A5 - Unravelling India and strengthening external engagement for sustainable growth

Summary

Trade is the natural enemy of all violent passions. Trade loves moderation, delights in compromise, and is most careful to avoid anger. It is patient, supple, and insinuating, only resorting to extreme measures in cases of absolute necessity. Trade makes men independent of one another and gives them a high idea of their personal importance: it leads them to want to manage their own affairs and teaches them to succeed therein. Hence it makes them inclined to liberty but disinclined to revolution.

Alexis de Tocqueville (1805–1859)

Trade in India was important well before the Colonial period. India's external trade made a significant contribution to the world economy. An extensive internal trade network also evolved from the large size of the country.

Any analysis of India's trade must keep in perspective the large volume of trade that happens within it. India's engagement with the rest of the world is limited because of the large domestic market, which is complex owing to the typicality of the interplay between constituent states and regions.

By the year ad 1000, the estimated share of India in the world economy was over 30%, the largest in the world. This share reduced to about 25% by the year 1500.

During the Colonial period, by the end of the eighteenth century, the Indian economy witnessed large-scale exploitation of domestic resources. It became a captive supplier of raw materials. Investments in the economy fell sharply thus severely dampening growth.