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Thursday, April 03, 2014
Origin and History of Economic Thought in India
Economic phenomena are diverse and the structure of economies is essentially dynamic and complex, amenable to changes from time to time. Economic universe, on the other hand, has a logic of its own. It has an inherent order through which there is a constant exchange between rational human beings, each seeking to attain maximum gain. Economics, as a science, is an attempt to understand this orderly working of the economy, and an individual in his business of life with a goal to maximizing his gain choosing among his innumerable wants with the limited resources he has at his disposal. As the structure of economies change over time, the science of economics also changes as the tools and analytical methods to study the economic phenomena, its working, problems and solutions keep changing. That is the reason, Economics as a science and discipline has always been influenced by the prevailing social structure, system of governance, institutional structures, ethics and norms. For example Kautilya’s “Arthashastra” is based on the then religious, spiritual and social systems, customs and standards. The individualism of the classical economist’s is essentially a product of the industrial revolution.
The systematic study of economics is of recent origin, but economic analysis has always been prevalent across the world in one form or the other. The science of Economics is as old as human life. The initial attempts to study economics as a subject as part of the education system were first made in Europe at the end of the 17th and the beginning of 18th century. The study of economics in India can be traced back as early as 4th B.C when Kautilya came out with his Arthashastra which provides an authoritative account of the political and economic thought that prevailed in ancient India.
Historically, Indian economic thought can be divided in to four periods:
1.Ancient Economic Thought
Ancient Indian scriptures like the Vedas (Rig, Sama, Yajur, Aharva), Upanishads, Brahmanas, epics, Smrities (particularly those of Manu, Yajnavalkya, Shukra, Vidur, Kamandok and Narad) give an account of the ancient economic philosophies. While Arthashastra and Nitishastra deal with production and exchange, Dharmashastra lays down the rules to be followed in consumption and distribution.
Varta and Arthashastra were the set of guidelines as far as material life was concerned. Varta has been defined as a branch dealing with agriculture, commerce, cattle breeding, money lending and artisanship. Arthashastra covered a much wider field with its insights on jurisprudence, politics and economics and life as a whole. Consumption was based on the principle of Kama, Artha, and Dharma ( aesthetic, economic and religious aspects of worldly life) as separated from Moksha ( or the subject related to non-worldly life).
The ancient economic thought recognized the four factors of production, land, labour, capital and organization. Land was regarded as the source of all wealth, with many kings laying down their lives for it.
2.Medieval Economic Thought
Medieval economic thought was basically shaped by the rulers during that time. Rulers like Ala-ud-din Khilji, Mohammad Tughlaq and Firozshah Tughlaq introduced economic reorganization and improvements during 8th century to 15th century after which Sher Shah Suri and Akbar brought in various transformations.
Alauddin Khilji deliberately controlled the markets in order to keep the basic necessities of life at a cheaper rate. This was done with an n intention to maintain a large army for his empire and to prevent rebellion on account of dwindling treasury. Mohammad Tughlaq brought in a new system of token coins, which failed as its monopoly could not be maintained. Firozshah Tughlaq realized the role of the state in production and employment way back in and engaged in a large number of public works in the form of construction of canals, public buildings etc. He reformed the taxation system on the basis of the laws of Quran by introducing four types of taxes ( Khiraj, Zakat, Jizya and Khams). Sher Shah Suri graded and fixed land rent as per its productivity and brought in reforms in the land revenue system.
Far reaching changes were brought in by Akbar in the form of reorganization of the revenue system and promotion of state enterprises. While, the rent of the land was fixed on the basis of last ten year’s average price of land, peasants were brought directly under the state by abolishing the power of jagirs.
3.Nineteenth Century Economic Thought
The foundations of modern Indian Economics were laid in the early British period by the leading thinkers of that time, namely Dadabhai Naoroji, R.C. Dutt and Gokhale. The economic philosophy was built as a reaction to the misgivings of the British Empire and to bring in systemic changes to the eradicate of widespread poverty prevalent that time.
Their prescription was to bring in a welfare state which would work for the interests of the general public at large. They wanted the heavy tax burden on the Indians to be reduced and the budget surplus to be spent for the betterment of people rather than on military expenses. They advocated the permanent fixation of land tax and the representation of tax payers in the body which controlled the government expenditure.
4.Twentieth Century Economic Thought
During this time the economic philosophy verged on the practical problems faced by the country rather than on abstract concepts. The prominent thinkers of the time like C. N. Vakil, D. R. Gadgil, Gyan Chand, V. K. R.V. Rao, and R. Balakrishna favored planned economic development by the state and that Laissez Faire is not suitable for India. The balanced utilization of resources suggested the development of agriculture along with all kinds of large scale, small and medium enterprises.
Economics as a subject in India was first advocated by Dadabhai Naoroji but it was Mahadev Govind Ranade who first gave shape to Indian Economics and actually succeeded in establishing it as a separate subject.He is hailed as the “Father of Indian Economics”
B.R. Ambedkar favoured radical ideas even in those times by supporting free banking (aginst monopoly of printing legal tender), gold standard, decentralized planning, individual liberty , private property rights etc. Eminent economists like Rajaji and B. R. Shenoy also advocated economic freedom as against the principally socialist structure prevailing at that time. Unfortunately a lot of those pertinent economic thought by eminent economists like V S Srinivasa Sastri, C. Rajagopalachari, B R Shenoy, N A Palkhivala, Bankimchandra Chattopadhyay, Minoo Masani were marginalized and don’t find mention in the history of economic thought.
Alfred Marshall in his eighth edition of “Principles of Economics” commented that “economic conditions are constantly changing, and each generation looks at its own problems in its own way”. The education in economics as a whole in the world as well as India has also changed its paradigms in tune with the current state of affairs, trends and developments in the world. Here is a list of India’s top 10 institutes in the field of Economics:
1. Delhi School of Economics, University of Delhi, Delhi,
2. Indian Statistical Institute, New Delhi, India
3. Planning Unit, Indian Statistical Institute, New Delhi
3. Indian Statistical Institute, Kolkata
4. Department of Economics, Delhi School of Economics, University of Delhi, Delhi
National Institute of Public Finance and Policy, New Delhi,
Economic Research Unit, Indian Statistical Institute, Calcutta,
5. Centre for Studies in Social Sciences, Kolkata, India
6. Indira Gandhi Institute of Development Research (IGIDR), Mumbai
7. Department of Economics, Jadavpur University, Kolkata
8. National Council of Applied Economic Research (NCAER), New Delhi
9. International Initiative for Impact Evaluation (3ie), New Delhi
10. Indian Institute of Management, Kolkata
The following is a list of top 10 universities in the world in the discipline of Economics:
1. Harvard University, United States
2. Massachusetts Institute of Technology (MIT), United States
3. London School of Economics and Political Science (LSE), United Kingdom
4. University of Chicago, United States
5. University of California, Berkeley (UCB), United States