Evolution of the Indian Economy: The Early Muslim Period and the Mughal Empire (1200 to 1760)
The Mughal Empire was a Persianate empire. “The Mughal Empire (also known as the Mogul, Timurid, or Hindustan Empire) is considered one of the classic periods of India’s long and amazing history. In 1526, Zahir-ud-Din Muhammad Babur, a man with Mongol heritage from Central Asia, established a foothold in the Indian subcontinent that was to last for more than three centuries. By 1650, the Mughal Empire was one of three leading powers of the Islamic world, the so-called Gunpowder Empires, including the Ottoman Empire and Safavid Persia. At its height in about 1690, the Mughal Empire ruled almost the entire subcontinent of India, controlling four million square kilometers and a population estimated at 160 million (Szczepanski 2019a).” Babur had invaded India at the behest of Daulat Khan Lodi and won the kingdom of Delhi by defeating the forces of Ibrahim Khan Lodi at Panipat in 1526 AD. Thus, he laid the foundation of the Mughal Empire. In this chapter a broad view of the Indian economy during the rule of the Mughal emperors is analyzed under the following heads:
Economy in the Medieval Period
The most remarkable feature of the economic system of the Mughals was the gap that kept the producers and the consumers far asunder. The producers were agriculturists; workers in the cottage industries; artisans; producers of consumer goods like oil, cloth, sugar; and workers in the karkhanas (a manufacturing centre under state supervision during the Sultanate and Mughal periods and now a common term for a place of manufacture or assembling).
Frequent outbreaks of famine: Agriculture depended on rainfall, and naturally, failure of seasonal rainfall or a heavy downpour resulting in flood would result in the failure of agricultural crops, which meant famine. There were frequent outbreaks of famine in Mughal India during which the sufferings of the peasants and common people would know no bounds. Bengal was visited by famine in 1575 and the Deccan and Gujarat during 1630–32. “The province of Gujarat in the northwest and the Deccan region in the central part of the empire were in political chaos due to a 2-year famine and its resulting economic depression. Toward the end of Akbar’s rule (1556–1605), terrible famine began in 1595 and lasted for 3 years, affecting the same areas. During the reign of Aurangzeb, the last of the grand Mughals, there was, yet again, a 3-year famine, between 1662 and 1665, covering the same regions. Not a drop of water is reported to have fallen during these years” (Sastri and Srinivasachari 1982). A number of famines broke out during Aurangzeb’s reign.
Despite from Akbar downward, the Mughal emperors tried to relieve the people’s distress, but as there was no systematic effort, nor any famine policy or any easy means of transport, the relief measures were inadequate.1
The silk industry, however, was limited in scope compared with the cotton industry. It was patronized by Akbar. Bengal was the most important center of silk production and manufacture. Other centers of silk cloth manufacture were Lahore, Fatehpur Sikri, Agra, Gujarat, Benares, Bhagalpur, and Kashmir. Bengal produced silk and silk goods worth £2.5 million. Apart from silk and cotton textiles, other industries were shawl and carpet weaving, woolen goods, pottery, leather goods, and articles made of wood.
Akbar took a special interest in the development of indigenous industry. He was directly responsible for the expansion of silk weaving in Lahore, Agra, Fatehpur Sikri, and Gujarat. He opened a large number of factories at important centers, importing master weavers from Persia, Kashmir, and Turkistan. Akbar frequently visited the workshops near his palace to watch the artisans at work, which encouraged the craftsmen and raised their status. All this resulted in the establishment of a large number of shawl manufacturers in Lahore, and inducements were offered to foreign carpet weavers to settle in Agra, Fatehpur Sikri, and Lahore, and manufacture carpets to compete with those imported from Persia.
Bernier (1916) has stated that there was rigid specialization. For instance, a goldsmith would not work on silver, and the hereditary nature of the craftsmanship gave an extraordinary specialization. A weaver would weave only a particular stuff that would naturally give him a special proficiency at work through repetition. The family traditionally followed the same trade. During the 17th century and the major part of the 18th, there were extensive and diverse manufactures.
As the country was open to foreign traders and travelers, there were also people of various nationalities from Europe (e.g., the Portuguese and the English) as well as Parsis and Chinese. “Sher Shah Suri during his brief reign (1538 to 1545) set a pattern that was followed by the later Mughals, especially Akbar, when he encouraged trade by linking together various parts of the country through an efficient system of roads and abolishing many inland tolls and duties. The Mughals maintained this general policy, but their rule was distinguished by the importance that foreign trade attained by the end of the 16th century. This was partly the result of the discovery of the new sea route to India, but even so, progress would have been limited if conditions within the country had not been favorable” (Columbia University n.d.).
Both Akbar and Jahāngīr interested themselves in the foreign seaborne trade, and Akbar himself took part in commercial activities for a time. The Mughals welcomed the foreign trader, provided ample protection and security for his transactions, and levied a very low custom duty (usually no more than 2.5 percent ad valorem). “Furthermore, the expansion of local handicrafts and industry resulted in a reservoir of exportable goods. Indian exports consisted mainly of manufactured articles, with cotton cloth in great demand in Europe and elsewhere. Indigo, saltpeter, spices, opium, sugar, cotton, woolen and silk cloth of various kinds, yarn, asafoetida (a fetid resinous gum obtained from the roots of a herbaceous plant, used in herbal medicine and Indian cooking), salt, beads, borax, turmeric, lac, sealing wax, and drugs of various kinds were also exported. The principal imports were bullion, horses, and a certain quantity of luxury goods for the upper classes, like raw silk, coral, amber, precious stones, superior textiles (silk, velvet, brocade, broadcloth), perfumes, drugs, Chinese goods, and European wines.” (Hosmani 2014). Articles of import were sent to the towns of Lahore, Multan, Cambay, Surat, Patna, Agra, and Ahmedabad.
“By and large, however, in return for their goods, Indian merchants insisted on payment in gold or silver. Naturally, this was not popular in England and the rest of Europe. The demand for articles supplied by India was so great, however, and her requirements of European goods so limited, that Europe was obliged to trade on India’s own terms until the 18th century” (Hosmani 2014). Owing to its proximity to sources of suitable timbers, Chittagong specialized in shipbuilding, and at one time supplied ships to distant Istanbul. The commercial side of the industry was in the hands of middlemen.
“In the course of time, the foreign traders established close contacts with important markets in India, and new articles that were more in demand in Western Europe began to be produced in increasing quantities. All foreign travelers speak of the wealth and prosperity of Mughal cities and large towns. The efficient system of city government under the Mughals encouraged trade. Trade and commerce developed a lot during the Mughal period” (Columbia University n.d.). There was a brisk trade with many countries of Asia and Europe. Ceylon, Burma, China, Japan, Nepal, Persia, Arabia, and Central Asia were commercially connected with India during the Mughal period. The Portuguese, the French, the Dutch, and the English purchased Indian goods for sale in European markets. In the words of Balakrishna (1954), “India was the respiratory organ for the circulation and distribution of moneys and commodities of the world; it was the sea wherein all the rivers of trade and industry flowed and thus enriched its inhabitants.”
Saltpeter was manufactured in Bihar and was exported by European traders to their countries. It was used for the manufacture of gunpowder. Copper mines existed in Central India and Rajasthan. Iron was found in many parts of India. Red stone quarries were there in Rajasthan and Fatehpur. Marble came from Rajasthan. Opium, an agricultural produce, was exported after meeting internal consumption.
Maritime trade—Indian merchants versus European traders: “Aden and Moch—two leading seaports—were important commercial centers due to the influx of pilgrims and traders from Egypt who purchased Eastern products, in return for gold and silver. These ports were the main outlets of the maritime activities of the traders of Gujarat, Cambay, and Diu. The same ports were frequented by pilgrims and merchants from Lahari Bandar port in Sind, the Mughal port of Surat, the Bijapur port of Dabhol, and the Vijayanagar ports of Cannanore and Cochin”.2
The Mughal Empire sustained a powerful agriculture- and trade-based economy along with impressive military technology. “While the emperors, nobles and jagirdars (Under Delhi Sultanate, the Jagirdars were allowed to collect taxes, revenues and maintain a standing army.), mansabdars and officers had wealth in abundance, the common people had very little of it. The economic disparity was quite evident by the standard of living, diet, dwellings, dresses, and other comforts and necessities of life. The commoners, who included the peasantry, artisans, and laborers, used to live a poor life” (Raghav 2019). People were free to choose their occupation. A very substantial portion of India’s population depended on agriculture. The villages produced articles of daily use in such a way that they were able to meet their requirements. Barter system along with currency was also very popular in the rural areas. In general, it is observed that the prices of essential commodities were quite low.
The zamindars derived their right and title to the management of the zamindari from a sanad, which was in the nature of a contract emphasizing the obligations of the zamindars. Default in payment would render a sanad revoked. A zamindari might be leased out, that is, given of ijara (An exchange transaction applicable in Islamic regions. This is similar to a type of mortgage loan with no requirements for down payment, such as a rent-to-own arrangement in the United States.) or even sold out. With the increasing weakness of the imperial administration, there was a progressive increase in the autonomy of the zamindars.
Distress of the peasant—peasants’ revolt: The Mughal revenue system according to Professor Habib (2013) suffered from two infirmities. First, the revenue was set at the highest in order that the military contingents to be supplied by the mansabdars (Mans.abdār, member of the imperial bureaucracy of the Mughal Empire. The manabdārs governed the empire and commanded its armies in the emperor’s name.) could be met out of the revenue collection of the jagir. Second, the revenue was fixed at so high a level that it left only the marginal surplus, that is, enough margin for the survival of the peasants, which was the barest minimum needed for their subsistence. This meant that while the appropriation of the surplus produce constituted the great wealth and the wherewithal of the Mughal imperial government to maintain its pomp and splendor as also its military strength, it left the actual producers of the wealth in a state of utter poverty.
During the early years of Aurangzeb’s reign, a great portion of good cultivable land remained uncultivated for want of laborers, a large number of whom had perished due to the bad treatment and oppression of the governors, or had left the country.
In this context certain points require to be specially stressed:
Bernier (1916) has observed that “there were cases where peasantry gave up cultivation as a profession altogether.” It goes without saying that the intensity of oppression varied from place to place as also due to the variance in the character of the jagirdars and their agents or revenue farmers.
Prices of articles such as rice, oil, ghee, spices, vegetables, milk, meat, and livestock were very low. The people did not grovel in misery since the prices were low, although in times of natural calamities they suffered. India was quite prosperous during the time of Jahāngīr and Shah Jahan, though the foundation was laid by Akbar. He provided security and stability to the Mughal Empire. As wealth was mostly concentrated in the hands of the emperors, the nobles, the traders, and the industrialists, naturally, they led a life of pomp and pleasure. Even the common people generally did not suffer from want as almost all commodities of daily use were available at a very cheap price.
“Most of this flourishing commerce was in the hands of the traditional Hindu merchant classes, whose business acumen was proverbial. Their caste guilds added to the skills in trade and commerce that they had learned through the centuries. Not only were their disputes settled by their panchayats (a village council having a group of five influential older men acknowledged by the community as its governing body), but they would also frequently put pressure on the government by organized action” (Columbia University n.d.). Bernier (1916), writing during Aurangzeb’s time, declared that the Hindus possessed “almost exclusively the trade and wealth of the country.” If Muslims enjoyed advantages in higher administrative posts and in the army, Hindu merchants maintained the monopoly in trade and finance that they had during the Sultanate. “Banking was almost exclusively in Hindu hands. In the years of the decline of the Mughals, a rich Hindu banker would finance his favorite rival claimant for the throne. The role of Jagat Seth of Murshidabad in the history of Bengal is well known” (Columbia University n.d.).
The individual abilities and achievements of the early Mughals—Bābur, Humāyūn, and later Akbar—largely charted this course. Bābur and Humāyūn struggled against heavy odds to create the Mughal domain, whereas Akbar, besides consolidating and expanding its frontiers, provided the theoretical framework for a truly Indian state. Picking up the thread of experimentation from the intervening Sūr dynasty (1540 to 1556), Akbar attacked narrowmindedness and bigotry, absorbed Hindus in the high ranks of the nobility, and encouraged the tradition of ruling through the local Hindu landed elites. This tradition continued until the very end of the Mughal Empire, despite the fact that some of Akbar’s successors, notably Aurangzeb (1658 to 1707), had to concede to contrary forces3. The picture began to change with the accession of Aurangzeb. Revolts after revolts occurred that drained away the economic resources of the empire. Around the closing years of the 17th century, during Aurangzeb’s rule, the economic condition of the country deteriorated. Sarkar (2009) has observed, “There appeared a great economic impoverishment of India.” “The Mughal Empire began to collapse under its own weight. In 1707, when Aurangzeb died, serious threats from the peripheries had begun to accentuate the problems at the core of the empire”.4
As regards India’s economic status prior to her becoming a British colony, the Cambridge historian Maddison (2007) has stated that India had the world’s largest economy in the 1st century and 11th century. The percentage of growth defined, with 32.9 percent in the 1st century which declined to 28.9 percent in the 10 AD and registered further decline in 17 AD with 24.5 percent. But there was no economic growth. It was during 1000 to 1500 AD that India began to see economic growth, with its highest (20.9 percent GDP growth rate) being under the Mughals.
Before the Europeans, India was ruled for over 700 years by the Mughal emperors and had some of the most powerful rulers who had good knowledge of trade and commerce. India was better economically during these times and saw some of the most golden years in terms of its economy. Till the 17th century, India was not totally under the rule of the British, and hence, it was not yet plundered by these colonial rulers. According to Dutt (1963), the doyen of historians, “India in the eighteenth century was a great manufacturing as well as a great agricultural country.”
It is established now that the Mughals did not take away money. They invested in infrastructure, in building great monuments that are a local and tourist draw, generating crores of rupees annually. A beautiful new style known as “Indo-Islamic architecture” that imbibed the best of both sensibilities was born. They invested in local arts and crafts, and encouraged old and created new skill sets in India. As Swapna Liddle (the convener of The Indian National Trust for Art and Cultural Heritage (INTACH’) Delhi Chapter says,
To my mind the greatest Mughal contribution to India was in the form of patronage to the arts. Whether it was building, artisanal crafts like weaving and metalworking, or fine arts like painting, they set standards of taste and perfection that became an example for others to follow, and brought India the global recognition for high quality handmade goods that it still enjoys.5
Mughal paintings, jewels, arts, and crafts are the key possessions of many a Western museum and gallery as they were looted in and after 1857. Some can be found in Indian museums too. Art and literature flourished under the Mughal Empire. Frances W Pritchett, professor emerita, Columbia University (n.d.) says, “The greatness of the Mughals consisted in part at least in the fact that the influence of their court and government permeated society, giving it a new measure of harmony.”6 Almost all Mughal emperors either themselves or the scholars of their court wrote about contemporary life. “The Mughals had encouraged trade by developing roads, river transport, sea routes, ports and abolishing many inland tolls and taxes. Indian handicrafts were developed. There was a thriving export trade in manufactured goods such as cotton cloth, spices, indigo, woolen and silk cloth, salt, and so on. A very efficient system of administration set up by Akbar facilitated an environment of trade and commerce. It was this that led the East India Company to seek trade concessions from the Mughal Empire and eventually control and then destroy it”.7
During the Medieval period, which had its start from 8th century and continued up to the 18th century, rulers like Ala-u-din Khilji, Mohammad Bin Tuglaque, Ferozshah, Shershah, and Akbar introduced certain measures for economic reforms for the uplift of the Indian economy. Among such measures, the land reform and revenue reform measures of Shershah, and the revenue reforms and other economic reforms of Akbar were remarkable. But most of the Indian kings and queens of the medieval period were very much preoccupied with immaterial objects at the cost of material objects, totally leading toward the unnecessary wastage of resources. For example, Jehangir (1569–1627) was interested in art, literature, and architecture and the Mughal gardens in Srinagar remain an enduring testimony to his artistic taste. He married Mehr-un-Nisa whom he gave the title of Nur Jahan (light of the world). He loved her with blind passion and handed over the complete reins of administration to her.
Thus, after Kautilya, near about 2,000 years passed without having any serious development in terms of Indian economic thought.8 Table 2.1 gives a rough indication of the social structure of the Moghul Empire.
Table 2.1 Social structure of the Moghul Empire
Percentage of labor force |
Percentage of national income after tax |
|
18 |
NONVILLAGE ECONOMY |
52 |
1 |
Moghul Emperor and Court Mansabdars Jagirdars Native princes Appointed zamindars Hereditary zamindars |
15 |
17 |
Merchants and bankers Traditional professions Petty traders and entrepreneurs Soldiers & petty bureaucracy Urban artisans & construction workers Servants Sweepers Scavengers |
37 |
72 |
VILLAGE ECONOMY |
45 |
Dominant castes Cultivators and rural artisans Landless laborers Servants Sweepers Scavengers |
||
10 |
TRIBAL ECONOMY |
3 |
Source: Maddison (2006).
Added to all this was the cruel treatment of the weavers and traders, which hastened the decline of the Indian trading community and the destruction of the manufactures. The political disintegration of the Mughal Empire sapped India’s economic vitality. External invasion and internal disruption affected the easy transit of goods from one part of the country to the other. Interprovincial trade gradually came to a standstill. What still lingered was due to the fact that the Mughal Empire took some length of time to die. When it became incapacitated, the economic reins were assumed by the English merchant community.
“Queen Victoria was declared Empress of India, and Britain assumed direct control of its Indian possessions, winding up the East India Company. They argued that Indians were unable to govern themselves properly, and continued their annexation policy, removing “corrupt” Indian princes on a regular basis. India became the jewel in the British Empire.” “By the early 20th century, the whole of the subcontinent, including Sri Lanka, was under British administration, although many princely states remained theoretically independent.”10 The advent of the European trading communities and the eventual supremacy of the English in the matter carried with it also the subjugation of Indian trade and industries and conversion of India into a raw material producing and supplying country. All this had its impact on the Indian trading community.
Ali (2003) has “highlighted an interesting ongoing debate as to whether the Mughal Empire had a middle class and so possessed the potential to develop into a capitalist economy. It has been argued that such was the case. Leonard (1979) has even tried to apply the “Great Firm” theory to explain the decline of the Mughal Empire. Essentially, proponents of the theory point to the development of commerce, banking and the existence of large professional classes. Opponents of the thesis include Irfan Habib (2013), who has argued that the Mughal urban economy and commerce rested heavily on the system of land tax extraction and was incapable of independent development into capitalism.”
Table 2.2 Timeline of the Mughal Dynasty
Sl. No. |
Mughal ruler |
Period of rule |
1. |
Babur |
1526–1530 |
2. |
Humayun |
1530–1540, 1555–1556 |
3. |
Akbar |
1556–1605 |
4. |
Jahangir |
1605–1627 |
5. |
Shah Jahan |
1627–1658 |
7. |
Aurangzeb |
1658–1707 |
8. |
Bahadur Shah |
1707–1712 |
9. |
Jahandar Shah |
1712–1713 |
10. |
Furrukhsiyar |
1713–1719 |
11. |
Rafi ul–Darjat |
1719–1719 |
12. |
Nikusiyar |
1719–1743 |
11. |
Mohammed Ibrahim |
1720–1744 |
14. |
Mohammed Shah |
1719–1720, 1720–1748 |
15. |
Ahmad Shah Bahadur |
1748–1754 |
16. |
Alamgir II |
1754–1759 |
17. |
Shah Jahan III |
1759–1759 |
18. |
Shah Alam II |
1759–1806 |
19. |
Akbar Shah II |
1806–1837 |
20. |
Bahadur Shah II |
1837–1857 |
Source: Timeline of the Mughal Dynasty. https://www.worldatlas.com/articles/timeline-of-the-mughal-dynasty.html
Note: Contemporary use: In popular news jargon, Mughal or Mogul denotes a successful business magnate who has built for himself a vast (and often monopolistic) empire in one or more specific industries. The usage seems to have an obvious reference to the expansive and wealthy empires built by the Mughal emperors in India.11
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