The economic aspects of the transition have been reconstructed mainly on the basis of the evidence of land-grant inscriptions, coins, and settlement archaeology, with some help from literary sources such as the account of the Chinese traveller. These may be studied under the following themes: continuous and unprecedented agrarian expansion; growth of a new class of landlords in the countryside along with corresponding changes in the status of peasantry; and decline in craft production, trade, and urbanisation. It is difficult to describe some of these changes without discussing the issues they involve relating to the changes that enable us to speak of a feudal or some other type of formation in early medieval India.
Agrarian regions had emerged all over the subcontinent by the first half of the seventh century CE at the time of Xuan Zang’s (Hiuen-Tsang) visit. However, the economies of not all areas were equally or uniformly developed. People who practised pastoralism ‘exclusively’, for instance, inhabited a long stretch along the lower Indus. Many other regions remained heavily forested, and in yet other areas, there had been a setback to past prosperity and land was lying desolate. These details, together with many others from other sources, show that there remained considerable potential for further agricultural development.
It is commonly argued that a major, probably the most important, way in which the early medieval states sought to tap this potential was by granting land to brahmins and temples. The increasing number of land grants in early medieval times is taken as spearheading the process of agrarian expansion. However, a recent reappraisal of the evidence cautions against this as a simplistic generalisation, and takes the position that only a handful of the grants were really about agrarian expansion, most being grants of revenue of already settled areas, that typically a land grant was the end product rather than a starting point of agrarian expansion. However, growing numbers of peasants continued to bring more and more land under the plough, and they got all possible encouragement from the state; for instance, in eighth century King Lalitaditya distributed water wheels for facilitating cultivation in Kashmir.
Extension of agriculture was a widespread phenomenon by all accounts, making possible the rise of kingdoms in new areas and integration of new communities during and after our period. The details for all areas for all periods are not equally available, but research has been adding to our knowledge. For instance, we are exceptionally well informed about the construction and upkeep of irrigation system in the Pallava kingdom. The Pallavas have long been reputed for building a number of tanks around Kanchipuram in the Palar valley through such a shrewd, close observation of the terrain as draws the admiration of the experts even today. The evidence for irrigation in southern Tamil Nadu in the Pandya kingdom – small epigraphs on granite sluices – remained neglected for some time. Their investigation has revealed several impressive irrigation projects that were successfully completed in the Pandya kingdom during the seventh-eighth centuries.
A major new feature of the agrarian economy was the creation of a class of landlords by means of land grants to religious men and institutions. The first instances of these grants date back to the early medieval period, but they are few, and it is only from the Gupta period that they began to be issued on a steadily larger scale. The grantees were given away for all time the revenues of a village (sometimes a part of it, sometimes more than one village), the people of which were asked to be obedient to them and regularly pay them their dues. They were also authorised to collect judicial fines from them for many types of crimes (aparadha). In other words, the grantees came to represent the state in the granted area, and state officials were normally prevented from interfering with their authority.
There is a controversy over the implications of these grants for the peasantry. According to one view, by subjecting them to the authority of these landlords, the land grants led to an all- round depression of the status of peasants, who suffered from several constraints and were reduced to a state of servility. In the other opinion, this is exaggeration as the peasants now simply began to pay the grantees just what they had been paying so far to the state officials, and so they remained as ‘free’ as ever.
Paradoxically, this progress of the rural economy was not matched, according to some historians, by a similar progress of the non-rural one, i.e. of non-rural craft production and of trade and urbanisation. Villages came to be ‘closed’ or ‘self-sufficient’ economies, meeting most of their needs through mutual, non-market agreements on exchanges in kind; e.g. the potter would provide pots to peasants in return of which he would be given a piece of land and/or a share in their harvest. As villages multiplied, this kind of arrangement led to a progressive reduction of trade and commerce, and with it to the decline of urban economy. It thus strengthened a trend that began with the decline of India’s external trade, which was occasioned by the downfall of the Western Roman Empire and came to a near halt by the close of the sixth century when people in the eastern Roman Empire stopped importing silk from China through Indian traders. The trade with China and Southeast Asia was clearly inadequate to check this economic regression, as seen in the urban and currency scenario in early medieval India till about the end of the tenth century CE. Trade is reduced to a minimum, a much lesser number of coins is seen in circulation, prosperous cities of yore continue to decline with some being eventually deserted as urban professionals including priests and craftspersons move out in the countryside in search of livelihood.
The criticisms of this picture of urban decline have been numerous and varied. One is the outright rejection of the decline thesis in toto; according to these critics foreign trade during the Gupta and the post-Gupta periods was in fact ‘in an exceptionally flourishing state’. In another line of critique, a phase of urban and currency decline in general is conceded, but in the same light it is also argued that the decline occurred for a more limited period and on a lesser scale, and that it could not have been due to the decline of long-distance trade; no attempt is however made to explain what else was or could have been responsible for the decline. The third viewpoint seeks to delimit further both the spatial and the temporal extent of the decline of urbanism; it is believed that the case for urban decline has been made only for the Ganges valley but there is also a study showing urban decay for the whole of the subcontinent). Further, some scholars point out the problems with the concept of closed or self-sufficient economy, and while some others do not think there was a reduction in the number of coins in circulation in early medieval India, there are yet others who concede the paucity of coins but do not think that this necessarily amounts to shrinkage of trade.
To top it all, inner contradictions in the decline theses have also been brought out. We need only to add to it the variations and contradictions in the critics’ standpoints (not to mention the responses to them by the protagonists of the decline thesis) to see how bad the overall situation is for arriving at a general, controversy-free understanding of the non-agrarian history of the period. Yet it seems safe enough to conclude from all this – although it is not much of a conclusion – that the transition to the early medieval period in the non-agrarian sector was anything but static, and that the confusing mass of evidence underlines a dynamism the precise nature of which awaits further research.