Indus valley civilization, which flourished between 2800 BC and 1800 BC, had an advanced and flourishing economic system. The Indus valley people practiced agriculture, domesticated animals, made tools and weapons from copper, bronze and tin and even traded with some Middle East countries.
Agriculture was the main economic activity of the people in the Vedic
age but with the second urbanization a number of urban centers grew in
North India. This gave a major fillip to trade and commerce. The ancient
Indians had trade contacts with far off lands like the Middle East, the
Roman Empire and the South East Asia. Many Indian trading colonies were
settled in other countries.
Most of the Indian population resided in villages and the economy of
the villages was self-sustaining. Agriculture was the predominant
occupation of the populace and satisfied a village's food necessities.
It also provided raw materials for industries like textile, food
processing and crafts. Besides farmers, other classes of people were
barbers, carpenters, doctors, goldsmiths, weavers, etc. In towns and
urban centers trade took place through coins but in villages barter was
the main system of economic activities.
The system of castes and sub-castes ensured division of labor and
functioned much like guilds, providing training to apprentices. The
caste system restricted people from changing ones occupation and
aspiring for an upper caste's lifestyle. Traditionally, there was joint
family system and the members of a family pooled their resources to
invest in business ventures.
Products like the muslin of Dhaka, calicos of Bengal, shawls of
Kashmir, textiles and handicrafts, agricultural products like pepper,
cinnamon, opium and indigo were exported to Europe, Middle East and
South East Asia in return for gold and silver.
With the coming of Europeans in the 16th century trade and commerce was
completely transformed. The Europeans concentrated mainly on spices,
handicrafts, cotton clothes, indigo etc. Of all the European powers the
British proved most strong and drove their competitors out of India.
Slowly and gradually the British acquired political supremacy and hold
over India and subverted the Indian economy according to their own
needs. With the establishment of British rule in India the drain of
wealth from India began. There was poor industrial infrastructure when
the British left India.
After independence, India opted for planned economic development. The
key concern was to develop thrust and heavy industries. With this there
began rapid industrialization. Here, it is important to note that our
economic policies were socially oriented and controlled by the state.
India began to follow a mixed economy pattern. But in the late eighties
and in the beginning of the 1990s, the Indian policy makers realized
that state controlled economy was not able to produce desired results in
almost 45 years. It was decided to pursue economic policy based on
liberalization, privatization and globalization. In this era of
liberalization, privatization and globalization, India has witnessed
rapid growth in some sectors of economy, even though better results were
expected when India began to follow the new economic policy.
Economic History Of India contains information on India economic history and a brief economic history of India.