Assessment of India's pre-colonial economy is mostly qualitative, due to the lack of quantitative information. According to one estimate, revenues from the Mogul Empire in 1600 Akbar's £ 17.5 million, which contrasts with total revenue of Great Britain in 1800, which amounted to £ 16 million. India, by the time of the arrival of the British, was a great traditional agricultural economy with a dominant sector of livelihood depend on primitive technology. There developed a parallel network of competitive trade, manufacturing and credit. After the fall of the Mughals, India was administered by Maratha Empire. The maratha empire's budget in 1740s, at its peak, was Rs. 100 million. After the loss at Panipat, the maratha empire disintegrated into confederate states of Gwalior, Baroda, Indore, Jhansi, Nagpur, Pune and Kolhapur. Gwalior state has a budget of Rs. 30M. However, at this time, British East India company entered the Indian political theatre. Until, 1857, when India was firmly under the British crown, the country remained in a state of political instability due to internecine wars and conflicts.

Colonial

The colonial rule has brought a major change in the environment from the taxation of income taxes for property taxes resulting from the mass impoverishment and misery of the vast majority of farmers. It has also created an institutional environment that, on paper, the guarantee of property rights among the settlers, encouraged free trade, and created a single currency with fixed exchange rates, standardized weights and measures, the capital markets, a highly developed system of railways and telegraph, a Civil Service, which aim to be free from political interference, and the common law, the legal system contradictory. India's colonisation by the British coincided with major changes in the world economy—industrialisation, and significant growth in production and trade. However, at the end of colonial rule, India inherited an economy that was one of the poorest in the developing world, with industrial development stalled, agriculture unable to feed a rapidly growing population, one of the world's lowest life expectancies, and low rates of literacy.

An estimate by Cambridge University historian Angus Maddison reveals that India's share of the world income fell from 22.6% in 1700, comparable to Europe's share of 23.3%, to a low of 3.8% in 1952. While Indian leaders during the Independence struggle, and left-nationalist economic historians have blamed colonial rule for the dismal state of India's economy in its aftermath, a wider macro-economic view of India in Over this period reveals that there were areas of growth and decline, as a result of changes brought about by colonialism and a world that is moving towards industrialization and economic integration.