Any system rests on two principal components. One is the driving force behind the system's construction, and the other is the guiding force. This same criterion applies to an economy as well. There are many kinds of economies across the world, and each has its own driving and guiding force.
The American economy champions capitalism and encourages entrepreneurial daring, because its inspiration is individual liberty, the idea of "Life, Liberty, and the Pursuit of Happiness."
Japan too, through its tenacity and entrepreneurial drive, occupies an important place in the world. The British are inspired by maritime adventure.
China proudly calls itself a Civilisational State. Weaving together communist ideology and thousands of years of a proud history, drawing inspiration from that fusion, China has today become a global power.
In this same manner, this is an attempt to think in detail about what the driving and guiding forces behind the Indian economy are, and what their contribution has been to India's journey.
India, like China, is a nation with a cultural tradition thousands of years old. India is a nation founded on cultural nationalism, possessing cultural unity and integrity. From prehistoric times through the Indus-Saraswati civilisation, the Vedic age, the Mahajanapadas, empires, invasions, the period of slavery, the modern age, and now a march toward a bright, glorious future, such is the grand canvas of the Indian economy.
In various periods, under various emperors and various regimes, political unity did occur. But for most of the time, we see various dynasties ruling in various regions. They fought among themselves, for supremacy. Even so, the socio-economic system was essentially the same, barring very minor differences. What does "it was the same" mean?
The Idea of Wealth in Indian Thought:
The foundation of Indian culture and civilisation is Vedic literature. The scholar Shri Prasad Joshi, in his paper 'Concept of Wealth in Vedic Culture,' has unfolded and explained the idea of wealth in the Vedas. The following discussion is based on his exposition.
In the Vedas, two principal concepts have been put forward: अभ्युदय (Abhyudaya - worldly prosperity) and पुरुषार्थ (Purushartha - the goals of human life).
Abhyudaya refers to the thought of an individual's and a family's material prosperity and progress. Wealth creation, the urge to acquire more and more wealth, is universal. That is, the urge for abhyudaya is natural. And it ought to be there. But Indian thought never goes to any extreme. It does not endorse any kind of excess.
On one hand is the concept of abhyudaya, and it is welcomed; on the other hand, there is also the concept that it should be 'निःश्रेयस' (Nihshreyas - the highest good / ultimate liberation). Shreyas is the worship of what is excellent, while nihshreyas implies the conviction that this alone is best and nothing could be better than this. Nihshreyas is the ultimate goal, indeed, it is the concept that it ought to be.
In Indian thought, human life is woven around the purusharthas. धर्म (Dharma), अर्थ (Artha), काम (Kama) and मोक्ष (Moksha) are the four purusharthas. Achieving abhyudaya is inherent in purushartha. Artha and kama are related to abhyudaya. Kama is not limited merely to its physical meaning. Behind this term lies a broader meaning including desire, aspiration, craving, and so on. For the fulfilment of kama, 'artha' is intended within abhyudaya.
The various suktas and ruchas in the Vedas are invocations addressed to deities such as Indra, Agni, Varuna, Rudra, Marut, and others. Along with invocations for protection from calamities, there is a constant invocation that we be ever prosperous with wealth, riches, grain, cattle, and so on. Indeed, the word 'pashu' is now taken to mean animals, but it also has a meaning of wealth. Because in Vedic times, cattle, especially the cow, were considered a form of wealth.
A rucha from the Rigveda (1.89.9), "vyashema devahitam yadayuh," says that we shall continue to fully enjoy and experience this life given to us by the gods. The Shrisukta, still sung on various religious occasions, is a worship of Hiranyavarna, that is, Lakshmi, wealth.
In the Akshasukta of the Rigveda (10.34), the seer warns that one's wealth is destroyed by gambling. He insists that a person should earn wealth by farming. He calls for one to find joy in wealth earned through farming and hard work.
Individual and familial abhyudaya is a clear inspiration; it is part of purushartha. But this inspiration also carries the call of nihshreyas.
The Epics: An Inspiration for History, Culture, and the Economic System as Well
The Vedic-age social system was an evolving one. It was a period in which various concepts were becoming firmly established. Social, political and economic ideas became increasingly firm in the age of the Ramayana-Mahabharata and the Mahajanapadas that followed.
The economic system was expanding along with concepts of industry, trade and property. Malhar Krishna Gokhale has discussed how, amid all this, the epics serve as an inspiration for the economic system.
He argues that land was not the property of the State, that is, of the government. It was the property of individuals and families. Private ownership of land was accepted, and its purchase and sale were possible. And for that, proper measurement of land was done, and proper accounts were kept. Tax-revenue was levied on this property at a fixed rate. Similarly, from traders, a tax equal to one-fifth of the profit remaining after deducting expenses was levied. A fixed tax was also levied on artisans or industries producing goods.
The Banjara community, or system, had existed since ancient times. Its importance in trade and in the growth of wealth has always been emphasised. That is why there is a call to levy the minimum possible tax on it.
In the Rudradhyaya of the Yajurveda, a list of occupations is given. It includes farming, animal husbandry, charioteer, soothsayer, horse-keeper, elephant-keeper, cowherd, weaver, cloth-dyer, gardener, carpenter, metalwork, goldsmith, priest, physician, and so on. Livelihood and the science of earning it are called 'varta.' The sage Narada advised Yudhishthira that the essence of the people's joy and contentment lies in the proper development of 'varta.'
Industry and Trade: An Enduring Inspiration
In the Indian economy, the industry and trade sector has continuously made a tremendous contribution. Industry and trade always made an enormous contribution to the economic growth of the janapadas-mahajanapadas, kingdoms and empires. The system of governance too was favourable to this industry and trade. The importance of Arya Chanakya's saying 'rajyasya mulam artham' (the root of the state is wealth) was understood by all kingdoms and empires. In the epics too, kings are advised to give assurance of safety to the wealthy and keep them close, because they are the pillars of the state.
The ancient form of the industry and trade sector had various designations. Shreni, sangha, sarthavaha, nikaya, nigama were those designations. This trade was at the family level, within the joint family system, or several traders-entrepreneurs would come together to establish a sangha. The head of such a sangha was called shreshthi, jyeshthaka. An elder person in the family, or the eldest and most eminent person in a traders' guild, would hold this position. The present form of this designation is seen in 'Sheth,' 'Seth.'
The shreshthi and jyeshtha carried weight in the royal court. They participated in the machinery of the state. They were included in the king's inner circle. The shreshthi helped the king in managing the state's economy. This means that industry and trade received the state's encouragement, and traders' guilds held an important place in the state apparatus.
In India's history, there is an important contribution to the development of trade routes, the development of trade centres, and the development of rest-houses along trade routes. The sarthavaha, shreni, sangha, nikaya and others also made a great contribution to the development of historical and cultural sites.
Most of the caves across India are located along major trade routes. There are caves near Gharapuri, Shurparak (Nalasopara), and several ports. The Ajanta-Ellora caves lie on the major trade route from Ujjain to Ter to South India. The Pitalkhora caves, the caves in the Junnar area, the Karle-Bhaje caves, and the Naneghat itself lie on the trade route leading to the Shurparak port. In many caves, inscriptions and evidence are available showing that shreshthis of traders' guilds made donations to caves and temples.
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| Ancient Trade, Ajintha Painting |
And this inspiration of industry and trade is not only of the past. The Indian Navy's sailing vessel INSV Kaundinya, a stitched ship of coir-sewn planks built by the ancient Tankai method and modelled on a fifth-century CE vessel in an Ajanta mural, carries that same tradition into our own time.
Named after Kaundinya, the earliest Indian mariner known by name, and built through a tripartite effort of the Ministry of Culture, the Indian Navy and Hodi Innovations, she sailed from Porbandar to Muscat in 2025, retracing the old India–Gulf route. The industry and trade that once sent the shreshthis to endow caves along those routes now sails them again, proof that the inspiration behind the Indian economy is not confined to the past but, like the monsoon winds, flows into the present.
Is the Caste System a Driving Force Behind the Economic System?
The varna system and the caste system are distinctive features of Indian civilisation. The question of how that system arose, its journey toward birth-based caste, and the various discussions about its unjust and exploitative nature are not considered in detail here.
In the following discussion, no support whatsoever is offered for the birth-based caste system. In considering the inspiration behind the economy, whether the caste system has any part in it has been considered merely as one viewpoint.
Shri Pramod Pathak has made the following argument. The 'Thermo Mechanical' process required for steel-making was known in ancient times only to Indians. In the 13th night's tale of the famous 'Arabian Nights,' there is a description of Indian steel of the finest quality. This art and skill needed to be kept secret. For that, Indians developed their own method, of conducting "roti-beti" (interdining and intermarriage) transactions within occupation-based groups. The Manusmriti underwent repeated changes, and it provided a kind of protection to occupation-based groups.
This system continued for many centuries. From time to time, some improvements occurred in it at the economic level and at the technological level. Alongside traders' guilds, producer shrenis-guilds also emerged and grew. In them too, a system of shreshthi and the like arose. But the birth-based caste system and the occupational restrictions based on it did not change much in this arrangement.
According to by Dr. Sadanand More, a scholar of Sant literature, a great chain came and went in India, from Bhagwan Mahavira and Bhagwan Buddha to Mahatma Basaveshwara, to the Sant tradition, and to modern social reformers. In reducing the hold of ritualism and the exploitative, burning yoke of Sanatan Dharma, and in bringing about some change by taking progressive steps, each was more or less successful. But none could completely destroy this birth-based caste system. That system was fundamentally shaken only by the advent of British rule.
During the British period, a modern education system arrived. This made available the opportunity of modern education irrespective of birth-based caste. Whether education became universal and widespread is a question that remains present even today. But the fact is this: the opportunity for education became available.
With the British system of governance, industries came up in the economic sphere. Industries led to the growth of cities. In the industrial sector, the factor of birth-based caste became somewhat secondary. In the various departments of British rule, those who had until then been denied opportunity began to get jobs. In some princely states with modern, progressive ideas, such as Travancore, Kolhapur, Baroda, Aundh, an era of modernisation arrived.
In the Kolhapur princely state, a policy of employment based on merit rather than caste was implemented for the first time. Maharaja Sayajirao of Baroda played an important role in shaping a figure like Dr. Babasaheb Ambedkar. Of course, as all this was happening, the seeds of new caste equations and new caste-based conflict were also sown, that too is equally true. Its discussion is out of place here.
Modern Inspiration:
In the post-independence period, the rulers of India chose the path of a 'Socialistic Pattern of Society.' There, there was no encouragement for private, individual enterprise or entrepreneurship. Indeed, earning profit was regarded as a condemnable thing.
In considering modern inspirations, the year 2014 is one that brought a fundamental change. This change is one of thought, of outlook. There is encouragement for enterprise and entrepreneurship. That encouragement is not merely verbal or theoretical, but at the policy level. This changed outlook is visible in future-oriented policies such as Start-up, Stand-up, Mudra, PM SVANIDHI, Make in India, and Atmanirbhar Bharat.
In Indian thought, there is constant support and encouragement for private property and private industry-trade. That tradition is once again being implemented in a modern form. The start-ups beginning across India are a sign of this very thing. The goal of becoming self-reliant in all sectors, industry, trade, the service sector, and agriculture, has been set. Indian thought, the inspiration within Indian thought, is once again guiding the economy in a forceful manner. From that, it is certain that India's future is bright.
