Economic System of Ancient India

The civilizations of ancient India had an advanced and flourishing economic system but still, its society was unable to sustain itself. 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 backbone of the economy but with the advent of transport systems and maritime trade, the people made contacts with various foreign people and increased their trading activities. For the government, taxation was the main source of income and at times, the people were coerced in to pay it. If they did not pay, they were punished. On one hand, peasants were forced in to paying the taxes while on the other hand, the rich simply got away from them by bribing the king with minimal gifts.

India’s economic history spans nearly 5,000 years and its dates back to the Indus valley civilization which flourished around 2500 B.C. Many objects discovered from the archaeological sites of Mohenjo-Daro and Harappa bear testimony that they were big industrial centers having trade relations with central, west and south India, West Asia and other parts of the world. Vedic-literature provides a detailed description of the economic condition of early Aryans who were quite familiar with cultivation of crops, as well as indulged in various manufacturing activities besides doing commerce with Babylon, Sumeria and some other countries. ¹

In Aryan times, the economic life of India was chiefly agricultural. The very name of arya, in which the masters of the country prided themselves, meant (root krish) the tillers of the soil, as opposed to the other occupants. ² Cattle was held in high esteem as a social wealth. Dairy farming was in an advanced state and there was an abundant supply of milk, curd, butter and ghee. Trees were cut for wood and timber. There was a regular industry of catching birds by means of snares which were sold in the markets. The king could dispose all abandoned and forestlands as he liked and all the ownerless lands were acquired by the crown. The land was enjoyed by the cultivators by the payment of a tithe to the king who could remit it to any person. The inland and foreign trade flourished side by side. ³

The people of rig-Vedic age knew about cultivation, and agriculture was their mainstay. They knew about tilling of the soil, cutting of corn with the help of seeds and cutting of corn with the help of sickles. The Vedic hymns also tell that trade and commerce was known to the people of the early Vedic period. ⁴

There were basket-makers, weavers, leather-workers, carpenters, metal-workers, blacksmiths, potters, jewelers, cloth merchants, perfumers, dyers, tailors, household servants, cooks, clerks, artists, door-keepers, sentinels, drain-cleaners, sweepers, elephant-trainers etc. The hereditary craftsmen or those who followed professional callings such as those of architects, mechanics, carpenters, ivory-makers, fishermen, butchers, etc., organized themselves into various guilds agreeing to be governed by their own laws and customs. They functioned as producers, manufactures, suppliers or sellers. ⁵

Non-Industrial Occupations

Other occupations included barbers (Napita, Vaptr), washer-men (Malaga, Vasahpalpuli), gatherers of wood (Darvahara), fishermen (Dasa, Dhivara, Dhaivara, Vainda, Mainala, Kaivarta, kevarta), herdsmen (Gopa, Gopala), huntsmen (Govikartana), drum-beaters (Dundubhyaghata), cooks (Paktr, Päcaka, Srapayitr), charioteers (Sarathi, Rathin, Rathagrtsa, Dhürsad, Yantr), elephant keepers (Hastipa), servants (Anuksattr, Ksattr), doorkeepers (Dvarapa, Grhapa), guards or servants (Payu, Purusa,), menials or messengers (palagala), waiters (Parivestr), rowers (Anithin), boatmen (Navaja), grooms (Asvapa), bath-attendants (Upasektr) and shampooers (Upamanthitr).

In addition to these, there were others who earned their living by amusing the public or ministering to the luxury of the rich. The Purusamedha list mentions actors (Sailusa), dressmakers (Pesaskari), exciters of love (Smarakari), lute player (Vinavada) etc. Similarly, we hear of Vamsanartaka (acrobat), Vinagathin (lute-player), Panighna (Hand-clapper) and Sabhavin (keeper of gambling houses). The evidence of the Rigveda and other Samhitas proves the existence of courtesans as well.

With the growth of the state, there arose a class who lived by accepting service under the king. Prominent amongst these officials we have the list of Ugra (police officers) Jivagrbh, atapati, and later on the Am tyas and Sacivas. ⁶

Priestly Occupations

Priestly class earned their livelihood by officiating in sacrifices, by teaching the sacred lore, or in other ways ministering to the spiritual needs of the community. As has already been shown, various grades of priests had arisen and these included the following:

1. Rtvij-priest officiated in sacrifices.
2. Chandoga-reciter of verses.
3. Somin, Udgltha, Gayatrin-priest or reciter.
4. The Adhvaryu-a yajus priest.
5. The Brahma priest.
6. Ganaka-astrologer.
7. Nakastradarsa-agtrologer.
8. Bhisak—physician.

During the days of the Rigveda, the practice of medicine had become a profession. The word Bhisak occurs in many places of the Rigveda. The healing art was highly lauded, and the Asvins, the divine physicians were repeatedly invoked. In addition, Varuna and Rudra were also called physicians. To the physician’s skill was attributed the healing of the blind and the lame; the story of the restoration of Cyavana's youth is mentioned in many places. ⁷

People residing in a particular area and following the same occupation naturally cooperated with one another to achieve common objectives. So, generally, the crafts were localized which helped in creating better understanding amongst craftsmen residing in the same area. Besides, the turning of professions as hereditary had the advantage that a child could easily learn from his father and other elder of the family. The experience of the previous generation thus came to be utilized, and this also made sizeable number of trained craftsmen available to different guilds. Thus, localization of crafts and hereditary nature of professions were also helpful to craftsmen in keeping their safety, separate identity and making their organization more compact with their own conventions and usages. ⁸

Labor

At that time labor was not wholly servile: much of the agricultural labor was in the hands of the freemen householders along with their sons and kinsmen. Gradually, however, there arose various laboring classes, recruited from the landless, poor or conquered enemies. Slaves existed and in the Samhitas, the Dasa (slaves) are mentioned many times. In the Rigveda, there are prayers for the acquisition of slaves and their gifts but the number of slaves has not been ascertained. Husking, winnowing, grinding of grains etc. were mostly entrusted to women. Women were employed in certain industries and female laborers worked for wages. Thus, in Vedic literature the occupations of Upalapraksini (woman employed in grinding corn), Vayitri, Pesaskari (female weaver) Rajayitri and Vasahpalpuli (woman employed in dyeing and washing cloths) are mentioned. In rich families Dasis (slave girls or maid servant) were employed. ⁹

Agriculture

Agriculture was carried on by ploughing. It is said that ploughing (kisikamma) which was done at the right time, yielded plenty of fruit. The Brhatkalpa Bhasya refers to the festival in honor of the ploughman’s profession dealing. Phodikamma is mentioned as a ploughman's profession dealing in ploughing the field. The lands were ploughed with hundreds and thousands of ploughshares, and sugar-cane, barley and rice were cultivated by shrewd (pannatta) farmers (karisaya). Three types of ploughshares were recorded, viz. hala, kuliya and nangala. Spade (kudala) was known and the fields were guarded by fences. Samvdha was mentioned as a place situated in a mountain or any other place of safety where the farmers used to store their corn. ¹⁰

Historical records suggest that agriculture thrived in the Indus Valley civilization due to the ample supply of rain and river water. During that period, great progress in agriculture was made. The quality and size of the plough (sira) was improved; and the use of manure was well understood for increasing production. ¹¹

Methods of Ploughing

Khetta or agricultural land was considered among ten kinds of external possessions, the rest being buildings, gold etc., seeds of grains, collection of wood-fuel and grass, friends and relatives, conveyance, furniture such as bed, sofa etc., male and female slaves and utensils. A khetta was divided into setu and ketu; the former being irrigated by Persian wheels (arahatta) etc., and the latter by rainfall. Various methods of irrigation were adopted for example, in Lata the fields received their moisture from rainfall, in Sindhu from rivers, in Dravida from ponds, in Uttarapatha from wells and in Dimbharelaka from floods. ¹²

Since Agriculture, in ancient days, was the most important industry of the people of India, the agricultural department of the government served as a sort of information bureau for the cultivators. It was presided over by a superintendent, whose duty was to study the conditions of cultivation in the different parts of the country and to introduce improved methods, wherever possible. He collected improved varieties of seeds and distributed them among the agriculturists. He was also expected to possess a knowledge of the science of meteorology so as to be able to make forecasts of weather conditions and of agricultural outlook. It was under the supervision of this department of the government that uncultivated tracts were brought into cultivation. The agricultural department supervised cultivation on state lands and assessed the irrigation rate. It was also responsible for making suitable provision for pasturage.

Associated with this department was that of dairy-farming. In Kautilya's time, dairy-farming was undertaken by the state in one of two ways. Either the state farms were directly worked by the government department with the help of herdsmen employed for wages, or they were leased to herdsmen for a share of the produce. Cattle-breeding also engaged the attention of the state. ¹³

Crops

The predominant grain harvest was that of rice of different varieties. The paddy was sown during the rains, and when ripe, the crops were harvested with newly sharpened sickles, thrashed, winnowed and then taken to the granary where they were filled in new jars, which were sealed and kept in a corner. ¹⁴

Megasthenes speaks of many vast plains of great fertility, more or less beautiful, but all alike intersected by a multitude of rivers. The greater part of the soil, moreover, was under irrigation, and consequently bore two crops. In addition to cereals, throughout India millet was also grown which was kept well-watered by the profusion of river streams, and much pulse of different sorts, and rice also, and what is called bosporum, as well as many other plants useful for food, of which most grew spontaneously. The soil yielded, moreover, not a few other edible products fit for the subsistence of animals. ¹⁵

Seventeen kinds of grains are mentioned in historical records: rice, barley, lentil, wheat, green gram, sesame, gram, proso millet, panic seeds, kodo millet, buck wheat, rice, leguminous seeds, dolichos and flax. Amongst other field grain crops mung bean, lablab bean, linseed, safflower, millet, shorea robusta resin, pigeon pea and mustard are also mentioned. The hoarders of millions of kumbhas of these grains in their granary were called naiyatikas. Among the spices, fresh ginger, dry ginger, cloves, turmeric, cumin, pepper, long pepper and mustard were grown.

Sugar cane was a very common crop at that time as well and sugar cane presses, known as mahajanla kolluka, were also present. Jantapilana was a profession that dealt in crushing sugar-cane, sesame and other articles by machines. Among fiber-yielding plants, cotton was the most important. Among other kinds of fabrics silk, wool, linen and hemp were also present. With respect to vegetables, cucumber, radish, spinach, bitter gourds, tuber roots, water nuts, onions, garlic and other vegetables were also grown. ¹⁶

Animal Husbandry

India was regarded as one of the oldest centers of animal domestication whose origin may be traced back to the pre-Neolithic period. ¹⁷ Cattle were a highly esteemed form of wealth in ancient India, and cows, buffaloes, oxen and sheep were included among the precious possessions of a king. At that time a herd of cattle was called Vaya (vraja) also known as sangilla and the King’s vraja consisted of ten thousand cows.

Breeding and rearing of cattle were an essential concern of the people. The people who were responsible for tending the cows were known as Ahirs. Cattle were supplied with necessary grass and water (tanapaniya). There were large cow-pens (gomandava) where the herds of cows, bulls and calves were kept. Even in those times, cattle theft was common and a cattle-lifter was called kudaggaha, who used to go to the cow-pen and steal the cattle at night. Quarrels among cow-herds were common as well. Apart from these cattle-lifters, cattle were also lost when they were attacked by the lions and the tigers in the jungle. These cows were of various colors such as black, blue, red, white and brindled.

Dairy farming was in an advanced state and the supply of milk and its four products such as curds, butter-milk, butter and ghee ¹⁸ was abundant and so people could get highly nutritious food. The milk was not only obtained from cows, but from buffalos, camels, goats and sheep as well. The place where the products of milk were available was known as Khiraghara. The cattle were also utilized for the production of hide, bones, ivory nails and hair. These cattle were slaughtered in slaughter houses known as suna. Up to five hundred buffaloes were slaughtered there every day.

The flocks of sheep and goats were kept in an enclosure known as vddaga. They were utilized for wool-production. The brooms (rayaharana) and blankets were made of sheep wool. People used to slaughter sheep and eat their flesh seasoned with salt, oil and pepper. Veterinary science was also in a developed stage. ¹⁹ These goats, cows and bullocks were not merely used for milking only, but were also used for ploughing and transport as well. Moreover, elephants and horses were also kept for transport, but some elephants were kept for guard purpose as well. ²⁰

Textile

Spinning was freely practiced in the houses of Mohenjo-Daro, as would appear from the large find of spindle-whorls. Wool was used for warmer textile, and cotton for the lighter one. ²¹ The art of spinning and weaving was well known during the Vedic period as well. India was the first country in the whole wide world to have perfected the art craft of weaving. It is believed that fine weaving passed on from India to Assyria, Egypt and through the Phonecians into Southern Europe. ²² Cotton was the chief textile fiber for India in ancient times. Thus, the cotton textile industry of India has a long tradition. ²³

Trade

Commerce was the largest contribution only next to that of land revenue. Taxes on commerce and industry were imposed in consideration of the difficulty or otherwise of purchase and sale of goods by merchants, their standard of life, family expenses and incidental charges on intermediaries and labor. The taxes were imposed by the king and it depended on him whether to levy taxes from a merchant or not. The Nayadhammakaha refers to the sea-faring merchants of Campa who visited the king of Mihila with the precious gift of a pair of ear-rings. The king was much pleased to receive the gifts and exempted the merchants from the tax. The merchant Ayala who returned from Parasaula with a huge amount of wealth, visited the ruler of Bennayada with a plate (thala) full of silver, gold and pearls and was exempted from tax. ²⁴ On the other hand, poor traders and a lay man were never exempted from the tax list and they were sometimes charged more than they could bear. Exploitation of common trader was general in that society and kings used to charge taxes in every case except those who gave them special gifts.

Trade and commerce, both internal and external, flourished. The internal trade was usually carried out in the towns and its markets. The Jatakas have mentioned several trade routes. One route ran south-east from Saravathi to Rajgrih and the rivers were easy to use as a route. Trade with foreign countries was carried on both through land and sea routes. There were trade relations with Babylon also. There is also a mention of traffic with China.²⁵

With the urbanization of the Indus culture, the trade became vitally connected with the economic life of the society because breeding cattle and agriculture did not fulfill all the requirements of it. ²⁶ The trade of the trader, dealer or middleman was largely hereditary. ²⁷ A certain social class, the Panis, had in Vedic times amassed fortunes which were considered scandalous. This type of man was odious in the eyes of the pious ancestors of the Brahman caste, the authors of the hymns; he was charged with rapacity, usury, and impiety. Perhaps the recognition of a legal standing for trade in the Vaisya caste was one of the first concessions to the facts that the Brahmanic theocracy had to make in order to ensure at least a nominal supremacy for itself.

In Vedic times, the towns and villages were already connected by tracks. The commercial centers grew up at the more important intersections of routes. This concentration of trade at fixed points must, however, have been long regarded by the itinerant business done by caravans, escorted by armed men. ²⁸

Panis

According to the evidence of Vedic literature, the Panis were a rich and enterprising merchant class solely devoted to the cause of gain, either through trade or through usury. They have been designated Bekanstas or userers and Rig-vedic evidence shows that with the exception of a few of them like Brbu, they were the objects of popular dislike. According to Roth and Zimmer they were a niggardly merchant class who neither worshipped the gods nor revered the priests. Ludwig thought, that they belonged to the aboriginal trading class, while according to Hillebrand they were the Parnians of Strabo.

The Atharva Veda mentions garments (Dürsa) coverlets (Pavasta), and goatskin, (Ajina) as articles of trade. An Atharva Vedic hymn shows that the early merchant was an adventurous wanderer, who moving from place to place, risked not only his goods, but his life for the sake of gain. He had to travel from one part of the country to another. His life was often jeopardized owing to the depredations of wild beasts on the way, and owing to the presence of robbers, who scrupled not to take the life of such people. Consequently, before starting, the merchant prayed to Indra ‘the merchant par excellence’ so that he might be his ‘guide and leader, chasing ill-will, wild beasts and highway robbers.’ After this prayer for security, he is described as turning to Agni and praying for a hundred treasures and craving pardon for this stubbornness. He is then made to speak of ‘the distant pathway which his feet have trodden,’ and to call upon the gods to be propitious to him in order that there may be success in sale (Vikraya), barter and exchange of merchandise (Pratipana), that his invested capital (Dhanam) may grow more for him and his ventures may be prosperous. The Vedic merchant, thus, was an adventurer in search of gain. He sold, bartered and ex-changed his goods for those of another locality. He appears to have been the fore-runner of the Svartha-vahas and caravan leaders of the early Buddhist literature and of the Jatakas. ²⁹

Prices were not fixed and there was competition. The vice of adulteration was also not unknown. On the part of the buyers there was the haggling of price. Merchants could enter into partnership or temporary partnership and there could arise disputes as to shares of profit. All indigenous and foreign goods imported into the city were assessed and a duty was levied upon them. ³⁰

Import and Export

Evidence suggests trading with several far-flung regions, including Mesopotamia and other parts of the Middle East. Indus traders exchanged textiles and items such as beads and dice for resources such as lapis lazuli gemstones and tin. ³¹ The trade with foreign countries was mainly carried through water routes. The people of Indus valley also knew the state exercised strict control over weights and measures. The people of Rig-Vedic period were essentially rural and lived in villages. The Rig-Vedic society was self-sufficient and provided all the necessities of life without any dependence on their countries. ³² The export and import of goods were carried on along land and water routes. The merchants and traders used wagons or bullock carts. A caravan sometimes consisted of 500 wagons and its course was guided by land-pilot. Foreign trade was usually carried on by sea and in some cases partly by land. Within the country, produce was brought to markets for sale. There were shops where commodities such as textile fabrics, groceries, green groceries, oil, perfumes, flowers, articles of gold and jewelry, etc. were displayed for sale. The hawkers carried their wares for sale in portable trays. ³³ India was the main exporter of the luxury items to the Roman Empire and earned huge profits. A large number of coins of this period those of the Indo-Greeks, Sakas, Parthians, Kushanas, indigenous rulers and tribal republics, cities and guilds have been found, some in hoards. It indicates a greater circulation of money-economy and fairly advancement of bricks trade and commerce. ³⁴

Mining and Metallurgy

India was rich in mineral wealth and so in ancient India mining was an important industry. The principle kinds of ores obtained from mines were iron, copper, tin, lead, silver, gold and diamond. Gold was found in two forms, in alluvial deposits and in reefs and veins. ³⁵ Iron and other metals were obtained by fusion. Besides metals, there were hundreds of mineral substances such as salt, soda, yellow orpiment, vermilion, arsenic, mercury, antimony and others. In those days, Indians and especially women-folk were extremely fond of ornaments. Fourteen kinds of ornaments are mentioned: a chain of eighteen strings of pearls (hara), a chain of nine strings of pearls, a single string of pearls, a necklace of pearls, an armlet for upper arm, a bracelet, an armlet, finger ring, ear-rings, a chain round the chest, chest-jewel and ornament worn between the eye-brows on the forehead.

The ornaments such as a chain of three strings of pearls, a pearl pendant, waist band, neck-chain, rings, ornaments of the hand, diadem, bracelets, bracelets worn on the upper arm, ornament reaching the feet, ornament string for the waist and were worn by males. The ornaments for ladies were anklets, girdle, a ring, jewels and a necklace of jewels.

A golden frontlet measuring four fingers and signet rings were common. The elephants and horses were also decorated with ornaments. The elephants are described as fitted with armors and decorated with neck-ornaments made of various gems and jewels and upper garment. The horses also were gaily caparisoned with armor and decorated with small mirrors on their waists. The ornaments for cows were known as Mayurangaculikas.

Then the rich and the kings used golden vessels for eating and drinking. The chair, bed-steads, thrones and royal cars used by kings were inlaid with gold. Golden vases were also used. The most commonly used precious metals and gem stones were jewels, pearls, conches, corals, rubies, zircon, quartz, emerald, serpentine, sapphire, moon-stone, sun-stone and cat’s eye stone. ³⁶

Fiscal and Monetary Systems

The business was carried on both by means of barter or exchange and cash transactions. Some types of coins were also in vogue during this period. Though the means of transport were quite underdeveloped, they certainly marked an improvement over the Rig-Vedic period ships and boats were also popular mode of transport. The elephants and horses were also used for the purpose of transporting goods. ³⁷

Manufactured goods were exchanged or sold. The Rigveda speaks chiefly of exchanges, such as ten cows for an Indra. It was afterwards that the root kri gave the words kraya, vikraya, with the sense of "sale". Yet the Atharvaveda gives a spell for obtaining success in trade. ³⁸

Simple barter was proved by the evidence of the words Pratipani or Prapani, meaning commodities received in barter or exchange, but the use of the cow standard in addition to that of gold and silver money. As to the use of this cattle standard, Macdonell and Keith cite an instance from the Rigveda in which an image of Indra is obtained by giving ten cows. According to them, this proves the existence of simple barter. In reality, this shows the growth of an idea of a standard of value and the use of cows for this purpose. Besides the use of the cow there was the use of gold and probably of silver money. The use of metallic currency has already been mentioned. ³⁹

The origin and evolution of the system of coinage prevailing in ancient India is equally involved in obscurity. ⁴⁰ Silver and gold coins appear to have been in use and mention of gold coins like nikkha or suranna is late and doubtful. Besides actual currency there were several other legal instruments. Mention is made of Letters of credit, and Promissory Notes. ⁴¹

Sir Alexander Cunningham asserted that the so-called punch-marked coins were as old as 1000 B.C., and perhaps even older. The most ancient coinage of India, which seems to have been developed independently of any foreign influences generally followed the native system of weights as given in Manu Chapter VIII, verses 132. Thus, the valid reason for denying the Greek origin of the art of coinage in India is that, several classes of early Indian coins do not exhibit a single clear trace of Greek influence, whereas they are distinctly marked by special Indian characteristics. The coinage of India in its most primitive forms consisted of small, oblong, roughly rectangular plates of silver, without any impression on the surface, but struck to a definite standard of weight viz., 32 ratis or 58.5 grains. A slight improvement was made when these little plates of silver were stamped with rough devices of stars, trees and so forth. These devices were impressed by means of small punches not covering the face of the coins. The symbols, found on ‘the punch-marked’ coinage, were used simply as the marks of localities and of individuals without any special religious significance. They were used primarily to denote either the localities at which the coins were struck, the authorities responsible for their issue, or the money changers through whose hands they passed. The earliest inscribed coins are proved by the characters used to belong approximately to the period of Asoka, whose inscriptions are the earliest examples of the use of alphabet, which afterwards developed into Devanagri. ⁴²

Various kinds of coins

Round or square sheets of metals, were at first possibly heated, and then were punch marked. Such coins were marked on one side only. Later on, finding this punch marking a tedious affair, people began to heat metals into liquid forms and then poured these liquids into dies made of clay. Sometimes, in this process, two coins which stuck with each other, were cut into two and separated and sometimes they were allowed by oversight to remain as they were. We see even today these double coins. Still, later on another method was adopted. Pieces of metals were first of all heated, and while they were hot, were stamped with a dye, sometimes on one side, and sometimes on both. At last mints were erected for coining purposes. Thus, there were four kinds of coins:

1. Punch marked.
2. Cast coins.
3. Dye-coins.
4. Minted coins. ⁴³

Balance Weights and Measures

The growth of trade facilitated the growth of standards and measures of exchange. In course of time, a metallic currency grew and displaced simple barter, or the use of the cow as a standard of value. The machineries for measuring quantities came into existence. ⁴⁴

From prehistoric times in India, gold was used in gilding the wheels of chariots and the horns of cattle, and in making jewelry. The demand for it was universal, and it was much prized by everyone. Owing to this, gold pieces weighing krsnala, salamana, hiranya, suvarna, niska, etc., were given to the Brahmanas as gifts in different sacrifices and ceremonies. The passages in the Satapattha-brahmana referring to these gifts are very interesting and give a good idea of the popularity of the metal. There is no doubt that

these pieces were made of equal weight to avoid any injustice or inequality. It appears that some Brahmanas, getting into financial difficulties, sold these pieces to other people, and thus put them into circulation. Some of the aphorisms of Panini show clearly that Satamana, Hiranya, and Niska were used in sale and purchase. ⁴⁵

The balance or the Tula is mentioned in the Vsj. Samhits and also in the Satapatha Brahamana. In connection with the estimation of a man's good and evil deeds, or in connection with the balance ordeal we find it mentioned. Wooden vessels of definite size were used in measuring grains. Standards of weight were also invented. Thus, the Krsnala (berry of abrus precatorius) and Masa and some other grains were used as standards of weight in measuring precious metals. ⁴⁶

Taxation

The system of revenue in ancient India was methodical, organized, systematic and proportionate. Financial administration in ancient India was strongly based on prevalent customs and conventions, and prescribed rules and regulations. ⁴⁷ The income of the state was derived from crown-lands and was supplemented by taxes. A tax of two per cent was levied on the increments of cattle and gold, and a sixth, eighth, or twelfth part of the produce of the soil was required to be paid as land revenue. Revenue was also derived from mines, manufactories, and storehouses, and Megasthenes states that royal officers employed in towns and villages, who collected such revenue and fostered agriculture, manufacture, and trade. ⁴⁸

Revenue and taxation were the chief support of the state. Revenue in ancient India was derived partly from taxation and partly from sources other than taxation. The Vyavahara Bhasya mentions one-sixth of the produce as legal tax, but it varied according to the amount of the produce, the cost of cultivation, the condition of the market and the nature of the soil. The commentary on the Pinda Niryuth speaks on a house-tax and mentions that a king should collect two drammas every year from each house. The Nisitha Curni refers to a merchant who had twenty vessels, and he gave one as a royal tax. ⁴⁹ There was an indirect tax on the use of water from reservoir Setu. ⁵⁰

Other important state taxes included Sita which comprised of all kinds of crops that are brought by superintend of agriculture. Bhaga was the tax on the crops which was one-sixth of what was produced. Bali: Aryanas were the first people known to have evolved a system of taxation under their ruler called the Rajan. In the Rigveda, it is mentioned that the Rajan used to receive his revenues in the form of ‘bali’ which meant offering. It was the most primary source of revenue in Vedic period. Bali was comprised of 1/6 of the agricultural produce or steers for a given individual. Another type of bali was tributes taken from the vanquished foes by the rulers.

U. N. Ghoshal in his book ‘Contributions to the History of the Hindu Revenue System’ and K. R. Sarkar in ‘Public Finance in Ancient India’ discussed a long list of taxes in ancient India which was based on exploitation and mercilessness of the Indian rulers including customs duty, excise tax, salt tax, excise profit tax, trade tax, professional tax, income tax, gambling tax, general property tax (kara), construction tax (vastuka), survey tax (rajju), police tax (chorarajju), tax on villages on the water (klŗpta), general tax on villages, (piņdakara), emergency tax (praņaya), celebration tax (utsanga), war tax (senabhakta) etc. which were imposed on every category of the residents except those who were closer to the kings and their relatives. The surprising thing which was found in the list of these taxes was that there were several taxes with unfixed rates and were totally dependent on the will of the ruler. Once decided, no one could complain about it, if someone dared, the convicted was punished in a brutal way and it was up to the king who exempted the selected people from these tyrannical taxes.

Other Taxes

Eighteen kinds of other taxes are mentioned in the Jain texts: taxes from cows (go), buffaloes (mahisa), camels (utti), cattle (pasu), goats (chagali), grass (tana), palala grass (puval in Hindi), chaff (busa), wood (kattha) coal (angara), plough (siya), threshold (umbara), pasture-ground (jangha or janga), bullocks (balivadda), earthen pots (ghaya) hides and skins (comma), food (cullaga) and any other tax imposed by will (uppatti). ⁵¹

Besides, there were other sources of income to the State. The Nayadhammakaha mentions a jeweler of Rayagiha who wanted to build a lake in the town. He visited the king with precious gifts and got his permission to do so. Then a goldsmith Kumaranandi of Campa, who wanted to go to the island of Pacasela, visited the king with a precious gift of gold and got his sanction for making an announcement to that effect. Unclaimed property and treasure-trove were other sources of income to the king. The king Vijayasena of Candrakanta, who, hearing the death of a certain merchant, deputed his officers and took possession of his property through illegitimate means.

The Nisitha curni refers to a certain king who punished a certain merchant and confiscated the treasure-trove which he had discovered. The same king is said to have honored a Brahmana who discovered a similar treasure-trove. Fines and forfeitures formed another plentiful source of income. The commentary on the Brhatkalpa Bhasya refers to an imposition of a fine of eighty thousand rupakas on one who raised his sword or any other weapon to kill another person. However, if a person attacked did not die of the stroke, the amount of fine varied from country to country. ⁵²

Assessment and Collection

A rajjuya was a survey-minister, who measured a janapada field by holding one end of the rope tied to a stick, the other end being held by the owner of the field, and is identical with the rajjugahaka amacca of the jatakas and the rajuka of Asokan Edicts. No other officials were mentioned.

About the collection of taxes, it may be mentioned that the collectors were very oppressive to the poor-folk. Historical records speak about a king who invaded another king for non-payment of taxes (kappaka). The Vivagasuya refers to a district-officer (vatthakuda) named Ikkai who harassed the people of five hundred villages under his jurisdiction by means of various taxes (kara), custom duties (bhara), interest, bribe, insult, compulsory contribution (dejja), punitive taxes (bhejja), extortion of money at the point, of the sword, by giving shelter to thieves, by setting fire and way-laying the travelers. The Brhalkalpa Bhasya refers to the king of Soparaya who demanded tax from the merchant (negama). They refused to pay and the king ordered his tax-collectors to burn down their house. ⁵³ Many incidents like this are found in the history of ancient India.

Banking System

There were no banks in general and facilities were few. Money lending was looked upon as an honest calling. Money was lent against bonds and there were cases of bad debts which were never repaid. ⁵⁴ Credit was always an essential condition of agriculture in India, as in all other agricultural countries, and the practice of granting loans to needy cultivators began from very early times. In the Mahabharata, Narada was made to ask Yudhishthira: ‘Grantest thou with kindness loans unto the tillers, taking only a fourth in excess?’ ⁵⁵

Rate of Interest

According to the Smrti of Yäjnavalkya, the normal rate of interest was 15 per cent per annum, or one-eightieth part of the actual capital per mensem. Kautalya's Arthasastra and the other law-books give the same rate. A careful study of the inscriptions shows that the rate of interest varied from time to time. It ranged between 9 to 25 per cent per annum. According to one of the inscriptions at the Pandu-lena caves of Nasik, the rate of interest was from 9 to 12 percent, if the interpretation of the expressions padikasata and padona-padika-sata may be taken to mean one and three-quarter padika, or silver pana, a month per hundred.

The padika of this inscription seems to have meant a quarter of a pana. Interpreting the expression quoted above as meaning that 100 and 75 padikas, or say 400 and 300 copper panas, was the annual interest on 2,000 and 1,000 copper panas respectively, the rate of interest amounts from 20 to 30 per cent. According to the five Bana inscriptions from Gudimallam, the current rate of interest was 25 percent per annum. Taking all this evidence into consideration, it appears that the normal rate of interest was 15 per cent per annum, as stated in the law books, and this rate may be taken for the sake of calculation in those places where the annual rate of interest is not specified. ⁵⁶

Manu Smiriti did not ban it either, but rather limited the interest rate to a certain extent. At one point, it stated that one cannot receive interest more than 5 percent and at another point, it stated that one can only receive what the government of the day classified as the legal interest rate.

Gradual growth of Capitalism

Capitalism was facilitated by various circumstances and by various causes. Apart from the tendency to accumulation in the case of thrifty individuals, this was helped to a certain extent by the existence of freedom of disposal of property. There were very little restrictions on transfers, whether of chattels or of real property. A study even of the Rig-Vedic hymns shows that from very early times, men enjoyed a certain amount of freedom in the disposition of their property. Sale of houses or lands either to a purchaser, or for the sake of satisfying debts to creditors, was allowed even in those days. The evidence of Rig-Veda shows how a man could spend his whole fortune even for gambling. In the case of heads of families, they were most probably unfettered in the matter of disposal of their property. As long as they lived, they exercised some control over their children, but this authority of the head of the family never approached that of a Roman ‘pater familias.’ Children could divide in the very life-time of their father, and this added much to the freedom of disposal of property.

Debts

Debts were contracted for various purposes, gambling being one of them. It often reduced men to slavery. Debtors were bound by the creditor, and according to some they were fastened to posts to be exposed before the public, pressure being thus put on them for repayment. The Rig-Veda contains references to the repayment of debts, and in the Atharva Veda we have prayers to the gods for absolution from sin arising from non-payment of debt. The information supplied by three hymns of the Atharva Veda, is of interest in this connection. In the first, absolution from the sin arising out of debt is asked for. Some passages are really significant and show how in those days, non-payment of debt was regarded as a sin which brought consequences in the other world. The reciter expresses his willingness to ‘throw away the grain to pay his debt’ and prays further.

  “May we be free in the world and that yonder. In the third world may we be un-indebted.
May we debt-free, abide in the pathways, in all the Worlds which gods and fathers visit.”

The next two hymns ask forgiveness for cheating and incurring debt in dice-play. The last one contains a clear reference to an intention of non-payment, and shows how the moral idea came to be masked by motives of deception. The Kausika Sutra directs these three hymns to be uttered on the occasion of repayment of debts, or on the decease of the creditors. The Atharva-Veda makes a reference to the creditor’s wife to whom, probably, the debtor we liable to pay on the demise of her husband.

The consequences of debt told heavily on the debtor, and consequently on society. The evidence of Rig-Veda shows that the debt for gambling reduced people to poverty. Everything was exacted, even the dwelling houses were sold, and men became homeless and destitute. ⁵⁷

Shortly, the economic system of ancient Hindustan evolved over time, but this evolution was unable to solve the problems of their lives since it was based solely on the principles on self-good and self-prosperity rather than the collective goodness. The ruling class was least bothered with the welfare of the people and did all it could to increase its wealth and control over the empire while the poor class did all it could just to stay alive. This has been the case of all the civilizations which either moved away from the divinely revealed system, or tried to change it for their personal benefits in the name of religion or power.

• ¹ Vivek Pathak (September, 2016), Economic History of India, “Ancient to Present Day”, National Journal of Multidisciplinary Research and Development, Vol. 1; Issue-4, Pg. 27.
• ² Paul Masson Oursel (1934), Ancient India and Indian Civilization, Trench Trubner & Co. Ltd., London, U.K., Pg. 107-108.
• ³ Bimala Churn Law (1947), Ancient India, The Indian Research Institute, Calcutta, India, Pg. 24-25.
• ⁴ Vivek Pathak (September, 2016), Economic History of India, “Ancient to Present Day”, National Journal of Multidisciplinary Research and Development, Vol. 1; Issue-4, Pg. 27.
• ⁵ Bimala Churn Law (1947), Ancient India, The Indian Research Institute, Calcutta, India, Pg. 24-25.
• ⁶ N. C. Bandyopadhyaya (1980), Economic Life & Progress in Ancient India, Kharbhanda Offset, Allahbad, India, Pg. 150-152.
• ⁷ Ibid, Pg. 147-148.
• ⁸ Santanu Mahapatra (September, 2012), Guild: The Institutional Economic Base of Ancient India, International Journal of Social Science & Interdisciplinary Research, Vol. 1, Issue-9, Pg. 166.
• ⁹ N. C. Bandyopadhyaya (1980), Economic Life & Progress in Ancient India, Kharbhanda Offset, Allahabad, India, Pg. 150-152.
• ¹⁰ Jagdish Chandra Jain (1947), Life in Ancient India, New Book Company, Bombay, India, Pg. 89-92.
• ¹¹ Rama Shankar Tripathi (1942), History of Ancient India, Jainendra Presss, Delhi, India, Pg. 18, 50-51.
• ¹² Jagdish Chandra Jain (1947), Life in Ancient India, New Book Company, Bombay, India, Pg. 89-92.
• ¹³ Pramathanath Banerjea (1916), Public Administration in Ancient India, Macmillan & Co. Ltd., London, U.K., Pg. 257-258.
• ¹⁴ Jagdish Chandra Jain (1947), Life in Ancient India, New Book Company, Bombay, India, Pg. 89-92.
• ¹⁵ Romesh Chunder Dutt (1904), Ancient India, Longman’s Green & Co., London, U.K., Pg. 129-130.
• ¹⁶ Jagdish Chandra Jain (1947), Life in Ancient India, New Book Company, Bombay, India, Pg. 89-92.
• ¹⁷ S. P. Ray Chaudhuri & Mira Roy (1993), Agriculture in Ancient India: A Report, Indian Council of Agricultural Research, Dehli, India, Pg. 72.
• ¹⁸ Clarified butter made from the milk of a buffalo or cow (Oxford Living Dictionaries (Online Version): https://en.oxforddictionaries.com/definition/ghee: Retrieved: 21-12-2018)
• ¹⁹ Jagdish Chandra Jain (1947), Life in Ancient India as Depicted in the Jain Canons, New Book Company, Bombay, India, Pg. 94-95.
• ²⁰ M. S. Randhawa (1980), A History of Agriculture in India, Indian Council of Agricultural Research, Delhi, India, Vol. 1, Pg. 316-317.
• ²¹ Rama Shankar Tripathi (1942), History of Ancient India, Jainendra Press, Delhi, India, Pg. 20-21.
• ²² Priya Saxena (2012), Development of Arts and Crafts from 1000 B.C. to 600 B.C., Rohilkhand University, Uttar Pradesh, India, Pg. 119-120.
• ²³ Lallanjee Gopal (1961), Journal of the Economic and Social History of the Orient: Textile in Ancient India, Brill, Boston, USA, Vol. 4, No. 1, Pg. 60.
• ²⁴ Jagdish Chandra Jain (1947), Life in Ancient India, New Book Company, Bombay, India, Pg. 61-63.
• ²⁵ Vivek Pathak (September, 2016), Economic History of India, “Ancient to Present Day”, National Journal of Multidisciplinary Research and Development, Vol. 1; Issue-4, Pg. 28.
• ²⁶ Balram Srivastava (1968), Trade and Commerce in Ancient India: From the Earliest Times to A.D. 300, The Chowkhamba Sanskrit Series Office, Varanasi, India, Pg. 16.
• ²⁷ E. J. Rapson (1922), The Cambridge History of India, Cambridge University Press, Cambridge, U.K., Vol. 1, Pg. 210.
• ²⁸ Paul Masson Oursel (1934), Ancient India and Indian Civilization, Kegal Paul, Trench, Trubner & Co. Ltd. London, U.K., Pg. 109.
• ²⁹ N. C. Bandyopadhyaya (1980), Economic Life & Progress in Ancient India, Kharbhanda Offset, Allahbad, India, Pg. 155-157.
• ³⁰ Bimala Churn Law (1947), Ancient India, The Indian Research Institute, Calcutta, India, Pg. 24-25.
• ³¹ Rebecca Rowell (2015), Ancient India, Abdo Consulting Group Inc., USA, Pg. 30.
• ³² Vivek Pathak (September, 2016), Economic History of India, “Ancient to Present Day”, National Journal of Multidisciplinary Research and Development, Vol. 1; Issue-4, Pg. 27.
• ³³ Bimala Churn Law (1947), Ancient India, The Indian Research Institute, Calcutta, India, Pg. 24-25.
• ³⁴ Santanu Mahapatra (September, 2012), Guild: The Institutional Economic Base of Ancient India, International Journal of Social Science & Interdisciplinary Research, Vol. 1, Issue-9, Pg. 168.
• ³⁵ F. R. Allchin (1962), Journal of the Economic and Social History of the Orient: Upon the Antiquity and Methods of Gold Mining in Ancient India, Brill, Boston, USA, Vol. 5, No. 2, Pg. 195.
• ³⁶ Jagdish Chandra Jain (1947), Life in Ancient India as Depicted in the Jain Canons, New Book Company, Bombay, India, Pg. 98-99.
• ³⁷ Vivek Pathak (September, 2016), Economic History of India, “Ancient to Present Day”, National Journal of Multidisciplinary Research and Development, Vol. 1; Issue-4, Pg. 28.
• ³⁸ Paul Masson Oursel (1934), Ancient India and Indian Civilization, Trench Trubner & Co. Ltd. London, U.K., Pg. 109.
• ³⁹ N. C. Bandyopadhyaya (1980), Economic Life & Progress in Ancient India, Kharbhanda Offset, Allahbad, India, Pg. 155-157, 162-163.
• ⁴⁰ Dr. Pran Bath (1929), A Study in the Economic Condition of Ancient India, The Royal Asiatic Society, London, U.K., Pg. 85-86
• ⁴¹ Bimala Churn Law (1947), Ancient India, The Indian Research Institute, Calcutta, India, Pg. 24-25.
• ⁴² Gauranga Nath Banerjee (1920), Hellenism in Ancient India, Great Russell Street, London, U.K., Pg. 123-124.
• ⁴³ Tribhuvandas L. Shah (1939), Ancient India, Manilal P. Ministry B.A., Ahmedabad, India, Vol. 2, Pg. 40-42.
• ⁴⁴ N. C. Bandyopadhyaya (1980), Economic Life & Progress in Ancient India, Kharbhanda Offset, Allahabad, India, Pg. 155-157.
• ⁴⁵ Dr. Pran Bath (1929), A Study in the Economic Condition of Ancient India, The Royal Asiatic Society, London, U.K., Pg. 85-86.
• ⁴⁶ N. C. Bandyopadhyaya (1980), Economic Life & Progress in Ancient India, Kharbhanda Offset, Allahabad, India, Pg. 155-157.
• ⁴⁷ Sanjeev Kumar Sharma (2016), Taxation and Revenue Collection in Ancient India, Cambridge Scholars Publishing, Cambridge, U.K., Pg. 10.
• ⁴⁸ Romesh Chunder Dutt (1904), Ancient India, Longman’s Green & Co., London, U.K., Pg. 129-130.
• ⁴⁹ Jagdish Chandra Jain (1947), Life in Ancient India, New Book Company, Bombay, India, Pg. 61-63.
• ⁵⁰ Chandra Hariharan Iyer (2016), Indirect Taxes in Ancient India: A Conceptual Review, Episteme, An Online Interdisciplinary, Multidisciplinary & Multi-Cultural Journal, Badlapur, MMR, India, Pg. 105.
• ⁵¹ Jagdish Chandra Jain (1947), Life in Ancient India, New Book Company, Bombay, India, Pg. 61-63.
• ⁵² Ibid, Pg. 61-63.
• ⁵³ Ibid.
• ⁵⁴ Bimala Churn Law (1947), Ancient India, The Indian Research Institute, Calcutta, India, Pg. 24-25.
• ⁵⁵ Pramathanath Banerjea (1916), Public Administration in Ancient India, Macmillan & Co. Ltd., London, U.K., Pg. 257-258.
• ⁵⁶ Dr. Pran Bath (1929), A Study in the Economic Condition of Ancient India, The Royal Asiatic Society, London, U.K., Pg. 93-94.
• ⁵⁷ N. C. Bandyopadhyaya (1980), Economic Life & Progress in Ancient India, Kharbhanda Offset, Allahabad, India, Pg. 183-185.