International Journal of Research and Development

2012

Volume 1, Issue 1

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Ancient Indian Economics

Manoj D. Harsule G. H. Raisoni Polytechnic, Amravati (MS) India Abstract This paper highlights on the Indian Economic policies which were used during the past 4000 years. India is a very old country, here the civilization started and developed in early stage of human development. When people in Europe and United States of America were not aware of Economics, Politics and Social Science at that time Indians philosophers had already developed the overall strategies and rules for balance economic and social system. Actually it was a result of research of 100 years of continuous learning. Geographically India is in between China and Europe so It was developed as a centre of trade. Even if considered that trade was not there still India was having such structure that there may not be any bad impact on economy of India. Indians were having a separate economy for villages. It was totally isolated from globalization. It was based on everyday living and needs only. The richness of people was counted on the basis of amount of land, animals and capital they were having. It is a physical form of money so definitely the impact of recession and clashes of economy was negligible for the country. If same type of policies is used by the countries now then there will not be any type of economical crisis happen. The ancient Indian Economist like Chanakya has mentioned many ideas in his book of Economics that can be implemented to make economy strong. India was richest country in the world for known about past 4000 years. Then many problems occurred here which destroyed its crown. But that resulted in totally unbalanced economy of the world. From last 200 years the world has experienced the variation in currency and problems like recession. Ancient Indian economic strategies were such that there was not unbalanced and uneven distribution of capital. Keywords (Ancient Indian Economics, Economical Crisis, Management by ancient methods, barter, Strength of Indian Economy) 1. HISTORY OF DEVELOPMENT When human being came into existence many of our generation just gone to find the food for life and saving himself from the carnivals. Slowly man realized that it is easy to hunt by making the group and they started to find the food by making groups. With time, they formed groups and settle down. India was one of the oldest countries where civilization started. In India not only it was started but also developed. At this time people were only having the Agriculture as main occupation of life, in fact, it was a part of lifestyle and need also. The Indus valley civilization is one in which something unique was there.
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Although the known Economic history of India begins with the Indus Valley civilization, ancient Indian epics like Ramayana and Mahabharata tell the story that India was a very reach country. In Ramayana, it is mentioned that people in the empire of Lord Rama (Ramrajya) were very happy. They were not only protected from devils but also having all the things that are required to live a happy life. Also mentioned about a city made up of Gold, today that region is known as Shrilanka. Same type of description can be found in Mahabharata. But in Mahabharata it is mentioned that India was divided in many small empires. Still the fact is well known about richness of people and emperors. The Lord Krishna was living in a city made up of Gold well known as Dwarka, even Pandwas and Kauravas were having a very big empire with a lot of wealth. All the things just indicate one fact, that India was a very rich country.

Fig 1: Early civilization in world The Indus civilization's economy appears to have depended significantly on trade, which was facilitated by advances in transport. 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 [7]. Following the decline of the Indus area sites (near 1900 B.C. to 1500 B.C.),253 there was a nearly contemporaneous rise in the eastern civilizations centered primarily on the banks of the Ganges River which bore many similarities to the Indus area sites. 254 These Indo-Gangetic kingdoms grew very quickly and became quite wealthy as the region is well watered, lush and green, and bountiful in natural resources.255 It is quite clear that the sreni would have existed during this
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time for two reasons. First, if one uses the most recent dating for the earliest written materials (1500 B.C. to 1000 B.C.) then by 1000 B.C. to 800 B.C. the sreni and the pani were known to the Indians [8].

Fig 2: Trade sites and routes of Indus valley with world The examination reveals that business people on the Indian subcontinent utilized the corporate form from a very early period. The corporate form (e.g., the sreni) was being used in India from at least 800 B.C., and perhaps even earlier, and was in more or less continuous use since then until the advent of the Islamic invasions around 1000 A.D. This provides evidence for the use of the corporate form centuries before the earliest Roman protocorporations. In fact, the use of the sreni in Ancient India was widespread including virtually every kind of business, political and municipal activity. Around 600 BC, the Mahajanapadas minted punch-marked silver coins. The period was marked by intensive trade activity and urban development. During the Maurya Empire (BC 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 and united most of the Indian subcontinent. The political unity and military security allowed for a common economic system and enhanced trade and commerce, with increased agricultural productivity [6].

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Most people in ancient India, as in other parts of Asia and Europe at this time, were farmers. In India, farmers mainly grew wheat and rice, and cotton for cloth. On the coast, people produced salt in big evaporation flats. However, there have always been a lot of Indians involved in trade too, because India is between China and West Asia and Europe. From the Harappan period on, Indian people were selling West Asian things like gold to people in China, and Chinese things like silk and pottery to people in West Asia.

Fig 3: Mauryan Empire During the Mughal period (15261858) India experienced peaks and bottoms unprecedented in history. The gross domestic product of India in the 16th century was estimated at about 25.1% of the world economy. Traders in India also sold Indian things to both China and West Asia, especially cotton cloth and spices like cinnamon and pepper. All this trade made India a very rich country. But because the trade mainly went through northern India, the north part of India was usually richer than the south part. After a while, people began to trade using ships on the ocean, which could carry more stuff more easily and safely than donkeys or camels could on land. This was good for South India, because some of the ships went to ports in the south, or sailed right around the south of India [14]. 2. CHARACTERISTICS OF ANCIENT INDIAN ECONOMY Though ancient India had a significant urban population, much of India's population resided in villages, whose economy was largely isolated and self-sustaining. 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 crafts. Besides farmers, other
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classes of people were barbers, carpenters, doctors (Ayurvedic practitioners), goldsmiths, weavers etc. One system was totally independent of the other hence there was no effect of fall of one business to the other [3]. Religion, especially Hinduism and Jainism, played an influential role in shaping economic activities. Pilgrimage towns like Allahabad, Benares, Nasik and Puri, mostly centred around rivers, developed into centres of trade and commerce. Religious functions, festivals and the practice of taking a pilgrimage resulted in a flourishing pilgrimage economy [4]. In towns and urban centers trade took place through coins but in villages barter was the main system of economic activities. It means that one thing was exchanged with other. Means a carpenter will sell his chair in exchange with sword from an armour-maker. 3. FAMILY BUSINESS In the joint family system, members of a family pooled their resources to maintain the family and invest in business ventures. The system ensured younger members were trained and employed in the family business and the older and disabled persons would be supported by the family. Along with the family-run business and individually owned business enterprises, ancient India possessed a number of other forms of engaging in business or collective activity, including the gana, pani, puga, vrata, sangha, nigama and sreni. Nigama, pani and sreni refer most often to economic organizations of merchants, craftspeople and artisans, and perhaps even para-military entities. In particular, the sreni was a complex organizational entity that shares many similarities with modern corporations, which were being used in India from around the 8th century BC until around the 10th century AD [11]. The use of such entities in ancient India was widespread including virtually every kind of business, political and municipal activity. The medieval world between the 1st and 17th centuries AD, controlling between one third and one fourth of the world's wealth up to the time of the Marathas, from whence it rapidly declined during European rule. 4. SHORTFALL The caste system restricted people from changing one's occupation and aspiring to an upper caste's lifestyle. 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 (person from a warrior class). This was a restriction to the talent. Also if the trends changed the result may be destruction of one occupation and hence total community. It can be resulted in obstacle for the development, because of the fact that may finish the total community [13]. 5. DECLINING GDP The gross domestic product of Mughal India in 1600 was estimated at about 24.3% the world economy, the second largest in the world. By this time, India had fell from the top rank to become the second-largest economy in the world, after the Manchu China.

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In 1700, India's economy had a 24.4% share of world income, the largest in the world. British economist, Angus Maddison argues that India's share of the world income went from 27% in 1700 (compared to Europe's share of 23%) to 3% in 1950. In the period 1760-1800, Bengal's money supply was greatly diminished; furthermore, the closing of some local mints and close supervision of the rest, the fixing of exchange rates, and the standardization of coinage, paradoxically, added to the economic downturn. During the period, 17801860, 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 [9]. More specifically, in the 1750s, mostly fine cotton and silk was exported from India to markets in Europe, Asia, and Africa; by the second quarter of the 19th century, raw materials, which chiefly consisted of raw cotton, opium, and indigo, accounted for most of India's exports [6]. Also, from the late 18th century British cotton mill industry began to lobby the government to both tax Indian imports and allow them access to markets in India. Starting in the 1830s, British textiles began to appear inand soon to inundatethe Indian markets, with the value of the textile imports growing from 5.2 million 1850 to 18.4 million in 1896 [10]. China was the world's largest economy followed by India and France. The gross domestic product of India in 1825 was estimated at about 50 per cent that of China [12]. British cotton exports reach 3 per cent of the Indian market by 1825. China was the world's largest economy followed by the UK and India. Industrial revolution in the UK catapulted the nation to the top league of Europe for the first time ever. During this period, British foreign and economic policies began treating India as an unequal partner for the first time. English replaced Persian as the official language of India. The gross domestic product of India in 1850 was estimated at about 40 per cent that of China. British cotton exports reach 30 per cent of the Indian market by 1850. The USA was the world's largest economy followed by the USSR, Japan, Germany and China. The gross domestic product of India in 1975 was estimated at about 5 per cent that of the USA. 6. HOPE FOR TODAYS CRISIS Economy in ancient India was mainly rural and agricultural in nature. The word Pancakrsti literally means either rotation of five crops in the same field or the growing of five kinds of crops in different fields. Other sectors that chiefly contributed to the economy of ancient India included pottery, carpentry, metal-work, glass-work, jewellery making, weaving and leather-work. Besides cultivators, there were the carpenter, goldsmith, weaver, barber, woodcutter, labourer, fighter, dancer, hunter, fowler, beggar, usurer, garland-maker, armour-maker, attendant, merchant, chariotmaker, metal-worker and craftsmen. Ancient Indian economy also included crafts making. It was another popular occupation that included making of toys like the elephant, glass-work, weaving, making gold ornaments, etc. Among women, the common occupations were weaving, knitting, sewing and embroidery. Mat making was practised by women as well as men. Brick-making, snake-charming, and bird-catching are some of the occupations of this age. References to the use of vessels of different metals, stone and wood imply the existence of the occupations of metal-making, cutting of stone and wood. The ancient
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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. 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. India began to follow a mixed economy pattern. But in the late eighties and in the beginning of the 1990s, the Indian policy makers realized that state controlled economy was not able to produce desired results in almost 45 years [5]. It was decided to pursue economic policy based on liberalization, privatization and globalization. In this era of liberalization, privatization and globalization, India has witnessed rapid growth in some sectors of economy, even though better results were expected when India began to follow the new economic policy [2]. After the 1991 economic crisis, the central government launched economic liberalization. India has turned towards a more capitalist system and has emerged as one of the fastest growing large economies of the world [1]. But after the economical crisis of 2008 again India has to think about the new policies because this time it had an impact on Indian economy. The report says that Indian GDP growth rate has fall from 9.4 to 5.3 from January 2010 to July 2012. One of the solutions for this problem is the use of Ancient Indian Economy. The impact of globalization is that, if crisis happens in one country the economical partners of this country will definitely hammered. But it is one of the ways of development in fastest way so it cannot be ignored. Most of the countries like America, South Korea and China etc. have already shown the power of globalization. These countries lead to development in fastest way in a short period of time. Adaptation of liberalization, privatization and globalization may be a solution for rapid growth but at the same time it shows dependence of one factor on the other. The ancient Indian traders were doing the trade throughout the world still in no time of the history it has the evidence that India had an economical crisis. Even at a time when there were many wars in Middle East of Asia and Europe, India was unaffected and remained on the top. The strength of Ancient Indian Economy was its diversified and independent businesses. The ancient Indian economy had a separate structure for Cities and separate for Villages. The various businesses done by Indians also independent so fall of one type of business was not affecting the other. If newer Indian policy is based on the same fact then it will be beneficial for people of India. Even if it is adapted by the others then may be a solution for the Economical crisis occurring. It may be resulting in a stable economical system.

7. REFERENCES 1. a b c "Economic survey of India 2007: Policy Brief". OECD. 2. "Industry passing through phase of transition". The Tribune. 3. Ranjit V. Pandit (2005). "Why believe in India". McKinsey. 4. Anekant: Views And Issues. Ladnun, India: Jain Vishwa Bharati University, Ladnun, India. First Edition, 2001. pp. 46.
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5. Anstey, Vera. The economic development of India (4th ed. 1952), 677pp; thorough scholarly coverage; focus on 20th century down to 1939 6. Bowen, H. V. Business of Empire: The East India Company and Imperial Britain, 1756-1833 (2006), 304pp 7. Balachandran, G., ed. India and the World Economy, 1850-1950 Oxford University Press, 2005. ISBN 0-19-567234-8. 8. Chaudhuri, K. N.Trade and Civilisation in the Indian Ocean: An Economic History from the Rise of Islam to 1750 (1985) 9. Derbyshire, I. D. (1987), "Economic Change and the Railways in North India, 1860-1914", Population Studies 21 (3): 521545, JSTOR 312641
10. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1396168 11. http://www.indianetzone.com/50/economy_ancient_india.htm 12. http://enlightened-economics.com/2011/04/12/-india-ancient-economic-behemoth-to-overtakechina/ 13. http://www.culturalindia.net/indian-history/economic-history.html 14. http://www.jstor.org/discover/10.2307/2956664?uid=3738256&uid=2129&uid=2&uid=70&uid=4&si d=51005820154377 15. http://www.iloveindia.com/history/ancient-india/maurya-dynasty/chanakya.html 16. http://www.tradingeconomics.com/india/gdp-growth

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