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Two Millennia of India’s Economic Journey: 1st Century to 2000 AD

India is a poor country today. But was it always like that? If you look at the GDP figures (courtesy: Wikipedia) of India vs the rest of the world – the journey is extremely interesting. For most part of the two millenia, India and China simply ruled the world.

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Until 1000 AD India was clearly well and truly the richest country. The share of the World’s GDP was around 30% for the first millenia. Then by 1500 AD the Islamic rulers had started making their raids from North, and the Hindu Kings had started becoming weak. From a country where spirituality and rule of law was paramount, India, suddenly was losing in its own web.

Then by 1600 AD, the Mughals were ruling India, and it went down further. The roles of China and India in the world’s economic dominance were now truly reversed. In 1000 AD, the shares were India – 28.90/China – 22.70; and in 1600 the shares had changed to India – 22.60/China – 29.20. Whereas the Ming dynasty had done wonders for China, Mughals had brought it down. It was the rule of Akbar and then Jahangir and Shahjahan, that India regained its numero uno position back, probably also helped by the Qing dynasty in China.

A country that was at the peak of science and technology edge was in 600-700 years of rule of Islam and self-serving Hindu rulers, had been slowly but gradually lost the urge to succeed and grow. This period – the Mughal period – is, in my personal view, the one time that broke the back of progressiveness in the Indian (Hindu) ethos – culturally and scientifically. We were to pay for such lack of urgency.

We had many invaders but none made India as poor as the British. They systematically took the wealth of the country out and replaced it with total dependence! All that was done in the name of “free-trade”… where the work was moved to a place where it was done best. So, our raw material was taken out and we got expensive finished goods back. We paid for lack of preparation.

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Law of Personal and Societal Growth
No one – a person in his/her career or life or a society – grows in linear manner constantly. Everything grows up and down in curves interspersed with plateaus. These plateaus are the times that the preparation for the next level should be made. Decisions taken in life of a person and an organization ultimately decide which way the curve will move.. up .. or down. In India’s case, religion had clouded the normal life. We were forgetting to live in harmony with science and nature.. but were adamant to use religion to define what nature was. True Science will always be at odds with Religion, and always be in harmony with spirituality. For spirituality, like science is an exploration. Honest and clear and no-nonsense. It does not and should not define a result before it is achieved. There are no conjectures, or strict laws on how the final result of a step forward should be. In anticipation is the salvation of the exploration.

If that was all, it would have been fine, worst was the money from treasury was usurped back to England or to fund more and more wars for colonization. The money was slowly but surely taken out. Bengal famine and many other such horrendous events resulted.

Once the richest country was brought to its knees. If India is resurgent today, it is because of its inherent strength of character.. its Civilizational character. It takes a certain set of characteristics to create a nation. But it takes a whole lot of different characteristics to create a civilization. A Civilization has an inherent strength of creating and re-creating itself while remaining the same. Most other civilizations – like Greek, Roman, and Chinese have lost their basic character, but India still retains its 5000 years old (I personally believe it to be at least 10,000 years but I did not write the history, the British did) ethos while becoming modern.

These things have been said by many people, but I will provide here the economic data to show how it was to demonstrate the strength and fall of India as an economic power.(pointed to me by my friend, Sanjay Goel)

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Within a period of 90-odd years, the British virtually drained India’s economy dry! From the top economic power in 1820 with a share of 16% of the World’s GDP, India came down to just 7.6% in 1913.

It was not as if the misery of India was gone with the Brits. The first generation of free Indians left a lot to be desired. That generation collectively set India on a terrible downward turn.

There were two main issues, in my personal opinion, that contributed to the downward trend.

Idealism without adequate Practicality: Personal Idealism should be translated into rule of law not just generally felt self-aggrandisement. But that is what really happened! Right from Gandhi downward, every person was Idealist not because they wanted to set Rule of Law, but they would often flout those very laws. Dictatorship of Idealists though subtle was unmistakeable!

Vision abandoned for Rejoicing of the Moment: What that generation lack was simply vision. That generation was consumed in the occasion of the time. Meanwhile, the population increased by leaps and bounds. Suddenly, in 50 years time, a population that was “manageable” had turned monumental, while the infrastructural growth was inadequate to handle any growth.

It wasn’t until the Indian mind – that was responsible for India’s original economic peak, started the reverse journey. As the economy was unfettered, the Indian techies, under the radar of the Government bureaucracy performed a miracle. It used the common talent from the NIIT’s and Aptech’s to use Y2K to the most telling effect. The GDP share had risen from a miserable 3.10% to 5.00% amidst great competition in the World Economy.

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Desh Kapoor

The panache of a writer is proven by the creative pen he uses to transform the most mundane topic into a thrilling story. Desh – the author, critic and analyst uses the power of his pen to create thought-provoking pieces from ordinary topics of discussion. He writes on myriad interesting themes. Read the articles to know more about his views and “drishtikone”.

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12 thoughts on “Two Millennia of India’s Economic Journey: 1st Century to 2000 AD”

  1. From the top economic power in 1820 with a share of 16% of the World’s GDP, India came down to just 7.6% in 1913.

    Perhaps you will care to consider a little something called the Industrial revolution in Europe, during roughly the same period, and the lack of an equivalent in India. The British did systematically destroy cottage industry in India but that is certainly not the sole, or the main, reason why India’s share of global GDP nosedived.

  2. From the top economic power in 1820 with a share of 16% of the World’s GDP, India came down to just 7.6% in 1913.

    Perhaps you will care to consider a little something called the Industrial revolution in Europe, during roughly the same period, and the lack of an equivalent in India. The British did systematically destroy cottage industry in India but that is certainly not the sole, or the main, reason why India’s share of global GDP nosedived.

  3. Thats what I wanted to bring out by saying that we did not take science and technology seriously. After the advent of Islam in India – specially the Mughals, the investment in pure science and technology seems to have gone down. Ostentatious living by the kings was more prevalent.

    So, it was the industrial revolution that created the difference, but IR was really the culmination of that scientific ethos that Europe had gained during Rennaissance… and that is where India just lost it!!

  4. Thats what I wanted to bring out by saying that we did not take science and technology seriously. After the advent of Islam in India – specially the Mughals, the investment in pure science and technology seems to have gone down. Ostentatious living by the kings was more prevalent.

    So, it was the industrial revolution that created the difference, but IR was really the culmination of that scientific ethos that Europe had gained during Rennaissance… and that is where India just lost it!!

  5. One needs to go beyond the surface and see why the Industrial Revolution happened at all.

    Paul Graham (a respected computer science PhD and successful Entrepreneur – he sold what is now ‘Yahoo Stores’ to Yahoo) says in one of his books that the IR happened in Europe because of the following chain of events: 1) some people broke away from serfdom to settle in cities 2) these people in the cities (later labeled as the “middle class”) escaped from the control of the feudal lords (eqvt to Zamindars/nobility in India) and thus got to keep the wealth that they created from their labors (in the days of serfdom they could not work for themselves). 3) this ability to keep the fruit of their inventions and labors (the promise of rewards) inspired more people to learn and grow the “middle class” and was called the “industrial revolution”.

    While the picture in the wikipedia table suggests that the wealth in the World just got re-distributed, it is a specious assumption. Wealth – which means “things that people want” – can be created and money is simply a means to trade wealth. Wealth (“desirable items” like guns, steel, medicinal breakthroughs) was rapidly created in Europe and the new world by this middle class even as India was plundered and the creation of wealth (read “creation of desirable items” like cotton, spices etc) in India stagnated because its own middle class shrunk.

    The “middle class” is not simply the class of people who are neither rich nor poor. The “middle class” is the class of people who can increase their income by working harder/smarter and keep most of the fruit of their labors. By this definition, a government servant and indentured farmer (or the highly taxed indigo farmer in British India) are not middle class, while an independent farmer and a small-time shopkeeper are middle class.

    At its nadir in early 20th century, the “middle class” in India was minimal – almost everyone was dependent on the dole of the zamindars in villages or the smalltime rulers or the British government for sustenance.

    What we’re seeing now is the resurgence of the class of people that can create wealth; the Ambanis, the Mittals and the like are from this nearly-extinct “middle class”, they are not from erstwhile royalty or the Zamindari. So what is happening in India now is what happened around AD 1600 in Europe.

  6. One needs to go beyond the surface and see why the Industrial Revolution happened at all.

    Paul Graham (a respected computer science PhD and successful Entrepreneur – he sold what is now ‘Yahoo Stores’ to Yahoo) says in one of his books that the IR happened in Europe because of the following chain of events: 1) some people broke away from serfdom to settle in cities 2) these people in the cities (later labeled as the “middle class”) escaped from the control of the feudal lords (eqvt to Zamindars/nobility in India) and thus got to keep the wealth that they created from their labors (in the days of serfdom they could not work for themselves). 3) this ability to keep the fruit of their inventions and labors (the promise of rewards) inspired more people to learn and grow the “middle class” and was called the “industrial revolution”.

    While the picture in the wikipedia table suggests that the wealth in the World just got re-distributed, it is a specious assumption. Wealth – which means “things that people want” – can be created and money is simply a means to trade wealth. Wealth (“desirable items” like guns, steel, medicinal breakthroughs) was rapidly created in Europe and the new world by this middle class even as India was plundered and the creation of wealth (read “creation of desirable items” like cotton, spices etc) in India stagnated because its own middle class shrunk.

    The “middle class” is not simply the class of people who are neither rich nor poor. The “middle class” is the class of people who can increase their income by working harder/smarter and keep most of the fruit of their labors. By this definition, a government servant and indentured farmer (or the highly taxed indigo farmer in British India) are not middle class, while an independent farmer and a small-time shopkeeper are middle class.

    At its nadir in early 20th century, the “middle class” in India was minimal – almost everyone was dependent on the dole of the zamindars in villages or the smalltime rulers or the British government for sustenance.

    What we’re seeing now is the resurgence of the class of people that can create wealth; the Ambanis, the Mittals and the like are from this nearly-extinct “middle class”, they are not from erstwhile royalty or the Zamindari. So what is happening in India now is what happened around AD 1600 in Europe.

  7. Was searching for an Urdu couplet which mentions how people are more interested in seeing a hanging rather than a marriage. This was credditted to Khusroo Faiz, or some other famous poet. Could you email me the couplet?
    vinod natesan
    prm86-88

    Nice site. I am on the learning curve and hope to do something similar myself. My blogs are http://mayanmuse.blogspot.com
    http://vinodnatesansportfolio….
    I store information and anecdotes that I may need to refer back or remember. Would appreciate your views when you find the time

  8. Was searching for an Urdu couplet which mentions how people are more interested in seeing a hanging rather than a marriage. This was credditted to Khusroo Faiz, or some other famous poet. Could you email me the couplet?
    vinod natesan
    prm86-88

    Nice site. I am on the learning curve and hope to do something similar myself. My blogs are http://mayanmuse.blogspot.com
    http://vinodnatesansportfolio.blogspot.com
    I store information and anecdotes that I may need to refer back or remember. Would appreciate your views when you find the time

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