The Economy of the Marathas Part I: Shivaji and the Rise of Chauth

While much has been discussed about the decline of the Marathas in such a short span of time, one has rarely focused on the economic picture of the time as a major attribution of the weakening of the Marathas. In this multi-part series, I shall explore the economic scenario of India in general and the Marathas in particular to argue that the Maratha state was founded on a weak financial footing from the beginning, and never allowed Marathas to be strong enough to assert their control. 

At the time of the rise of the Maratha power under Shivaji, historians have noted a not so favorable economic condition of the rural areas of Deccan. Fukazawa (1987) notes the decay of agriculture as the key to the rise of the Marathas, a direct result of a combination of factors like the incessant fighting between Mughal, Qutbshahi and Adilshahi kingdoms. One has to remember as Srinivasan (1944) notes that the Marathas had been since the times of the Rashtrakutas and all the way to the Qutbshahi and Adilshahi times been involved in the administration of the state in various capacities, including the management of the economy. A large number of initial supporters of Shivaji in fact were Deshmukh zamindars. Given this failure of agricultural system for long, there were various ways devised to finance the relentless military campaigns that the Marathas undertook to attain his dream of svarajya.

However, it would be completely unfair to attribute the decline of the Deccan economy only to the Marathas. Under the successive Sultanates of the Deccan and the Mughal rule, the Deccan was already subject to various natural disasters (vis famines) and the oppressive rules that troubled traders endlessly. Fukazawa (1987) has highlighted records of a Dutch merchant visiting the Qutbshahi kingdom reported how the people pretended to be poor, for ' no prosperous person dares to let the fact be known for fear of the governors, who lightly take all they have on some petty claims'. This is further corroborated by a French traveler’s account in Hyderabad a particular case of a court noble detaining a Hindu banker and forcing him give up a large amount of money, only to be ordered by the king to return as the bankers of the city shut up their shops as a protest at this extortion. Rampant civil wars were even more ruinous for the kingdoms’ subjects, many of whom fled to save their lives in such turbulent times than to face death for failing to pay exorbitant sums being demanded by governors. 

The Mughals had done no better. As Tapan Raychaudhari (1987) had argued, the Mughal state was Leviathan in its nature, with an insatiable appetite for resources for its military conquests as well as opulent expenses. The unlimited desire to expand the empire matched by an indifference to maintaining the economy had started a long term depression of farming, as the revenue collection became more and more repressive, leading to ever greater poverty amongst peasants. Even the traders and moneylenders had come under considerable stress, as Raychaudhari (1987) narrates the account of a Jain merchant Banarasidas writing about jewellers being thrashed with 'thorny whips' by the jagirdar of Jaunpur who demanded what 'they did not have'. Even leading merchants like the brokers of the London East India Company and a son of the famous Parsi trader of Surat, Rustam Manak, were subjected to corporal punishment and torture for no fault of theirs, and how at the time of Akbar’s death 'it became difficult to distinguish between high and low, and the rich and poor resembled one other'.

The Marathas under Shivaji had a great level of personal touch and intervention in the state’s economic affairs. As Sen (1976) observes, this has a direct bearing on the idea of svarajya as Shivaji had imagined, inspired directly by the principles of administration of the past laid out by Kautilya, Shukraniti and other such administrative treatises. Dighe and Qanungo (1977) identified other sources of state revenue, which were

  1. Land revenue
  2. Customs at 2.5% and transit duty
  3. Judicial fees and fines
  4. Forest revenue
  5. Profits and mintage
  6. Presents by subjects and officers
  7. Escheat and forfeitures
  8. Plunder of hostile territory
  9. Booty in war
  10. Chauth and sardeshmukhi
  11. Capture of ships (piracy)
  12. Monopolies
  13. Other cesses, e.g. cess on oil extraction and on ghee production

Despite all these cesses and revenue streams, there were also considerable expenditures of the state under Shivaji. Maintaining a large army of over 200,000, paying civil services, building and repairing of forts, tank and canal construction to improve agriculture and even pensions and prizes to widows of soldiers who died were the key expenses of the state. Giving royalties and rewards from time to time in the form of jagirs was an active policy of Shivaji. Deshmukhs, who had allied with Shivaji, were not allowed to inherit jagirs, a system continued from the times of Malik Ambar of the Adil Shahi, which had been the primay  caused great heartburn amongst the zamindars. This policy was continued by Shivaji, wherein Deshmukhs as well as the Deshpandyas, along with the Patels, Khots and Kulkarnis were strictly regulated and allowed to collect revenues due to them only after these accounts had passed through strict supervision.

While the most famous fiscal measure of Shivaji are chauthai (Chauth) (one fourth of state revenue) and sardeshmukhi (one tenth of state revenue), it is interesting to note the origins of these two financial measures and its purpose. Chauthai was a form of a tribute exacted from hostile or conquered territories, while Sardeshmukhi was a kind of revenue ownership that the Maratha zamindars turned band leaders claimed their own since the days of the Bahmani empire (Sardesai, 1933). Chauthai existed much before Shivaji’s time; in fact, as Sardesai noted, the Portuguese were paying chauth to the kings of Ramnagar in North Konkan for the possession of Daman on the grounds that these territories paid chauth even before they were occupied by the Portuguese. The nature of chauth was more political in nature than economic, as it helped Shivaji and the subsequent Maratha rulers to keep a check on the power of further lands, and this erosion of the economy contributed to the continuing decline of the Mughal empire (Sardesai, 1933). Sardeshmukhi was equally political, as Shivaji had declared himself the sardeshmukh or authority to collect revenue of all Deccan provinces, and in turn charged the fees for this purpose.

That chauth and sardeshmukhi were significant contributors to the Maratha coffers under Shivaji’e rule can be gauged from the fact that at the time of coronation, Shivaji's kingdom yielded about Rs. 30 to Rs. 40 million, while the chauth when fully collected added another Rs. 8 million to his revenue, or almost 20% of the state revenue. This was a difficult proposition, as to maintain the situation merited a strong and nimble army, which in turn perpetuated a cycle wherein raids had to be conducted on cities such as Surat. From a modern economic perspective, one can note the instability of the revenue streams upon the examination of the identified revenue streams. Many of the sources of state revenue are directly incumbent on the military strength of the imposing party and its clout on the payers. Such hot money flows are never welcome in today’s modern macroeconomics, since its instable nature can overturn a country’s finances overnight, as has been seen with hot money in various East Asian economies during the 1990s.

Another thing we must note that at the time of Shivaji and Aurangzeb, the Europeans had solidified their grip on India’s maritime trade with an iron grip. The Portuguese had strong controls on Goa, Daman and Diu and Bombay, while the Dutch and British were gaining strong footholds. Aurangzeb had roundly defeated the British but had agreed to a peace agreement as he knew that the European navy could not be matched by anyone, and had to acknowledge their control on the sea trade routes (Burgess, 2012). Shivaji on the other hand had nothing to complement his army in the Arabian sea, and had to spend extensive sums to even build the foundations of a series of naval fortresses. In the absence of an effective deterrent, therefore, it is likely that the Mughals and the Marathas did not have the leeway to effectively impose cesses and revenues on the trade effectively at the time.

Thus, we have outlined briefly the economic scenario in which the Marathas first came to power under Shivaji Maharaj, and their dependence on chauth and sardeshmukhi to run the economy. In the next part, we shall explore the economics of the Tanjore Marathas to complement this era.


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