The Mughal Economy

How the Mughal Empire raised revenue from land, managed a vast economy with silver coinage, and ranked among the world's largest economies.

At its height in the 16th and 17th centuries, the Mughal Empire ruled most of the Indian subcontinent and managed one of the largest economies in the world.

A large economy

Economic historian Angus Maddison estimated that around 1700, the Indian subcontinent produced roughly a quarter of the world’s output, comparable to China. Such historical estimates are uncertain, but they show India’s economic importance, largely due to its huge population and productive agriculture and crafts. Income per person, however, was modest and similar to many other pre-industrial economies.

Land revenue

The state’s main income came from land revenue, a share of agricultural output. Under Emperor Akbar, his finance minister Raja Todar Mal developed the zabt system:

Land was measured and classified by fertility.
Average yields and prices over ten years were used to calculate revenue.
Revenue was usually collected in cash, encouraging farmers to sell crops in markets.

The revenue demand was high, often estimated at a third or more of the produce.

Mansabdars and jagirs

Officials called mansabdars held ranks and were assigned jagirs, rights to collect revenue from specific lands, instead of salaries. Jagirs were transferred frequently to prevent officials building local power bases, but this may have encouraged short-term exploitation.

Money and trade

The Mughals issued high-quality silver rupees, a coin whose name survives today. Silver flowed into India from the Americas via Europe, as Europeans bought Indian textiles, spices and indigo. Markets, trade routes and banking networks run by sarrafs and merchants using hundis, bills of exchange, connected the empire.

Crafts and cities

Cities such as Agra, Delhi, Lahore and Dhaka were among the largest in the world, with thriving crafts, especially textiles.

Decline

After the death of Aurangzeb in 1707, the empire fragmented. Regional powers rose, and the East India Company eventually took advantage.

The cash revenue

A farmer near Agra harvests wheat. The revenue official calculates the tax based on measured land and average yields, payable in silver rupees. The farmer sells part of his crop to a grain merchant to raise cash, linking village farming to wider markets.

Thinking India was wealthy per person before colonial rule

India's total output was large because of its population. Average incomes were modest, as in most pre-industrial economies.

Key takeaways

Around 1700, India may have produced about a quarter of world output.
Land revenue, often collected in cash under the zabt system, funded the state.
Mansabdars held revenue rights called jagirs.
The Mughal silver rupee and hundi networks supported trade.