Economic history of India

Economic history of India, in the sense of the meaning of the term economic in its current sense, is at least 5,000 years oldFact|date=November 2007.

Indus Valley Civilization

The Indus Valley civilization, the first known permanent and predominantly urban settlement that flourished between 2800 BC to 1800 BC boasted of an advanced and thriving economic system. Its citizens practiced agriculture, domesticated animals, made sharp tools and weapons from copper, bronze and tin and traded with other cities. Evidence of well laid streets, layouts, drainage system and water supply in the valley's major cities, Harappa, Mohenjo-daro and Rakhigarhi reveals their knowledge of urban planningFact|date=November 2007. They eventually over used their resources, and slowly died out. There have been few weapons found in the Indus Valley, showing that they were peaceful people, and they did not get slaughtered by the Aryans.

Ancient and Medieval Characteristics

Though ancient India had a significant urban population, much of India's population resided in villages, whose economy was largely isolated and self-sustainingFact|date=November 2007. Agriculture was the predominant occupation of the populace and satisfied a village's food requirements besides providing raw materials for hand based industries like textile, food processing and craftsFact|date=November 2007. Besides farmers, other classes of people were barbers, carpenters, doctors (Ayurvedic practitioners), goldsmiths, weavers, etcFact|date=November 2007.

Religion

Religion, especially Hinduism, played an influential role in shaping economic activitiesFact|date=November 2007. The Indian caste system castes and sub-castes, despite its social fallbacks, functioned much like medieval European guilds, ensuring division of labour and provided for training of apprenticesFact|date=November 2007. The caste system restricted people from changing one's occupation and aspiring to an upper caste's lifestyleFact|date=November 2007. Thus, a barber could not become a goldsmith and even a highly skilled carpenter could not aspire to the lifestyle or privileges enjoyed by a Kshatriya. Kshatriya person of a warrior classFact|date=November 2007. This barrier to mobility on labour restricted economic prosperity to a few castesFact|date=November 2007.

Pilgrimage towns like Allahabad, Benares, Nasik, Puri, Orissa Puri, etc., mostly centred around rivers, developed into centres of trade and commerceFact|date=November 2007. Religious functions, festivals and the practice of taking a pilgrimage resulted in a flourishing "pilgrimage economy"Fact|date=November 2007.

Family business

In the joint family system, members of a family pooled their resources to maintain the family and invest in business venturesFact|date=November 2007. The system ensured younger members were trained and employed in the family business and the older and disabled persons would be supported by the familyFact|date=November 2007. The system, by preventing the agricultural land from being split ensured higher y ield because of the benefits of scaleFact|date=November 2007. The system curbed members from taking initiative because of the support system and family or workFact|date=November 2007.

Coinage

Punch marked Silver Ingots, in circulation around 5th century BC and the first metallic coins were minted around 6th century BC by the Mahajanapadas of the Gangetic plains were the earliest traces of coinage in IndiaFact|date=November 2007. While India's many kingdoms and rulers issued coins, barter was still widely prevalentFact|date=November 2007. Villages paid a portion of their agricultural produce as revenue while its craftsmen received a stipend out of the crops at harvest time for their servicesFact|date=November 2007. Each village, as an economic unit, was mostly self-sufficientFact|date=November 2007.

Maurya Empire

During the Maurya Empire (c. 321-185 BC), there were a number of important changes and developments to the Indian economy. It was the first time most of India was unified under one ruler. With an empire in place, the trade routes throughout India became more secure thereby reducing the risk associated with the transportation of goodsFact|date=November 2007. The empire spent considerable resources 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. During this time, the "Arthasastra" ("science of state") was written by the Chanakya, an adviser to Chandragupta MauryaFact|date=November 2007. The "Arthasastra" is one of the most important ancient texts on economics, politics and administration. It was a treatise on how to maintain and expand power, obtain material gain, and administer an empire. It covers both theory and implementation and contains many clear and detailed rules regarding the governing of an empire.Khanna (2005).]

The economic situation in the Maurya Empire is comparable to the Roman Empire several centuries later, which both had extensive trade connections and both had organizations similar to corporationsFact|date=November 2007. While Rome had organizational entities which were largely used for public state-driven projects, Maurya India had numerous private commercial entities which existed purely for private commerce. This was due to the Mauryas having to contend with pre-existing sreni hence they were more concerned about keeping the support of these pre-existing private commercial entitiesFact|date=November 2007. The Romans did not have such pre-existing entities to contend with; hence, they were able to prevent such entities from developing.

Exports

Surplus of Indian manufactures, like the muslin of Dacca, calicos of Bengal, shawls of Kashmir, steel and iron works, silk, and other 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, wine, pearls, and other valuablesFact|date=November 2007.

GDP estimates

According to economic historian Angus Maddison in his book "The World Economy: A Millennial Perspective", India had the world's largest economy in the 1st century and 11th century, with a 32.9% share of world GDP in the 1st century and 28.9% in 1000 CE. Maddison's estimates have been criticized and admired by the academic communtity, and media, as based on what some might characterize as controversial assumptions. Haig, Bryan. 2005. "Review of 'The World Economy: Historical Statistics,' by Angus Maddison" "Economic Record", volume 81. ] However, Economist and Journalist Evan Davis has praised Maddison's research by citing it as a "fantastic publication" and that "One shouldn't read the book in the belief the statistics are accurate to 12 decimal places." [ [http://news.bbc.co.uk/2/hi/business/4337203.stm. China's magnificent historic past] ]

Mughal Empire

1525 - 1550

During this period, India was the second largest economy in the world. The gross domestic product of India in 1550 was estimated at about 40 per cent that of China.

1550 - 1575

During this period, India was the second largest economy in the world. The gross domestic product of India in 1575 was estimated at about 50 per cent that of China.

1575 - 1600

An estimate of India's pre-colonial economy puts the annual revenue of Emperor Akbar's treasury in 1600 at £17.5 million, in contrast to the entire treasury of Great Britain in 1800, which totalled £16 million. The gross domestic product of India in 1600 was estimated at about 60 per cent that of China.

1600 - 1625

During this period, India was the second largest economy in the world. The gross domestic product of India in 1625 was estimated at about 70 per cent that of China.

1625 - 1650

During this period, India was the second largest economy in the world. The gross domestic product of India in 1650 was estimated at about 80 per cent that of China. Emperor Shah Jahan's treasury reported annual revenues exceeding £25 million by 1650.

1650 - 1675

During this period, India was the second largest economy in the world. The gross domestic product of India in 1675 was estimated at about 90 per cent that of China.

1675 - 1700

During this period, the Mughal empire expanded to almost 1,000 million acres (or 90 per cent of south Asia) and a uniform customs and tax administration system was enforced. Annual revenue reported by the Emperor Aurangzeb's exchequer exceeded £100 million in 1700 (twice that of Europe then). Thus, India emerged as the world's largest economy followed by China and France.

1700 - 1725

China was the world's largest economy followed by India and France. Collapse of the central authority of the Mughal Empire and the resultant chaos triggered India's long but slow decline on the world stage. The gross domestic product of India in 1725 was estimated at about 90 per cent that of China.

Nawabs, Marathas & Nizams

1725 - 1750

During this period, Mughals were replaced by the Nawabs in north India, the Marathas in central India and the Nizams in south India. However, the Mughal tax administration system was left largely intact. China was the world's largest economy followed by India and France. The gross domestic product of India in 1750 was estimated at about 80 per cent that of China.

1750 - 1775

During this period, about two-thirds of the civil service in India was still dominated by Muslim officers. During this period, the Maratha empire expanded to almost 250 million acres (or 34 per cent of Indian landscape) while the Nizam's dominion expanded to almost 125 million acres (or 17 per cent of Indian landscape). China was the world's largest economy followed by India and France. The gross domestic product of India in 1775 was estimated at about 70 per cent that of China.

British East India Company Rule

The British colonial rule created an institutional environment that did stabilize the law and order situation to a large extent. The British foreign policies however stifled the trade with rest of the world. They created a well developed system of railways, telegraphs and a modern legal system. The infrastructure the British created was mainly geared towards the exploitation of resources of India. By the end of the colonial rule India inherited an economy that was one of the poorest in the world and totally stagnantinote|Ch.1, pg.1|roy-2, with industrial development stalled, agriculture unable to feed a rapidly accelerating population. They were subject to frequent famines, had one of the world's lowest life expectancies, suffered from pervasive malnutrition and were largely illiterate.

;GDP estimatesAn estimate by Angus Maddison, formerly of Groningen University, reveals that India's share of the world income went from 24.4% in 1700, comparable to Europe's share of 23.3%, to a low of 3.8% in 1952; however, these statistics too are based on assumptions that have been criticized. inote|Hindu|Manmohan Singh's address at Oxford|While Indian leaders during the Independence struggle and "left-nationalist" economic historians have blamed the colonial rule for the dismal state of India's economy, a broader macroeconomic view of India during this period reveals that there were segments of both growth and decline, resulting from changes brought about by colonialism and a world that was moving towards industrialization and economic integration. inote|Ch.10, pg.304|roy-1 inote|preface|roy-left-nationalist

Lawrence H. Officer, "Exchange rate between the United States dollar and forty other countries, 1913 -1999." Economic History Services, EH.Net, 2002. URL: http://eh.net/hmit/exchangerates/

During the 1990s, at least 100,000 insolvent farmers committed suicide. [http://ipsnews.net/news.asp?idnews=34116] The Union government treasury reported annual revenue of almost £19-20 billion in circa 2000 thus registering an average annual growth of merely 5 per cent during the last quarter of 20th century.

About one-fourth of the national population were urban by 2000. [ [http://globalis.gvu.unu.edu/indicator_detail.cfm?country=IN&indicatorid=30 One-fourth of Indians were urban by 2000] ]

2000 - Present

The gross domestic product of India in 2007 was estimated at about 8 per cent that of the USA.

National Democratic Front led by BJP, was in helm of economic affairs from 1998-2004. During this period there were two finance ministers, viz., Yashwant Sinha (1998-2003) and Jaswant Singh (2003-2004). The main economic achievement of the government was the universal license in telecom field, which allows CDMA license holders to provide GSM services and vice versa. NDA started off the Golden Quadrilateral road network connecting main metros of Delhi, Chennai, Mumbai and Kolkata. The project, still under construction, was one of the most ambitious infrastructure projects of independent India. Simultaneously, North-South and East-West highway projects were planned and construction was started.

Education for all is still an unrealised dream in India. This was made a fundamental right by amending the constitution of India and huge amount of money was pumped into the project under the name of Sarva Shiksha Abhiyan. This project met with limited success.

This is a chart of trend of gross domestic product and foreign trade of India at market prices [http://mospi.nic.in/2_macro_agg_curr.pdf estimated] by "Ministry of Statistics and Programme Implementation" with figures in millions of Indian Rupees. See also [http://www.imf.org/external/pubs/ft/weo/2006/01/data/dbcselm.cfm?G=2001 the IMF database] .

Lawrence H. Officer, "Exchange rate between the United States dollar and forty other countries, 1913 -1999." Economic History Services, EH.Net, 2002. URL: http://eh.net/hmit/exchangerates/

For purchasing power parity comparisons, the US Dollar is exchanged at 9.46 Rupees only.

Despite steady growth and continuous reforms since the Nineties, Indian economy is still mired in bureaucratic hurdles from coast to coast. This was confirmed by a World Bank report [http://www.doingbusiness.org/EconomyRankings/Default.aspx?direction=asc&sort=1]

The Union government treasury reported annual revenue of £51-52 billion in 2005 thus registering a average annual growth of almost 22 per cent since 2000. India imported about 85 per cent of oil and 15 per cent of gas consumption by 2005.

ee also

*Timeline of the economy of India
*List of countries by past GDP (PPP)
*List of countries by past GDP (nominal)
*Rajnarayan Chandavarkar historian

References

Bibliography

;Articles
* Dr. Nupam P. Mahajan, (1999) [http://www.med.unc.edu/~nupam/ancient1.html India's First Coinage] . Retrieved Feb. 24, 2005.

;Books
*
* Ram Sharan Sharma Material Culture & Social Formations in Ancient India (Macmillan Publishers India Ltd., 2nd Revised Edition, Delhi 2007).
* Ram Sharan Sharma Perspectives in Social and Economic History of Ancient India(Munshiram Manoharlal, Delhi, 2003).
* Adam Smith, "The Wealth of Nations".
* Jawaharlal Nehru, "The Discovery of India"
* Max Weber, ""
* Micklethwait, John & Wooldridge, Adrian (2003). "The Company: a short history of a revolutionary idea". Modern library chronicles. ISBN 0-679-64249-8.
* Sankaran, S (1984). "Indian Economy: Problems, Policies and Development" (7th ed. (1994)). Margham Publications.
* Datt, Ruddar & Sundharam, K.P.M. (1965). "Indian Economy" (51st Revised ed. (2005)). S.Chand. ISBN 81-219-0298-3.
* "Limca Book of Records" (1993). Bisleri Beverages Limited. ISBN 81-900115-6-1.

;Papers
* Khanna, Vikramaditya S. (2005). [http://papers.ssrn.com/sol3/papers.cfm?abstract_id=796464 "The Economic History of the Corporate Form in Ancient India."] University of Michigan.
* Pearce, H. Thomas (Spring 2003). " [http://www.mc.maricopa.edu/~pearce/pdfs/caste.pdf Weber's study of the Hindu ethic and the caste system] ".

;News
*
*http://livesharemarkets.com/2008/04/04/inflation-at-3-years-hightouches-7-markets-down-by-490-points/

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