Indian Economy During Ancient and Medieval Times
The 5,000-year-old Indus Valley civilization is characterized by early signs of economic development initiatives, as evident from the significant development in transport technology and other urban infrastructure. The first unified administration of the Indian subcontinent can be traced back to the Mauryan Empire (300 B.C.). The political unity and military security allowed for a standard economic system, enhanced trade and commerce, a nationally administered and strict but fair system of taxation as advised by the principles in Kautilya's Arthashastra, and the establishment of a single currency across India (Box 9.1). India's GDP during 1 A.D. was US$33,750 million (at 1990 prices), constituting around 32% of World GDP. By 1000 A.D., India's GDP remained stagnant at US$33,750 million, around 28% of the world's GDP. In 1526, the empire established by Babur was reported as the second-largest economy in the world after China. In 1600 A.D., India's GDP was US$74,250 million, around 22% of world GDP. India's population during 1 A.D. was around 5.5 crore, and the per capita income was around US$450. During 1600 A.D., India's population was 13.5 crore, and the per capita income was US $550. India's per capita GDP in 1600 A.D. was higher than that of the United States ($400) and many other nations. India's total GDP at the arrival of the British (around 1600 A.D.) was US$74,250 million, and that of Britain was US$6,007 million.
Indian Economy During the British Times
Early British Period: 1600–1757 A.D.
The East India Company had started as a trading organization in India in 1600, covering the eastern part. The East India Company traded in some selected pockets. Initially, the company had two-fold purposes: (1) finding raw material for their factories, and (2) searching the market for their manufactured product. Further, the company moved ahead to acquire administrative and political power in the Indian Economy During the Pre-independence Period 175 power. As a trading organization, it had brought vast quantities of precious metals, particularly silver and gold, to India and, in exchange, exported Indian cotton cloths, silk, saltpeter, spices, and other goods that commanded huge demand across the world markets. The East India Company earned a good profit from these transactions, which was also shared with Indian manufacturers and big producers, which helped the company's interests. In this process, the company also provided a good market for Indian products. The British crown authorized the company to export gold and silver bullion and the coins of these metals worth £30,000 per annum in exchange for goods and services from India.
From Battle of Plassey till the Sepoy Mutiny: 1757–1857 A.D.
During the early phase of company rule, there was a high demand for Indian products worldwide, and the pouring of bullion into India created a sense of jealousy among British traders. Indian products like silk, cotton, drugs, and spices were in high demand at a much higher price in the European market. The East India Company earned a considerable profit from selling such products in Britain. The products were exchanged for bullion. The danger of draining treasure from the West became a nightmare for the British, who termed India "a sink of precious metals." In 1772, Lord Clive mentioned in his speech at the House of Commons that "silver of the West and the gold of the East have for many years been pouring into that country and goods only have been sent out in return." 3 The Battle of Plassey marks a watershed as far as colonial rule in India is concerned. The Battle of Plassey was fought on June 23, 1757, at Plassey on the banks of the Hooghly River in West Bengal and marks the victory of the British East India Company (led by Robert Clive) over the Nawab of Bengal, Siraj-ud-Daulah, and his French allies. The Battle of Plassey paved the way for the British entry into India. Thereafter, the company acquired economic and political power in the Bengal province. That was detrimental not only for revenue collection but also for making the authoritative trade policy. This change had a long-term impact on Indian farmers and traders. This period was characterized by direct plunder by the East India Company under the guise of trade, exploitative land revenue policy, and corrupt and unscrupulous officers of the company making large fortunes
British Crown Period: 1858–1947 A.D
Following the Great Sepoy Mutiny of 1857, which is also hailed as "First war of Independence," the British crown dissolved the company, and the governance of India was taken over by the British crown in 1858. The Sepoy Mutiny witnessed a larger presence of British recruits in India. There were only 31,000 British in India in 1805 (22,000 were in the army and 2,000 in civil government). The number increased substantially after the mutiny; in 1931, there were 168,000 British in India. The higher ranks of the administration remained almost entirely British until the 1920s, when they were appointed through the Indian Civil Services exam held in the United Kingdom. There was a whole hierarchy of separate bureaucracy in which the higher ranks were British, that is, the revenue, justice, police, education, medical, public works, engineering, postal, and railway services, and the provincial civil services. This period was characterized by colonial exploitation through industrial and financial capital. Agriculture was commercialized, the import of machine-made goods from England experienced a steep rise, and heavy investments were made in plantation sectors and railways.