Economic history of India

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India was one of the richest countries in the world, for about two and a half millennia starting around the end of 1st millennium BC and ending around the beginning of British rule in India.^{[1][failed verification]}

Around 500 BC, the Mahajanapadas minted punch-marked silver coins. The period was marked by intensive trade activity and urban development. By 300 BC, the Maurya Empire had united most of the Indian subcontinent including Tamilakam, which was ruled by Three Crowned Kings. The resulting political unity and military security allowed for a common economic system and enhanced trade and commerce, with increased agricultural productivity.

The Maurya Empire was followed by classical and early medieval kingdoms, including the Cholas, Pandyas, Cheras, Guptas, Western Gangas, Harsha, Palas, Rashtrakutas and Hoysalas. The Indian subcontinent had the largest economy of any region in the world for most of the interval between the 1st and 18th centuries.^{[2][3][4][failed verification][5][better source needed]} From 1-1000 AD India constituted roughly 30% of the world's GDP. In the year 1000, Maddison estimates 28.5% of the world's population lived in India.^[3]

India experienced per-capita GDP growth in the high medieval era, coinciding with the Delhi Sultanate. By the late 17th century, most of the Indian subcontinent had been reunited under the Mughal Empire, which for a time again became the largest economy and manufacturing power in the world, producing about a quarter of global GDP, before fragmenting and being conquered over the next century.^[6] Bengal Subah, the empire's wealthiest province, that solely accounted for 40% of Dutch imports outside the west,^[7] had an advanced, productive agriculture, textile manufacturing and shipbuilding, in a period of proto-industrialization.^[8][9]

By the 18th century, the Mysoreans had embarked on an ambitious economic development program that established the Kingdom of Mysore as a major economic power. Sivramkrishna analyzing agricultural surveys conducted in Mysore by Francis Buchanan in 1800–1801, arrived at estimates, using "subsistence basket", that aggregated millet income could be almost five times subsistence level.^[10] The Maratha Empire also managed an effective administration and tax collection policy throughout the core areas under its control and extracted chauth from vassal states.^[11]

India experienced deindustrialisation and cessation of various craft industries under British rule,^[12] which along with fast economic and population growth in the Western world, resulted in India's share of the world economy declining from 24.4% in 1700 to 4.2% in 1950,^[13] and its share of global industrial output declining from 25% in 1750 to 2% in 1900.^[12] Due to its ancient history as a trading zone and later its colonial status, colonial India remained economically integrated with the world, with high levels of trade, investment and migration.^[14]

From 1850 to 1947, India's GDP in 1990 international dollar terms grew from $125.7 billion to $213.7 billion, a 70% increase, or an average annual growth rate of 0.55%. This was a higher rate of growth than during the Mughal era (1600–1700), when it had grown by 22%, an annual growth rate of 0.20%, or the longer period of mostly British East Indian company rule from 1700 to 1850 where it grew 39%, or 0.22% annually. However, by the end of British rule, India's economy represented a much smaller proportion of global GDP. In 1820, India's GDP was 16% of the global GDP. By 1870, it had fallen to 12%, and by 1947 to 4%. The Republic of India, founded in 1947, adopted central planning for most of its independent history, with extensive public ownership, regulation, red tape and trade barriers.^[15][16] After the 1991 economic crisis, the central government began policy of economic liberalisation.