There have been a spate of tweets and posts pointing out that the decline in India’s share of world GDP from 1700 onwards is proof that the Moghuls looted India.

The term “Moghul” is a code word for Muslims. The allegation is that Muslims took Hindu wealth and women and exported them out to Central Asia, and that is the reason India is so poor.

This allegation is wrong and illogical on so many counts – but it is proof of our times that perfectly intelligent people give credence to this allegation and let it fuel their Hindu anger against the Muslim.

I am no economist but I used whatever knowledge I learnt in business school all those years ago with some facts and analysis in the hope that I can convince a few people how wrong this view is.

GDP – or Gross Domestic Product – is the sum of Consumer Spending, Investment, and Government Spending in a year. Or GDP = C + I + G.  To track these figures, you need a systematic mechanism to collect and collate data. Assuming you have such a mechanism, you need to make sure the data is collected properly, that you remove any double counting etc. Statisticians use sampling methods, secondary data (for example annual reports of companies, etc) to try and find the right values for C and I.  Even so, the process is fraught with controversy. Methodology changes have huge political implications – as we have seen in India’s own case.

There was no such mechanism available until a hundred years ago in most economies. Prior to that, zero.

However economic historians have been studying how to measure the growth of the world economy using secondary and tertiary methods. The doyen in this field was the late Prof Angus Maddison, who researched and wrote on the subject of historical GDP growth at the University of Groningen. His curiosity on the subject arose from an inquiry into why poor countries are poor. His work on the subject is now a reference, and it is from his work that these GDP numbers are quoted.

Before I go ahead and quote these numbers to you, let me state the caveats that need to accompany them.

First, how do you assign a base value for comparison when no method for collection and analysis of GDP growth data existed credibly before the 1930s?  Maddison’s approach is to  assign a value of $400 (in 1990 prices) for GDP per capita per annum in all the countries under consideration for the period before 1000 CE. He assumes this is the minimum subsistence wage level and that this did not grow for a long time until the Industrial Revolution began. He does not say how he came up with this number. For purposes of argument let us accept this number as the base.

Second, how did he arrive at the numbers for the years under review? He has been criticized for how he got these numbers in the first place. It is never clearly explained. “Fictive” is the word used by one of his critics.  From 1820 onwards, when there is more data available, there is economic growth. From here on one can track the Industrial Revolution and other modern factors that affect  GDP. There is a detailed criticism available of Maddison’s methods which is cited below in references.

I culled out some of these figures and they are in the table below. My apologies that the figures are hard to see.

The GDP numbers are quoted in Purchasing Power Parity terms, in Simplistically, this approach takes into account how much it costs to buy the same basket of goods in a country, in that country’s currency. It is indicative of living standards and purchasing power. Given that there were no formal currencies in, say, 1500 CE that were tradable worldwide, this is the most reliable mechanism rather than Nominal GDP.

Here is what I see.

• India’s GDP and share of world GDP grew from 1600 to 1700 largely under the hated Moghuls (from $74bn to $91bn, from 22% to 24%).
• From 1700 to 1820, India’s GDP increases (from $91bn to $114bn) and world share falls (from 24% to 16.4%).

• At the same time, World GDP increases (from $371bn to $695bn), the figures for Western Europe rises ($81bn to 160bn) and UK in particular (from $11bn to $36bn). China rises from $83bn to $229bn at the same time.

• Note the grand entry of the United States, which goes from close to zero in 1700 to $13bn in 1820.

• From 1820 to 1913, world GDP almost quadruples from $695bn to $2723bn. In the same period, the United States surges forward from $13bn to $517bn, the United Kingdom from $36bn to $225bn – a huge jump. India barely doubles – from $114bn to $204bn, and its relative share therefore falling to 7.46%

• By 1950 – and two world wars later – the United States has jumped from $517bn in 1913 to $1456bn and its share from 19% to 28%. The United Kingdom has increased from $225bn to $304bn – a very slow increase – and its share falls from 8.23% to 6.53%. India goes from $204bn to $222bn – practically stagnant – and its share of world GDP falls to 4.16%.

Let us pause and ponder what happened at this time, in India and elsewhere

The Mughal dynasty effectively collapsed in 1707 with the death of Aurangzeb. Years of fratricidal war and the pernicious actions of the Sayyid brothers took their toll.

In 1737, Nadir Shah mounted his first disastrous raid on Delhi.  There were other raids, by Ahmed Shah Abdali. In one of these raids, 28,000 camels accompanied Abdali to Kabul filled with jewels and precious stones from Delhi.

The Marathas, taking advantage of the power vacuum, quickly created their confederacy. The confederacy could never settle down to build a stable state due to being in a constant state of war.

The British East India Company, also taking advantage of the power vacuum, and having on their side access to money from trade and from the London markets, and a superbly trained military,  decided to become landowners instead of merely mediating in disputes between princes. By 1820, Maratha power was destroyed and the British were in control.

The United States, having shaken off  the British, were starting to industrialise, expand its territories and grow.

The capital from India and elsewhere fuelled the Industrial Revolution in England by the end of the century, laying grounds for the growth of incomes and wealth.

China – the way to make sense of it is that it continued to be a unitary trading state growing wealthy thanks to European trade, but it did not modernise.

Between 1820 to 1913, the explosive growth of the world economy can be directly attributed to the Industrial Revolution, feeding on capital captured from colonial rule, and creating great wealth. While India’s GDP grew, we were now a colonial economy that existed for the enjoyment of our colonial ruler.  By this time India had lost all her manufacturing capability. It would not come back in full measure until 1941, when the Americans forced the British to enable Indian industrialists to set up plants to make planes, jeeps, railway equipment etc to feed the war effort.

This is the analysis relevant to us. When I read it, it seems perfectly obvious to me and I cannot understand what leads people to believe that the disastrous slide into poverty and dependency was due to the Moghuls.  Or that the share of world GDP fell not just because of our enslavement by the British, but that we missed out on the Industrial Revolution (also thanks to colonial rule!). Any efforts at proto-industrialisation that seems to have begun under the last stages of Mughal rule were ended by colonial rule.

The Mughal Empire was the richest entity of its like in the world between the 16^th and 18^th centuries.  This was why the British came – because the country was wealthy. Trade was largely done and controlled by the Hindu merchant class who took advantage of a relatively well-developed economic environment to make money. The rulers built roads, there was a system of exchange, there were no internal tolls and tariffs. In fact the first British Ambassador to the Moghul court, Sir Thomas Roe, remarked on the insistence of Hindu merchants to take only gold for payment with the words “Europe bleedeth to enrich Asia”. The systematic destruction of the administrative apparatus that existed during Mughal times to facilitate a colonial command-and-control economy suited for exploitation has been very well documented.

Why promote this absolutely daft assertion that the Mughals looted India? The Kohinoor did not leave India until British rule. The systematic looting of Delhi by the Afghans is well known. Every British chancer who came to India left with huge amount of money and gold, so much so that each such man “was amazed at his own modesty”.

History is being rewritten in the service of a pernicious political narrative that is currently making the rounds. That the Muslim is not Indian and that the greatest Indian dynasty before the British were not Indian – just a bunch of thieves.  I make no excuse for the Mughals and their many excesses and extravagances. Such as the need to build a huge and expensive tomb for one of Shah Jehan’s queens, the money for which must obviously have come out of taxes. Or Aurangzeb’s puritanical ways.

But they did not loot India and send our wealth abroad.

References:

1) “Contours of the World Economy 1-2030AD” by Angus Maddison

2) A review of the above available here: faculty.econ.ucdavis.edu/faculty/gclark/Book_Reviews/Maddison.pdf

3) Rana Safvi: “No, The Mughals did not loot India” available here:https://www.dailyo.in/politics/mughals-contribution-indian-economy-rich-culture-tourism-british/story/1/19549.html

4) “India Conquered” – Jon Wilson, Simon & Schuster 2016.