This work was submitted as an assignment for the credit
completion of the course "Indian Financial and Business Models" at
Shailesh J Mehta School of Management, IIT Bombay.
Introduction
India is a melting
pot of culture, peoples and various societies. The definition of India various
from person to person and perspective to perspective. Having caught in the
dichotomies present in this tolerant country, India is neither what it is made
out to be nor what it is thought to be. The realms of reality are beyond
comprehension of an ordinary mind. It involves some deep soul digging as well
as facts and inferences put out by leading scholars of the outside world.
For far too long
India has been ridiculed as a country where any financial, business and
management model would fail because of its belief in karma, rebirth and caste[1].
But seldom is written or known about how these three factors and many more
additional ones were the ones that made India the greatest nation of all times
from 1 AD to 1700 AD. History is as good as it is reported and the modern
Indian academic, sociological and economic thinking[1] was
misguided by proponents of outside world who failed to understand the Indian
way of working.
[1]In 1983, Paul Bairoch, a Belgian economist, came out with
his study of the world economy and his findings astounded the West. He said
that in 1750 India’s share of world GDP was 24.5%, China’s 33%, but the
combined share of Britain and the US was just 2%.
India’s share,
Bairoch found, fell to 20% in 1800; to 18% in 1830; and finally crashed to 1.7%
in 1900, while China’s crashed to 6.2% from 33%. In these 150 years, the
combined share of Britain and the US rose to from 2% to over 41%. Bairoch shook
the West by saying that in middle 19th century, the West had a lower standard
of living than Asians (Indians and Chinese). The Organisation for Economic
Cooperation and Development [OECD], constituted a Development Institute Studies
under Angus Maddisson, a great economic historian, to conduct a comprehensive
research into economic history and the ulterior motive was to prove Bairoch
wrong.
Angus Maddisson
postulated, ‘If Bairoch is right, then much more of the backwardness of the
third world presumably has to be explained by colonial exploitation’ and ‘much
less of Europe’s advantage can be due to scientific precocity, centuries of
slow accumulation, and organisational and financial superiority’. After two
decades of hard work, Maddision published his studies titled ‘World Economic
History - A Millennial Perspective in 2001’.
His study confirmed
Bairoch’s study of 150 years and more, as Maddisson studied the entire 2000
years economic history. Maddisson showed that India was the leading economic
power of the world from the 1st year of the first millennium till 1700 - with
32% share of world’s GDP in the first 1000 years and 28% to 24% in the second
millennium till 1700.
China was second to
India except in 1600 when China temporarily overtook India. India again
overtook China in 1700. The global economic play was in the hands of India and
China till 1830. Maddison confirmed that India fell only due to colonial
exploitation. Now the Maddisson study, endorsed by OECD, is the most authentic
economic history of the world.[1]
Such has been the neglect on India’s
prowess. But the sad state of affairs is that everything that India ever
achieved has to be validated by someone from outside. As Gandhiji said, “First
they ignore you, then they laugh at you, then they fight you, then you win.”
Angus
Maddison’s Research and Findings
Angus Maddison’s
works have assumed significance because for the first time that certain vital
economic data for different countries and the world were provided. The GDP
figures of the world and different countries/regions during 1 AD reveals
clearly the predominance of the Indian economy. Indian economy denotes the
economy of the undivided India as existed during 1 AD.
Table 1: World
GDP (1 AD)
(million 1990
international $)
|
Year
|
1 AD
|
|
Total Western Europe
|
11,115
|
|
Eastern Europe
|
1,900
|
|
Former USSR
|
1,560
|
|
Total Western offshoots
|
468
|
|
Total Latin
America
|
2,240
|
|
Japan
|
1,200
|
|
China
|
26,820
|
|
India
|
33,750
|
|
Other Asia
|
16,470
|
|
Total Asia
(excluding Japan)
|
77,040
|
|
Africa
|
7,013
|
|
World
|
1,02,536
|
Source:
Maddison, Angus, The World Economy – A Millennial Perspective, 1st
Indian Edition, Overseas Press (India) Pvt. Ltd. New Delhi, 2003, p.261.
Table 1 shows
the total GDP of the world at $102.5 billion. India was the largest contributor
to the global GDP at that time with $33.75 billion. China was following India
with $26.82 billion. Africa’s contribution was $7.01 billion, while that of
Japan was $1.2 billion.[2]
Table 2: Percentage
Share of countries/regions in World GDP (1 AD)
|
Year
|
1 AD
|
|
Total Western Europe
|
10.8
|
|
Eastern Europe
|
1.9
|
|
Former USSR
|
1.5
|
|
Total Western offshoots
|
0.5
|
|
Total Latin
America
|
2.2
|
|
Japan
|
1.2
|
|
China
|
26.2
|
|
India
|
32.9
|
|
Other Asia
|
16.1
|
|
Total Asia
(excluding Japan)
|
75.1
|
|
Africa
|
6.8
|
|
World
|
100
|
Source:
Maddison, Angus, The World Economy – A Millennial Perspective, 1st
Indian Edition, Overseas Press (India) Pvt. Ltd. New Delhi, 2003, p.263.
Table 2
illustrates the predominant position of India in the international economy during
the 1 AD. It shows that India’s share of the world was 32.9%. It means that
India alone was contributing almost one-third of the global GDP, while all the
countries in the rest of the world we jointly contributing the remaining
two-thirds. China’s contribution during that period was 26.2%. India and China
together were contributing 59.1% to the global economy. While the other
countries in Asia were contributing 16.1%, Japan’s share was 1.2%. The total
contribution of Asia including Japan was an astonishing 76.3%. While the total
Western Europe was contributing 10.8%, Africa’s contribution was 6.8%. It is
significant to note that India’s GDP was slightly more than three times of the
GDP of the total Western Europe. No country or even geographical region was
anywhere nearer to India, except China. Even when compared with China, India’s
GDP was more than 125%.[3]
Table 3: GDP of
India and other countries/regions (1 AD to 1700)
(million 1990
international $)
|
Country
|
0
|
1000
|
1500
|
1600
|
1700
|
|
Austria
|
1414
|
2093
|
2483
|
||
|
Belguim
|
1225
|
1561
|
2288
|
||
|
Denmark
|
443
|
569
|
727
|
||
|
Finland
|
136
|
215
|
255
|
||
|
France
|
10912
|
15559
|
21180
|
||
|
Germany
|
8112
|
12432
|
13410
|
||
|
Italy
|
11550
|
14410
|
14630
|
||
|
Netherlands
|
716
|
2052
|
4009
|
||
|
Norway
|
192
|
304
|
450
|
||
|
Sweden
|
382
|
626
|
1231
|
||
|
Switzerland
|
482
|
880
|
1253
|
||
|
U.K.
|
2815
|
6007
|
10709
|
||
|
12 Countries Total
|
38379
|
56708
|
72625
|
||
|
Portugal
|
632
|
850
|
1708
|
||
|
Spain
|
4744
|
7416
|
7893
|
||
|
Others
|
590
|
981
|
1169
|
||
|
Total Western Europe
|
11115
|
10165
|
44345
|
65955
|
83395
|
|
Eastern Europe
|
1900
|
2600
|
6237
|
8743
|
10647
|
|
Former USSR
|
1560
|
2840
|
8475
|
11447
|
16222
|
|
United States
|
800
|
600
|
527
|
||
|
Other Western Offshoots
|
320
|
320
|
300
|
||
|
Total Western Offshoots
|
468
|
784
|
1120
|
920
|
827
|
|
Mexico
|
3188
|
1134
|
2558
|
||
|
Other Latin America
|
4100
|
2623
|
3813
|
||
|
Total Latin America
|
2240
|
4560
|
7288
|
3757
|
6371
|
|
Japan
|
1200
|
3188
|
7700
|
9620
|
15390
|
|
China
|
26820
|
26550
|
61800
|
96000
|
82800
|
|
India
|
33750
|
33750
|
60500
|
74250
|
90750
|
|
Total Asian Countries
|
16470
|
18630
|
31301
|
36725
|
40567
|
|
Total Asia
(Excluding Japan)
|
77040
|
78930
|
153601
|
206975
|
214117
|
|
Africa
|
7013
|
13723
|
18400
|
22000
|
24400
|
|
World
|
102536
|
116790
|
247116
|
329417
|
371369
|
Source:
Maddison, Angus, The World Economy – A Millennial Perspective, 1st
Indian Edition, Overseas Press (India) Pvt. Ltd. New Delhi, 2003, p.261.
Table 3 shows
that while the GDP of India had remained the same in terms of dollar values for
thousand years since 1 AD, there was a small decline in the case of China as
well as the total Western Europe. Only the share of Africa had increased
notably during this period. During 1500, while the GDP of India had increased
to $60.5 billion, the GDP of China touched $61.8 billion. There are two notable
developments in this period. One is for the first time in the previous two
thousand years, India’s position as the number one economy was overtaken by
another country, namely China. The other one is that for the first time in
history, the UK and the US enter the GDP map of the world along with many other
western countries. At that time, while the GDP of the UK was $2.81 billion,
that of the US was $800 million. The data for the next two hundred years reveal
that in 1700, India again becomes the number one country in terms of economic
performance in the world. So the contemporary economic figures clearly reveal
that India had remained as the premier economic power almost till 1700, with
declines during 1500 and 1600.[4]
Table 4: GDP
Share of India and Other Countries/regions (1 AD to 1700)
|
Country
|
0
|
1000
|
1500
|
1600
|
1700
|
|
Austria
|
0.6
|
0.6
|
0.7
|
||
|
Belguim
|
0.5
|
0.5
|
0.6
|
||
|
Denmark
|
0.2
|
0.2
|
0.2
|
||
|
Finland
|
0.1
|
0.1
|
0.1
|
||
|
France
|
4.4
|
4.7
|
5.7
|
||
|
Germany
|
3.3
|
3.8
|
3.6
|
||
|
Italy
|
4.7
|
4.4
|
3.9
|
||
|
Netherlands
|
0.3
|
0.6
|
1.1
|
||
|
Norway
|
0.1
|
0.1
|
0.1
|
||
|
Sweden
|
0.2
|
0.2
|
0.3
|
||
|
Switzerland
|
0.2
|
0.3
|
0.3
|
||
|
U.K.
|
1.1
|
1.8
|
2.9
|
||
|
12 Countries Total
|
15.5
|
17.2
|
19.5
|
||
|
Portugal
|
0.3
|
0.3
|
0.5
|
||
|
Spain
|
1.9
|
2.1
|
2.2
|
||
|
Others
|
0.2
|
0.3
|
0.3
|
||
|
Total Western Europe
|
10.8
|
8.7
|
17.9
|
19.9
|
22.5
|
|
Eastern Europe
|
1.9
|
2.2
|
2.5
|
2.7
|
2.9
|
|
Former USSR
|
1.5
|
2.4
|
3.4
|
3.5
|
4.4
|
|
United States
|
0.3
|
0.2
|
0.1
|
||
|
Other Western Offshoots
|
0.1
|
0.1
|
0.1
|
||
|
Total Western Offshoots
|
0.5
|
0.7
|
0.5
|
0.3
|
0.2
|
|
Mexico
|
1.3
|
0.3
|
0.7
|
||
|
Other Latin America
|
1.7
|
0.8
|
1
|
||
|
Total Latin America
|
2.2
|
3.9
|
2.9
|
1.1
|
1.7
|
|
Japan
|
1.2
|
2.7
|
3.1
|
2.9
|
4.1
|
|
China
|
26.2
|
22.7
|
25
|
29.2
|
22.3
|
|
India
|
32.9
|
28.9
|
24.5
|
22.6
|
24.4
|
|
Total Asian Countries
|
16.1
|
16
|
12.7
|
11.2
|
10.9
|
|
Total Asia (Excluding Japan)
|
75.1
|
67.6
|
62.1
|
62.9
|
57.6
|
|
Africa
|
6.8
|
11.8
|
7.4
|
6.7
|
6.6
|
|
World
|
100
|
100
|
100
|
100
|
100
|
Source:
Maddison, Angus, The World Economy – A Millennial Perspective, 1st
Indian Edition, Overseas Press (India) Pvt. Ltd. New Delhi, 2003, p.263.
Table 4 shows
the share of global GDP for different countries for the first 1700 years in the
previous 2000 years of world history. The position of India as the topmost
economic power had continued uninterrupted, for the longest period during the
last two millennia, till 1500. Even during 1500, China’s GDP was only more than
0.5% of India’s GDP. Such a high performance testifies that of the previous
twenty centuries, without any competition from any other nation in the world.
But, there is a real decline in 1600 and thereafter India regained her position
as the top economic power in 1700, leading China by a margin of 2.1%. So it
could be said that for about 80% of the time in history of previous two
millennia, India was the premier economy. This is an excellent and unparalled
performance in the history of the world.
During 1 AD to
1700, while the share of India in global GDP had declined from 32.9% to 24.4%,
the share of China had declined from 26.2% to 22.3%. As a result, in the same
period, the share of Asia had declined from 75.1% to 57.6%. But at the same
time the share of the total Western Europe had increased during the above
period from 10.8% to 22.5%. While the share of Africa had slightly decreased
during the above period from 6.8% to 6.6%, Japan had increased its share from
1.2% to 4.1%. The share of increase for the total Western Europe is more from
1000 onwards. In fact, it was only this region that had gained the most during
1000 to 1700. The share of UK had shown an increase of 264% in just two
centuries, between 1500 and 1700, with its actual share moving from 1.1% to
2.9%. This is a high increase for a country that first appeared in the global
GDP map only in 1500. It is interesting to note that the share of the US had
declined from 0.3% to 0.1% during 1500 to 1700. The share of India was the
highest in the world in 1700, followed by China. There was an important
development in economic history during this period. For the first time in
history, the share of the total Western Europe was more than the share of
China.[5]
Table 5: GDP of
different countries (1700 – 1950)
(million 1990
International $)
|
Year
|
1700
|
1820
|
1870
|
1913
|
1950
|
|
Austria
|
2483
|
4104
|
8419
|
23451
|
25702
|
|
Belgium
|
2288
|
4529
|
13746
|
32347
|
47190
|
|
Denmark
|
727
|
1470
|
3782
|
11670
|
29654
|
|
Finland
|
255
|
913
|
1999
|
6389
|
17051
|
|
France
|
21180
|
38434
|
72100
|
144489
|
220492
|
|
Germany
|
13410
|
26349
|
71429
|
237332
|
265354
|
|
Italy
|
14630
|
22535
|
41814
|
95487
|
164957
|
|
Netherlands
|
4009
|
4288
|
9952
|
24955
|
60642
|
|
Norway
|
450
|
1071
|
2485
|
6119
|
17838
|
|
Sweden
|
1231
|
3098
|
6927
|
17403
|
47269
|
|
Switzerland
|
1253
|
2342
|
5867
|
16483
|
42545
|
|
UK
|
10709
|
36232
|
100179
|
224618
|
347850
|
|
12
Countries Total
|
72625
|
145366
|
338699
|
840743
|
1286544
|
|
Portugal
|
1708
|
3175
|
4338
|
7467
|
17615
|
|
Spain
|
7893
|
12975
|
22295
|
45686
|
66792
|
|
Others
|
1169
|
2206
|
4891
|
12478
|
30600
|
|
Total Western Europe
|
83395
|
163722
|
370223
|
906374
|
1401551
|
|
Eastern Europe
|
10647
|
23146
|
45448
|
121559
|
185023
|
|
Former USSR
|
16222
|
37716
|
83646
|
232351
|
510243
|
|
USA
|
527
|
12548
|
98374
|
517383
|
1455916
|
|
Other Western Offshoots
|
300
|
941
|
13781
|
68249
|
179574
|
|
Total Western Offshoots
|
827
|
13489
|
112155
|
585632
|
1635490
|
|
Mexico
|
2558
|
5000
|
6214
|
25921
|
67368
|
|
Other Latin America
|
3813
|
9120
|
21683
|
95760
|
356188
|
|
Total
Latin America
|
6379
|
14120
|
27897
|
121681
|
423556
|
|
Japan
|
15390
|
20739
|
25393
|
71653
|
160966
|
|
China
|
82800
|
228600
|
189740
|
241344
|
239903
|
|
India
|
90750
|
111417
|
134882
|
204241
|
222222
|
|
Other Asian Countries
|
40567
|
50486
|
72173
|
146999
|
362578
|
|
Total
Asia (excluding Japan)
|
214117
|
390503
|
396795
|
592584
|
824703
|
|
Africa
|
24400
|
31010
|
40172
|
72948
|
194569
|
|
World
|
371369
|
694442
|
1101369
|
2704782
|
5336101
|
Source:
Maddison, Angus, The World Economy – A Millennial Perspective, 1st
Indian Edition, Overseas Press (India) Pvt. Ltd. New Delhi, 2003, p.261.
During this
period of 250 years, many significant changes had taken place in the world
economy. The western countries became economically powerful. By 1820, China
replaced India as the largest contributor to the global economy. Asia had to
lose its long held supremacy as the economic powerhouse of the world. By 1913,
the US became the largest contributor to the global economy.[6]
Table 6: Share
of different countries in World GDP (1700 – 1950)
(percent of
world total)
|
Year
|
1700
|
1820
|
1870
|
1913
|
1950
|
|
Austria
|
0.7
|
0.6
|
0.8
|
0.9
|
0.5
|
|
Belgium
|
0.6
|
0.7
|
1.2
|
1.2
|
0.9
|
|
Denmark
|
0.2
|
0.2
|
0.3
|
0.4
|
0.6
|
|
Finland
|
0.1
|
0.1
|
0.2
|
0.2
|
0.3
|
|
France
|
5.7
|
5.5
|
6.5
|
5.3
|
4.1
|
|
Germany
|
3.6
|
3.8
|
6.5
|
8.8
|
5.0
|
|
Italy
|
3.9
|
3.2
|
3.8
|
3.5
|
3.1
|
|
Netherlands
|
1.1
|
0.6
|
0.9
|
0.9
|
1.1
|
|
Norway
|
0.1
|
0.2
|
0.2
|
0.2
|
0.3
|
|
Sweden
|
0.3
|
0.4
|
0.6
|
0.6
|
0.9
|
|
Switzerland
|
0.3
|
0.3
|
0.5
|
0.6
|
0.8
|
|
UK
|
2.9
|
5.2
|
9.1
|
8.3
|
6.5
|
|
12
Countries Total
|
19.5
|
20.9
|
30.7
|
31.1
|
24.1
|
|
Portugal
|
0.5
|
0.5
|
0.4
|
0.3
|
0.3
|
|
Spain
|
2.2
|
1.9
|
2.0
|
1.7
|
1.3
|
|
Others
|
0.3
|
0.3
|
0.4
|
0.5
|
0.6
|
|
Total Western Europe
|
22.5
|
23.6
|
33.6
|
33.5
|
26.3
|
|
Eastern Europe
|
2.9
|
3.3
|
4.1
|
4.5
|
3.5
|
|
Former USSR
|
4.4
|
5.4
|
7.6
|
8.6
|
9.6
|
|
USA
|
0.1
|
1.8
|
8.9
|
19.1
|
27.3
|
|
Other Western Offshoots
|
0.1
|
0.1
|
1.3
|
2.5
|
3.4
|
|
Total Western Offshoots
|
0.2
|
1.9
|
10.2
|
21.7
|
30.6
|
|
Mexico
|
0.7
|
0.7
|
0.6
|
1.0
|
1.3
|
|
Other Latin America
|
1.0
|
1.3
|
2.0
|
3.5
|
6.7
|
|
Total
Latin America
|
1.7
|
2.0
|
2.5
|
4.5
|
7.9
|
|
Japan
|
4.1
|
3.0
|
2.3
|
2.6
|
3.0
|
|
China
|
22.3
|
32.9
|
17.2
|
8.9
|
4.5
|
|
India
|
24.4
|
16.0
|
12.2
|
7.6
|
4.2
|
|
Other Asian Countries
|
10.9
|
7.3
|
6.6
|
5.4
|
6.8
|
|
Total
Asia (excluding Japan)
|
57.6
|
56.2
|
36.0
|
21.9
|
15.5
|
|
Africa
|
6.6
|
4.5
|
3.6
|
2.7
|
3.6
|
|
World
|
100
|
100
|
100
|
100
|
100
|
Source:
Maddison, Angus, The World Economy – A Millennial Perspective, 1st
Indian Edition, Overseas Press (India) Pvt. Ltd. New Delhi, 2003, p.263.
Table 6 shows
that since 1700, the contribution of India to the global GDP had been
continuously falling. As a result, within a period of just 120 years between
1700 and 1820, more than one-third of India’s economy was wiped out. By 1820,
India’s GDP had declined to around 66% of what it was in 1700. India that
remained the leader, far ahead of the others as an economic superpower since
the ancient times, had to lose her long held premier status in 1820.
Thereafter, the decline was steady, and in the next 130 years, nearly 75% of
her economic worth of 1820 was again wiped out. In just 250 years about 83% of
India’s economy was completely ruined. By 1950, India’s share of GDP became
nearly one sixth of what it was in 1700. Even though China took over the
position of India as the largest contributor in 1820, its share had also
declined very fast. As a result, China’s contribution to the global GDP was
4.5% in 1950, just 0.3% more than that of India. The share of Asia declined to
15.5% from 57.6% in 250 years. By 1913, Asia had lost her status as the largest
contributor of the world economy to the total Western Europe.[7]
The contribution
of the UK to the world economy in 1870 was 319% of what it was in 1700.
Thereafter, the share of UK declined to 6.5% in 1950. The share of total
Western Europe had increased from 22.5% to 26.3% during this period of 250
years. The US had emerged as the largest contributor in 1913 with a share of
19.1% and its contribution reached 27.3% in 1950. The biggest gainer during
this period of 250 years was the US. The share of Africa had declined from 6.6%
to 3.6% during the period. It is important to note that while the shares of
traditional powers led by India and China had drastically declined, the shares
of the Western nations led by Europe and later US had increased manifold.[7]
Playing a big
hand in destroying the Indian economy, the British exercised their policies by
leeching on India for resources. Maddison notes that the policy of the East
India Company regarding taxes. “The main objectives of the company were to
enrich its officials and finance its exports from the tax revenues of the
province instead of shipping bullion to India.”[8] He also informs
that the taxes collected from India were used to expand the British Empire.
“The hard core of the Empire was India, with three quarters of its population.
Indian taxation financed a large army under British control, which could be
deployed to serve British objectives elsewhere in Asia, the Middle East and
eventually in Europe.”[9]
Conclusion
Before one is
oblivious to these pieces of research and findings, India will remain as a
third world country trying to achieve unrealistic goals. But as Indians, when
one goes through Paul Bairoch’s and Angus Maddison’s research there is big
paradigm shift in the way Indians see themselves. A lot of pride is restored
and seeing India as a future economic giant is never going to be an impossible
task. Indians can say to themselves that, “Been there, done that and it is only
a matter of time before we pick ourselves up and work for the glory of the
nation”. The slave mentality goes through a fillip and Indians are the new
masters of the world. With a strong cultural setup where human relations are
more important than anything else in the world, the day is not far when the
indigenous economic model backed by the sociocultural setup is discussed and
followed. That will lead Indians to glory and India will once again become the
most prosperous nation in the world.
Reference
1. Gurumurthy S., 'Boss, read the true history before speaking', The New Indian Express, 6th April 2013.
2. Kanagasabapathi P, Indian Models of
Economy, Business and Management, 3rd Edition, PHI Learning Pvt.
Ltd., New Delhi, 2012, p. 8.
3. Kanagasabapathi P, Indian Models of
Economy, Business and Management, 3rd Edition, PHI Learning Pvt.
Ltd., New Delhi, 2012, p. 9.
4. Kanagasabapathi P, Indian Models of
Economy, Business and Management, 3rd Edition, PHI Learning Pvt.
Ltd., New Delhi, 2012, p. 31.
5. Kanagasabapathi P, Indian Models of
Economy, Business and Management, 3rd Edition, PHI Learning Pvt.
Ltd., New Delhi, 2012, p. 32-33.
6. Kanagasabapathi P, Indian Models of
Economy, Business and Management, 3rd Edition, PHI Learning Pvt.
Ltd., New Delhi, 2012, p. 37.
7. Kanagasabapathi P, Indian Models of
Economy, Business and Management, 3rd Edition, PHI Learning Pvt.
Ltd., New Delhi, 2012, p. 38-39.
8. Kanagasabapathi P, Indian Models of
Economy, Business and Management, 3rd Edition, PHI Learning Pvt.
Ltd., New Delhi, 2012, p. 44.
9.
Kanagasabapathi P, Indian Models of
Economy, Business and Management, 3rd Edition, PHI Learning Pvt.
Ltd., New Delhi, 2012, p. 46.
