Maarg Manthan · Topic 8.5

Trends in India’s Economy During the First Half of the 18th Century

Medieval History › Medieval Economy & Trade · Topic 8.5

In the first half of the eighteenth century India's economy was neither simply collapsing nor booming: the Mughal fiscal system strained, Nadir Shah's raid in 1739 emptied the treasury and regional states rose, yet trade and manufactures kept expanding, Bengal was a major exporter, and calico exports to Europe rose from 9½ lakh pieces in 1701 to 20 lakh in 1719. Historians still debate decline versus regional growth.

5 min read · UPSC Prelims · History · Medieval Economy & Trade

At a Glance

Strain Jagirdari crisis and heavy revenue demand
Shock Nadir Shah, 1739
Strength Bengal, Gujarat, Coromandel trade
Exports Calicoes: 9½ lakh (1701), 20 lakh (1719)
Debate Decline or regional growth
Exam link UPSC Prelims, Medieval History: Medieval Economy & Trade

Where Does It Fit?

This is the fifth topic of the category on medieval economy and trade. The previous topic described the Mughal state and commerce, and this one looks at what happened after Aurangzeb. The next and last topic covers medieval coinage. Previous topic: The Mughal State’s Relationship with Commerce.

What Pressures Weighed on the Economy?

In short: the economy of the early eighteenth century combined fiscal strain at the centre with continued commercial activity in the regions.

The Mughal revenue system, under which the state share had risen from about one-third to about half of the produce including intermediaries’ shares, was largely kept after Aurangzeb, and one estimate by Tapan Raychaudhuri puts revenue demand at 50 per cent or more of output. The nobility’s growth and the jagirdari crisis made nobles squeeze peasants and zamindars, as discussed in Assessment of Aurangzeb’s Reign and the Jagirdari Crisis. Nadir Shah’s invasion sacked Delhi in 1739 and emptied the treasury, and regional rulers, such as the Nawabs of the north and the Nizams of the south, declared autonomy as the Marathas became the dominant military power in much of India. Prices had almost doubled in the first half of the seventeenth century with the inflow of silver, as shown in Overseas Trade and the Role of European Trading Companies.

What Remained Strong?

Area	Evidence
Trade and manufacture	They continued to expand during the eighteenth century despite the fall of the Mughal empire, although India stayed backward compared with Europe in science and technology
Exports	White calico exports to England rose from 9½ lakh pieces in 1701 to 20 lakh in 1719, despite a ban of 1701 on painted and printed calicoes
Bengal	The wealthiest Mughal province, prominent in textiles and shipbuilding, exporting silk, cotton textiles, steel and saltpetre; Dhaka was a financial capital with a population said to exceed a million; Bengal supplied about 40 per cent of Dutch Asian imports
Fast-growing regions	Gujarat, the Coromandel coast and Bengal were the areas that developed most rapidly in the seventeenth century
North India	Trade and industry in the heartland continued to flourish and expand, and district administration remained tenacious

How Did Producers and Merchants Fare?

Production grew mainly through the putting-out (dadni) system, in which merchants advanced money to artisans, which raised output but left artisans more dependent on Indian and foreign merchants (see Artisans and Master-Craftsmen in Medieval India). Manufactures stayed small-scale with simple tools. Competition among companies for pre-paid cloth orders from Bengali middlemen was keen, and Europeans paid largely in silver, with an estimate of about 28,000 tonnes of bullion flowing into the subcontinent between 1600 and 1800. Indian merchants, bankers and brokers remained active in regional and international trade. The regional kingdoms of the period and their economies are described in Economic Conditions in the 18th Century Regional Kingdoms.

Was It Decline or Growth?

Historians do not agree. One view, associated with Jeffrey Williamson, sees Charter Act of 1813: one-way free trade Tariffs Nearly 80 per…">deindustrialisation in the later eighteenth century, caused indirectly by Mughal collapse. Prasannan Parthasarathi disputes this and argues that Bengal, the Maratha lands and Mysore did not decline and compared with Britain into the late eighteenth century. P. J. Marshall sees the eighteenth century as a time of continuity, in which the economy stayed prosperous apart from frequent famines. A common view is that the empire’s decline followed from internal contradictions, yet trade and manufacture kept growing in several regions. As an analytical point, the best reading is that the centre weakened while regions with strong merchants and ports, notably Bengal, Gujarat and the Coromandel, adapted, so the eighteenth century cannot be called a dark age or a golden one without specifying region and sector.

Why Is This Topic Important?

Debate question Decline versus growth in the 18th century
Facts Calico figures and Bengal’s role
Link Prepares the rise of the Company

What Came Next?

The next topic describes medieval Indian coinage. Next topic: token currency Sher Shah Gold, silver…">Medieval Indian Coinage (Sultanate Tanka, Mughal Rupee and Mohur).

Key People and Terms

Dadni Putting-out advance system
Calico Cotton cloth export
Saltpetre Gunpowder ingredient
Deindustrialisation Decline of manufacturing
Bullion Gold and silver
Successor state Regional power after Mughal weakness

Exam Corner

Points to Remember

Calico exports: 9½ lakh (1701) to 20 lakh (1719).
1739: Nadir Shah sacks Delhi.
Bengal: about 40 per cent of Dutch Asian imports.
Dadni raised dependence on merchants.
Williamson versus Parthasarathi.

Do Not Confuse With

Fiscal decline and economic decline State revenue crisis versus fall in production and trade
Bengal and Coromandel Eastern and southeastern textile regions
Williamson and Marshall Deindustrialisation view versus continuity view

Memory Hook

The centre weakens, the regions trade; calicoes double; historians quarrel.

Mains Angle

Questions on this period ask whether it was an age of decline. These points add depth.

Strains Revenue burden and political disorder
Strengths Trade, textiles, Bengal
Debate Regional variation

A Question You May Face

An original practice question, not a past paper question.

“Would you consider the first half of the eighteenth century an era of economic decline or growth in India? Discuss.”

How to Answer

Strain Fiscal crisis and Nadir Shah.
Growth Trade, calicoes, Bengal.
Producers Dadni and dependence.
Verdict Regionally varied.

GS Relevance

Prelims: Bengal's exports and calico trade. GS Paper 1: the eighteenth-century economy and the decline debate.

Frequently Asked Questions

What was the state of India's economy in the early eighteenth century?

The state faced a fiscal and political crisis and Nadir Shah's raid of 1739 emptied the treasury, but trade and manufactures continued to expand and regions like Bengal, Gujarat and Coromandel remained active in textile exports.

How much did Indian calico exports rise?

Exports of white Indian calicoes to England rose from about 9½ lakh pieces in 1701 to 20 lakh in 1719, even after a ban of 1701 on painted, dyed and printed calicoes, which proved to have little effect.

Why was Bengal important economically?

Bengal was the wealthiest Mughal province, exporting silk, cotton textiles, steel and saltpetre, with Dhaka as a financial capital. Bengal supplied about 40 per cent of Dutch imports from Asia and attracted much European silver.

What is the decline debate on the eighteenth century?

Williamson argues that Mughal collapse caused deindustrialisation in the later century, while Parthasarathi argues that Bengal, the Marathas and Mysore did not decline, and Marshall stresses continuity and a prosperous economy apart from frequent famines.

How did the dadni system affect artisans?

Under the dadni or putting-out system merchants advanced money to artisans for goods to be made, which increased production but made the artisans more and more dependent on Indian or foreign merchants for their livelihood.

PYQ Practice — Statement Analysis

1 Nadir Shah sacked Delhi in 1739.

True

The treasury was drained.

2 Bengal supplied about 40 per cent of Dutch Asian imports.