Studies show that with the coming of Colonialism, the unchanging economic system of India began o crumble. With the establishment of colonial rule, a new economic system came up in money, market and trade. It even penetrated the local agricultural economy. Gradually this agricultural economy became part of a wide exchange chain. With this, self-sufficient villages collapsed.
The old studies say that the coming of the colonial rule brought revolutionary changes in the village and urban communities of India. But modern studies do not support this view. The old studies say that before the colonial rule, the Indian economy was immobile. It was self-sufficient. There, exchanges (barters) took place without any interference of market forces. Economy based on money was not there.
All these arguments were denied by the new studies conducted by Bailey, Burton Stein and Sanjay Subramanian. New studies point out that just before the colonial rule, the system of collecting taxes in cash was started in India. Trade was also done using money. There is no doubt that in many villages of India there still was the barter system as found in the Jajmani system. At the same time, many agricultural products and other goods were also sold for cash in the markets. Recent researches show that extensive trade and business chains were in existence in India before the colonial rule.