History Optional Paper-1 Solution – 2010: Q.6 (b)

Q.6 (b) To what extent ‘monetary anaemia’ afflicted the erstwhile commercial economy during the early medieval period? [2010, 30m]


Monetary anaemia refers to paucity of coins and coins of poor quality with less purchaging power.

During A.D. 750 to 1000, India was ruled by powerful dynasties like Gurjara Pratiharas in Western India, the Palas in Eastern India and the Rashtrakutas in the Deccan. But it is astonishing that their available coins are very few and in no way compare either in quantity or quality with the coins of earlier centuries. Since money plays an important role in the sale and purchase of goods, the paucity of coins and the absence of coin-moulds in archeological finds leads us to believe in the shrinkage of trade in this period which badly affected commercial economy. The evidence for transaction of goods of daily use is quite meagre in the sources belonging to this period.

Though first suggested by D.D. Kosambi, it was R.S. Sharma’s ‘Indian Feudalism’ in 1965 that brought to focus the paucity of coinage in the post-Gupta times, its link with trade and commerce and consequent emergence of feudal social formation. Sharma proposed the theory of urban decay. Urban decay resulted in decline of trade, collapse of artisan activity and disappearance of metallic money.

Counter views

  1. Many other views question not only the idea of paucity of coins but also the decline of trade. This is based on the evidence from what is described as the mid-Eastern India comprising Bihar, West Bengal and Bangladesh during A.D. 750 – 1200. While it is conceded that there was no coined money and the Palas and Senas themselves did not strike coins, it is also argued that there was no dearth of media of exchange. There was not only a long series of Harikela silver coinage but also cowries and most importantly churni (money in the form of gold/silver dust) also functioned as media of exchange.
  2. John S Deyell has argued that money was not scarce in medieval India, nor were the states of the time suffering from a financial crisis. There was a reduction of coin types and decline in the aesthetic quality of coins but not in the volume of coin in circulation.
  3. Early medieval texts such as Prabandhachintamani, Lilavati, Dravyapariksha, Lekhapaddhati, etc. mention bhagaka, rupaka, vimshatika, dinar, karshapana, dramma, nishka, tanka, gadhiya-mudra, gadyanaka amd many other coins. No less prolific are inscriptional references. For example Siyodani inscription refers to varities of drammas in the mid-tenth century.
  4. A case study of Orissa substantiates complete absence of coins between c. A.D. 600 and 1200 but argues for trade with Southeast Asia and emphasizes the role of barter in foreign trade. Hence, India’s trade with Southeast Asia was based mainly on barter system and coins were of poor quality and of negligible volume.
  5. The currency system of South India during A.D. 950- 1300 shows that transactions at all levels of the society were not equaly affected by coined money. For example, the fanulous expenses reported to have been incurred but the Pandyas as regular buyers of imported horses cannot be thought in terms of very poor Pandyan currency. Barter was still an important means of exchange in local inter-regional and perhaps even in inter-national commerce. There are references which indicate that carvanas of merchants exchanged their commodities with those of other regions. According to one account, horses imported from abroad were paid notnin cash but in Indian goods like silk, spices or ivory.
  6. KN Chaudhury had shown that by the eleventh century, the Indian Ocean trade was divided into smaller segments- the stretch from the Red Sea and Persian Gulf to Gujarat and Malabar, from Indian coast to Indonesian archipelago and from South-East Asia to East Asia. Hence the nature of trade changed instead of decline of trade.
  7. Even if commercial acticity had declined, it did not disappear completely. In fact trade in costly and luxury goods meant for the use of kings, feudal lords and heads of temples and monasteries continued to exist. The articles such as precious and semi-precious stones, ivory, horses, etc. formed an important part of the long distance trade.


There may be some regional exceptions but the all-India perspective fits in the general hypothesis of Professor Sharma. Even with regards to the regional exceptions, the following points need to be considered:

  1. The relevant sources cited in the context of the mid-Eastern India, are silent about the participation of indegenous people in the maritime trade of the area.
  2. Even the limited trading activities were confined to the ruling elites.
  3. The miserable conditions of the common man are reflected in the meaning of the word vangali (literally, a resident of Bengal) which denoted somebody “very poor and miserable”.
  4. Kashmir shows emergence of copper coinage from about eighth century A.D. but extremely poor quality of this coinage has been explained in terms of the decline in trade based economy and rise of agricultural pursuits in the valley.
  5. Despite the plethora of references of coins, the evidence of overall volume of money in circulation is almost negligible. Nor can one overlook poor purchaging power of early medieval coins, irrespective of the metal used.

The revival of trade received considerable help from the re-emergence of metal money during later period of early medieval India.

Though revival of even “partial monetization” was contributing to economic growth, yet no less significant was the parallel development of credit instrument by which debits and credits could be transferred without handling of cash money. In the texts of the period we find references to a device called Hundika (or bill of exchange) which might have been used by merchants for commercial transactions. Through this device credit could be extended by one merchant to another and, thus, the obstacle to commerce due to shortage of coined money could be overcome.

The Lekhapaddhati, a text which throws light on the life of Gujarat in 12th-13th centuries, refer to various means of raising loan for consumption as well as commercial ventures through the mortgage of land, house and cattle.

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