, which absorbed a good deal of the bullion mined by the Spaniards in the New World. Having learned about cotton textiles from India, the English turned the tables, and brought an industrial revolution to Britain, but destroyed the lives of millions of Indian weavers.
-Of all the European powers, the British proved most strong and drove their competitors out of India. Slowly and gradually the British acquired political supremacy and hold over India and subverted the Indian economy according to their own needs. With the establishment of British rule in India, the drain of wealth from India began.
-There was poor industrial infrastructure when the British left India. The British East India Company whose political power gradually expanded in India from 1757 onwards, used huge revenue generated by the provinces under its rule for purchasing Indian raw materials, spices and goods.

-Thus the continuous inflow of bullion that used to come into India on account of foreign trade stopped altogether. The Colonial government used land revenue for waging wars in India and Europe, leaving little for development of India. In a short span of 80 years (1780-1860 AD) under Colonial rule, India changed from being an exporter of processed goods for which it received payment in bullion, to being an exporter of raw materials and a buyer of manufactured goods.
-More specifically, in the 1750s, mostly fine cotton and silk was exported from India to markets in Europe, Asia, and Africa; whereas by 1850s raw materials, which chiefly consisted of raw cotton, opium, and indigo, accounted for most of India's exports.
-The ruthless exploitation under British colonial rule completely devastated India’s economy. India’s population was subject to frequent famines, had one of the world's lowest life expectancies, suffered from pervasive malnutrition and was largely illiterate. As per economist, Angus Maddison, India's share of the world income went from 27% in 1700 AD (compared to Europe's share of 23%) to 3% in 1950.

Advent of Europeans

-With the coming of Europeans in the 16th century, trade and commerce was completely transformed. The Europeans concentrated mainly on spices, handicrafts, cotton clothes, indigo etc. Vasco Da Gama after returning from India, described to King Manuel of Portugal, of Indian large cities, large buildings and rivers, and great populations.
-He spoke about spices and jewels, precious stones and “mines of gold.” He believed that he had found India's legendary wealth. Europeans came for spices which were found only in few parts of the world. They needed spices for their long travels and distant sea voyages (mainly to preserve food for their long voyages).


1. What percentage of the worlds wealth did India hold in the ancient and mediaeval period?

a. 20%-30%
b. 25%-33%
c. 40%-50%
d. 45%-55%

2. Unification of the Indian subcontinent was achieved for the first time by the

a. Greek Seleucid empire
b. Ptolemaic empire
c. Mauryan empire
d. Mahajanapadas

3. What was India’s share of world’s GDP at the time of Mahatma Gandhi’s return to India?

a. Approximately 12%
b. Approximately 5%
c. Approximately 10%
d. Approximately 8%

4. What is the best description of the term New World as indicated in the article ?

a. Africa
b. Australia
c. American continents
d. Asia

5. Gold and silver moved from

a. Europe to India
b. India to Europe
c. Spain to India
d. None of the above



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