India has an economic history of thousands of years that dates back to the Indus valley civilization. Ancient India was a rich country till foreigners plundered it for several hundred years. But it has a history of a great economy due to its trade relations with foreign countries from the Far East and to the western European countries and Africa.
Ancient Economic History
The Indus civilization had great economy, which can be seen by the importance of trade that this civilization gave and also facilitated transportation. There was a marked improvement in the trade by the trade silver coins which were minted during the 600 BC by the Mahajanpada, Followed by the Maurya Empire who conquered almost the whole of India by 300 BC. During this period, trade flourished and economy was very good. The next 1500 years saw India with many rulers and is known as the largest economy of the world that dates back to the 1st and the 17th centuries AD.
During the Mughal Rule
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 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. However, it still experienced some unprecedented downs in economy. Studies have revealed that the gross domestic surplus goods contributed the world's 25.1% economy. It was estimated to be the second largest in the world, more than the treasury of Great Britain.
Advent of the Europeans
With the advent of the Europeans everything changed forever and India saw a sharp decline in its economy. They were responsible for ruining the Indian economy to a large scale through their reforms. It was a two way depletion of resources. The most prominent reason for the decline is the way British exploited India for 200 years. They bought raw material at a cheaper rates in India and sold the finished good at a very higher rate as compared to the rates in the Indian market. Thus this changed the whole scenario of the most powerful economy of the world to decline from its position from 22.3 % in 1700 AC to a drastic dip of 3.8% in 1952.
One can see that within just a short period of 200 years, such a huge country with such a prominent position in the economy and in the world trade was great affected by the colonial rulers. The colonial era has a tremendous impact on the economy due to the changes in the process of taxation, trade; property taxes all resulted in the breakdown of the economy. Indian industries were shut down and people were forced to buy English good only due to which the produce suffered losses and people lost their money.
However, the changing system of the British also brought new dimension to the rule in India like the banking system and the free trade. People could use a single currency system along with the exchange rates. Weights and measures were brought into the system and trade was carried on with full scale with the development of railways, roads, telegraph lines etc.
Independent India Economy
After India's independence, the economy slowly and firmly started getting back to its roots and the government of India focused on various aspects like agriculture, industries, trade, foreign policies etc. five year plans targeted the need to have a good Indian economy. Agriculture as well as industries was focused alongside to have a balanced economy. Thus after a few years of hard work, the gross economy which during the British was 2.3% reached to a stable height.
