The Indian economy in the pre-British period consisted of isolated and self-sustaining villages on the one hand, and towns, which were the seats of administration, pilgrimage, commerce and handicrafts, on the other. Means transport & communication were highly underdeveloped and so the size of the market was very small..
- The structure and organization of villages: The village community was based on a simple division of labour. The farmers cultivated the soil and tended cattle. Similarly, there existed classes people called weavers, goldsmiths, carpenters, potters, oil pressers, washer men, cobblers, barber-surgeons, etc. All these occupations were hereditary and passed by tradition from father to son. Most of the food produced in the village was consumed by the village population itself. The raw materials produced from primary industries were the feed for the handicrafts. Thus interdependence of agriculture and hand industry provided the basis of the small village republics to function independently. The villages of India were isolated and self-sufficient units which formed an enduring organization. But this should not lead us to the conclusion that they were unaffected by wars or political decisions. They did suffer the aggressors and were forced to submit to exactions, plunder and extortion, but the absence of the means of transport and communications and a centralized government helped their survival.
- Classes of Village India: There were three distinct classes in village India: (i) the agriculturists, (ii) the village artisans and menials, and (iii) the village officials. The agriculturists could be further divided into the land-owning and the tenants. Labour and capital needed was either supplied by the producers themselves out of their supplied by the producers themselves out of their savings or by the village moneylender. These credit agencies supplied finance at exorbitant rates of interest but since the moneylender and the landlord were the only sources of credit, the peasants and even the artisans were forced to depend on them. The village artisans and menials were the servants of the village. Most of the villages had their panchayats or bodies of village elders to settle local disputes. The panchayats were the court of justice.
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