1 - The Decline and the Rise of the Indian Economy

Summary

Chapter 1 provides a long view of the living standards and economic growth from the Mughal Empire to the end of British rule, followed by economic changes in independent India. Living standards are measured in terms of income categories such as average wages and estimates of per capita incomes. I show that Indian per capita GDP was 60 percent of British level in 1600. But Indian per capita GDP began to decline from the seventeenth century, well before the conquest of Bengal by the East India Company. It stabilized in the nineteenth century and stagnated until the end of colonial rule. The economy moved from stagnation to positive economic growth after independence until the policies of regulation and import substitution. Although the rate of growth was low compared to recent decades, it marked a structural break with its historical trend and set India on the path of modern economic growth.