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There was support for economic liberalization from other quarters from new businessmen involved in what were essentially “parallel market” transactions; a section of the top bureaucracy and perhaps more significantly the large and politically powerful urban middle classes, along with more prosperous rural farming groups, whose real incomes increased in the consumption –led boom of the 1980s. The letter groups actively began to desire access to international goods and gave potency to the demands for trade liberalization. And of course the technological and media revolution, especially the growing importance of satellite television imparted a significant impetus to the international demonstration effect, which further fuelled liberalizing and consumerist demands. This process was given further stimulus by the accelerated globalization of a section of Indian society. Apart from the media, one major instrument of this was the postwar Indian Diaspora. The “NRI phenomenon” by means of which of qualitatively significant number of people from Indian elites and middle classes actually become resident abroad, contributed in no small measure to consumerist demands for opening up the economy. The important of non resident Indians was not only because they were viewed as potentially important sources of capital inflow but also because of their close links with dominant groups within the domestically resident society.

Despite the imbalanced and unequal economic growth pattern of these years, there was a definite improvement in material conditions for a substantial section of the upper and middle classes. Since these groups had a political voice that was far greater than their share of population they were able to influence economic strategy to their own material advantage. So the local elites and middle classes were not only complicit in the process of integration with the global economy, but active proponents of the process. This becomes clear even from data on the distribution of consumption, expenditure by different fractal groups. As chart 5 suggests6, in the 1990s and until 2002, the urban top 20 percent of the population experienced increases in per capita consumption which were the most rapid in post independence history. The other groups that also appear to have increased per capita consumption significantly were the next 40 percent of the urban population and the top 20 percent of the rural population. By contrast the per capita consumption of the bottom 40per cent of the rural population actually declined over this same period. Such pattern not only gives some idea of the spread of the “gainers” of the economic growth process, but also indicates the political constituency for the liberalizing reforms of the 1990s. The economic context of India in 2004 was one in which the need to rethink, modify and revise at least some of the economic strategy of the recent past was becoming increasingly obvious. In particular, the supposed emphasis on fiscal discipline, which had not been reflected so much in actual declines in the fiscal deficit to GDP ratios, but in compression of important productive public expenditure, with high linkage and multiplier effects required reversal. The neglect of important policy issues with respect to agriculture could not continue. In addition to greater emphasis on public expenditure with high direct and indirect effects on employment generation, addressing the issue of higher resource mobilization from the rich had become urgent. Further, it was necessary to counter some of the adverse effects of trade liberalization on employment, apart from more directly addressing the basic structural issues of asset and income inequality and the persistence of low productivity employment. Mentioned above, which remained so significant in the Indian economy?

The study of early Indian economic history goes back to the middle of the 19^th century. Christian lanen’s monumental history of India down to the fall of vijayanagara emphasized political history. The economic sections occupied a subsidiary place. Another colonial writer Richard fick primarily dealt with social or caste relationships prevalent in north-eastern India. But many historians of the 19^th and the 20^th centuries wrote under the auspices of the imperial government and had pre-conceived ideas about the India’s past. The best known exponent of the imperialist view of Indian history was Vincent A. smith.  He devoted himself to the study of the general history of ancient India. He made a significant observation that in the ancient times land was own by the king. British writers after smith gave special attention to Indian connection with Europe and Greek rule in India. In numismatic the study of indo-Greek coins received their chief attention. In 1916, H.G. Rawlinson wrote his ‘Intercourse between India and the western world, which covered India’s commercial contact with the Greece-roman world from the earliest times to the fall of Rome. Indo roman trade continued to attract the attention of British scholars till the fifties.  From 1951, onward there was a new trend in the economic history writing and contemporary British scholars directly or indirectly provide some justification for the commercial enterprise of the European nations in India in modern times and support the British exploitation of the Indian resources. The main challenge to the historical models of writing put forward by British historians came from Indian scholars who, under the influence of growing nationalist movement, wrote in conscious opposition to the imperialist, view of Indian history. The development of nationalism and political consciousness at the term of the century made the Indian scholars keenly aware of the economic exploitation of India by the British, which formed the theme of writings of Dadabhai Naroji and R,C.Dutt. The strong nationalist movement that followed the partition of Bengal in 1905 gave a great impetus to the study of the economic condition of ancient India. A more forceful attack on the imperialist writer came from K.P.Jaswal who was considered a potential contributor of the ‘seminaries’ of sedition. At the time of nationalist movement several monographic studies were published, through several scientific themes of early economic history attracted the attention of Indian scholars in the twenties. Writer like N.C.Bandopadhya, S.K.Das M.A.Buch seeks to make a systematic study of economic development in ancient India, with special references to the land system, agriculture industry and trade. One of the earliest writings on the economic content of the arthashastra’s was by H.C.Ray. He decected in kautilya’s social and economic policies and the element of modern state socialism developed in Germany by the social legislation of Bismark of the Indian scholars of the twenties U.N.Ghoshal handled his sources most critically. His contributions to the study of the taxation system of india from the vedic age to c. A.D.1200 but it gave a detailed information detailed studies of early south Indian rconomic history was undertaken by K.M.Gupta (the land system in south india between A.D.800 and A.D.1200, Lahore,1933) and A.Appadorai (economic conditions in southern india,A.D,1000-1500,2 vols,madras,1986). In recent year detailed economic studies of the different regions of peninsular india have undertaken. K.Sundaram in his studies in economic and social conditions of medieval Andhra A.D.1000-1600 (machilipatanam and madras, 1968) gives an account of metal work, jewellery, carpentary, architecture, spinning and weaving salt manufacture etc. but analysis is absent in most of the economic writings like D.R.Das’s economic history of the deccan during the first six centuries of the Christian.

Studies on urbanization and urban centers during the medieval period have largely remained a neglected and relatively less explored field. Medieval cities are generally seen as ‘parasitic’ depending largely on countryside, extracting large surplus to its own advantage while hardly giving back anything in return. Yet vibrant commercial activities provided a town a district character. There are many approaches to study the  medieval Indian, town R.Redfield and M.B. singer maintain, that generally speaking Indian cities emerged out of political, administrative, and cultural concerns and their commercial and industrial functions were insignificant. Hamida khatoon naqvi has highlighted the importance of political, stability in the growth of medieval Indian towns. She argues that, the highly centralized Indian states with base at Lahore, Delhi or Agra worked to foster viability and endurance in urban concentrations. The rise and full of medieval Indian towns corresponded largely to the vigour or weakness of the central political power. K.n. choudhury has focused upon the ‘complementarity of economic modality and political attributed’. He defines commercial towns of mughal period as a case of ‘flag following the trade’.for him’political skills were essential to preserve their economic interests’. Satish Chandra, however, argues that the political integration resulting in unprecedented growth of towns is actually over emphasized. he questions, if that was so then why After the tugluq period following the disintegration of the political power, did not result in the decline of town ? satish Chandra, instead, links the growth of towns to agricultural expansion. He argues, taking the case of firuz shah tughlug’s reign when the sultanate shrank to half its size, that the period is marked by emergence of many new towns. As a result of Muhammad tughlugs network of canals and impacts of new technology and expansion of horticulture all this led to the growth of agrarian sector. He has emphasised that we cannot simply dismiss the Afghans as ‘merely warriors’. Instead, unlike the Turks Afghans settled in the countryside suggested that they must have had something more to do with agriculture. He applies the same argument to the 18^th century as well. He argues that evidence pertaining to the decline of cities during the 18^th century comes largely from literacy traditions. There is no doubt that Delhi faced a decline but only as a chief administrative centre. In 1772 Delhi is mentioned by shah nawuz khan as a flourishing city filled with all sorts of crafts. Dorgah quli khan in his muraqqa-i delhi speaks about the grandeur of markets of shahjahanabad city.chetan singh has also emphasized the growth of urban centers, particularly manufacturing centres in well developed agricultural zones away from the main trade routes. Irfan habib however, relates ‘urban decline ’to‘agrarian crises.mughal cities declined in the 18^th century because the existence of towns and cities depended on agricultural surplus. K.n. chaudhury also accepts that the economic existence depended on the ability of the countryside to produce a surplus and the way in which the later was distributed. Henri pirenne has linked growth of medieval towns to long distance trade. In the Indian context R.S, Sharma in his well researched monograph Indian feudalism also argues that the growth and decline of long distance trade resulted in the growth and decline of the towns during early medieval period, although other historians have expressed doubts about the thesis of urban decline. I.P.Gupta while denying any significant role of administrative and military factors in the growth of urbanization and urban growth argues that ‘administrative and military influence in all the major cities and towns remained subdued to economic activities’. His estimates reveal that roughly 80-90 percent of the activities in the large urban centres in Gujarat were ‘economic’. There is no instance where a ‘fort’ assumed the status of an ‘urban’ out of the 33 forts reported in Gujarat in the 17^th century only 9 were located at the big and small towns. Even ‘religion and education centers were predominantly manufacturing centers. His study shows that Gujarat towns were largely performing the role of either manufacturing center, or collection centers and distribution centers, or else were port towns. Ahmadabad, surat, broach cam bay pertained such multipurpose activities. Chetan singh has also emphasized the economic base of the urban centers. Though some town derived their strength as important administrative centers their importance as thriving manufacturing center as well as market and transit points cannot be ignored. He argues that though Lahore was an important administrative town, it derived its strength’ as a center of considerable manufacturing and commercial activity’. It was situated on the major land route providing connectivity across India to Middle East and Iran. Its economy was entirely dependent upon the mughal ruling class or upon imperial patronage. He highlight the decentralizing tendency of the urban centers in the Punjab region that ‘no single town was economically important enough to control the urban artisanal production of the region such growth according to him was instrumental in the incorporation of hitherto peripheral areas into the urban network.

The beginning of our period saw unprecedented growth of towns. The process continued, even got accelerated up to the close of our period. Medieval towns were centres of manufacture and commercial activities. There appears to existed hierarchy among the towns. There were qasbas and balda/shahr,baras and bandars. Certain cities were ‘primate’ cities largely depending upon state patronage for their power and position. Nonetheless they were vibrant centres of commercial and manufacturing activities. This hierarchy was also markedly presented within the town itself. There were palaces, havelis, on the one side, while at the lowest level people lived in hutments. Medieval towns were marked by ‘urban characteristics that S.C.Misra calls ‘peasant urbanizes’. Between town and country there existed a ‘symbiotic’ relationship.

The international encyclopaedia of social sciences refers to capitalism as the economic and political system that in its industrial or full form first developed in England in the late 18^th century.

Dictionary of social sciences explained capitalism as denoting an economic system in which the greater proportion of economic life, particularly ownership of and investment in production goods, is carried on under private(i.c, non-governmental) auspices through the process of economic competition with an avowed incentive of profit.

Marxist historians have identified a series of stages in the evolution of capitalism—for examples, merchant or commercial capitalism, agrarian capitalism, industrial capitalism and state capitalism, and much of the debate on origin and progress Has hinged on differing views of the significance, timing and characteristics of each stage. The first stage, i.e. mercantile or commercial capitalization provided the initial thrust and impetus for capitalization in the sense that merchants started becoming entrepreneurs to cater to market demands by employing wage labourers as well as by exploiting the existing craft guilds. Commercial capitalization metamorphosed into industrial capitalisms, which again, according to Marxist economist, gave way to socialism, because industrial capitalism was inseparably connected with problems of the working class, this invariably gave rise to different currents of socialist thoughts.

Commercial capitalism and agrarian capitalism were, therefore, two forms of capitalism that overlapped with each other, the difference between them being that one emerged out of commercial surplus while the other out of agricultural surplus. Agrarian capitalism sometimes metamorphosed fully into commercial capitalism i.e. invested the entire surplus accumulated from agriculture into commerce and sometimes transformed directly into industrial capitalism by investing in industrial development alone.

In all this stages of capitalism, identified by the Marxist historians, therefore, the first stage was merchant capitalism or commercial capitalism. Now, what is it? Precisely, capital accumulation out of the profits of merchants to be invested in various economic activities was what is called commercial capitalism. It took different forms in different stages.

In middle age, however, the form assumed by commercial capitalism was entirely different. It was during this time that it developed in the true sense. In England, and even more emphatically in Holland, the birth of capitalism can be dated from the late 16^th and early 17^th centuries. The type of capitalism t5hat was growing up in Europe in the Middle Ages and was well established by 1500 was predominantly of this sort. Here lay the distinction between commercial capitalism, of the ancient and middle ages.

It can therefore be said that a limited form of ‘early’ or commercial capitalism, already known in the ancient world, had developed in Italy as early as the thirteenth century and later in the Low Countries. This commercial form developed in England in the 16^th century and began to change into industrial capitalism while elements of feudalism and the guild system still existed. In short, therefore, the early stage of capitalism, primarily founded upon commerce is called commercial capitalization, which in course of time metamorphosed into industrial capitalism. Capitalism therefore did exist in ancient world in the form of commerce as well as guild system and merchant dominated putting out system in the medieval world.

The world we live in is bipolar in nature. This characteristic can be seen not only in relation to geographical entity but also in relation to our social pattern, on one hand we can see affluent and well to do class and on the other hand we can see deprived and discriminated class. In our world eight hundred and eighty million are malnourished and millions go without schooling. On the other hand, three richest people in the world have assets that would surpass the some total of the GDP’S of 48 least developed countries. People who are deprived are excluded from full participation in the society in which the live, lack of options, entitlement to resources and lack of social capital are the main reasons behind it. Economic development is a process by which an underdeveloped society can be economically competitive. It is the way in which a traditional society is transformed into a modern, high technology, high income economy. Such a developed economy uses capital, skilled labour and scientific knowledge to produce wide variety of products for the market. Capital goods and human capital plays an important role in such a society. The World Bank has put forward the following development goals: a) Reduction of poverty b)Low mortality rates c) Universal primary education d)Access to reproductive health services e) Gender equality. There are a number of underdeveloped countries which are unable to attain these development goals due to lack of resources. They share wide spread and chronic absolute poverty, high and rising burden of unemployment and underemployment, growing disparities in income distribution, low and stagnant agricultural productivity sizeable gap between urban and rural levels of living. Underdeveloped countries are also suffering from lack of education, health and housing facilities dependence on foreign and often in appropriate technologies and more or less stagnant occupational structure. In many respects underdeveloped countries are common. At the same time there are significant differences also. These differences can be seen in respect of the size of the country, their historical evolution, their natural and human resources and the difference in structure regarding industry, institutions etc. one of the most important problem of an under developed country is the presence of a large section of low income group. Ghana and India with per capita income below $785 are low income countries; china between ($785-3125) is a lower middle income country. Brazil is a country where per capita is between ($3125-9655). It falls in the upper middle income category. Per capita income is an evaluation of average income based on market evaluations. The proper assessment of a country’s economy can be made on the basis of some extra dimensions. They are life expectancy, health facilities, condition of employment, distributing of assets and the social structure. The under developed countries of different continents have certain common features.  These are low standards of living, low level of productivity, high rate of population growth, Greater importance on agricultural production and primary product exports. Dominance and vulnerability in international relations, a low standard of living reflects through in adequate housing, poor health, limited education, high infant mortality. The same can be seen in case of India and Ghana, Lack of distribution of wealth in an even manner. As a result chronic poverty’s can be seen. Slow GDP growth rates and higher under-5 mortality can be seen. Besides these countries have high population pressures on their resources. This is due to high birth rates and maternal fertility rates. Some countries like china and Brazil have succeeded to a large extent in controlling population growth. Under utilization of labour is also an important feature of the underdeveloped. Disguised unemployment has low productivity level. In an underdeveloped economy people is large or primarily dependent on agricultural production. Due to primitive techniques, poor organization, lack of capital etc the output is low. Such underdeveloped economies are not blessed with wide scale industrialization and these resources are also limited. Under developed countries Like India and Ghana have to depend on rich countries or advanced nations in terms of technology, foreign aid and private capital transfers.