Explain the stages of Indian economic history.

From the historical point of view, it was considered that India’s economy and society remained unchanged. It was only after the British rule, that there was a change in India’s economy. The different stages of Indian economic history are –

• In ancient India, we had a number of village communities which were self-sufficient and their economy was based on the non-market exchange.

• After India became the colony of British, many developments took place in various fields. In the post-independence period, various factors led to the drastic social and economic changes in urban and rural society. The infiltration of commercial money economy into the local agrarian economy, this connecting with the wider network of exchange were some of the factors. The change that had been bought by colonialism was visible for example – as the increasing demand of the land revenue to be paid in cash - recent historical research shown that use of money was already there in India’s economy during the pre-colonial period. Also, we found the non-market exchange taking place, for example –Jajmani system, which was prevalent in many regions and villages. During the pre-colonial period, villages were made connected to the wider network so that agricultural products and other goods were distributed.

The difference between the traditional and modern economy also known as the pre-capitalist and capitalist economy has now become blurry. Recent historical research has shown that in the pre-colonial India, extensive and highly-developed trading networks existed.

India had always been a major manufacturer and exporter of handloom cloth, popular for many other goods that were in high demand in the international market especially in a country like Europe. Thus, it is clear that in pre-colonial India, we had well-organised manufacturing centres, local merchant groups, trading networks and banking system which made the trading process in India and with the other countries easier.

Traditional trading communities or castes had their own system of banking and credit. For example –Hundi (bill of exchange) was the traditional instrument of exchange and credit. This way they were able to carry on long-distance trade. Trade usually took place within the caste or kinship or within the community, so the merchant of one part of the country could issue Hundi in the name another merchant from the different part of the country.