South Asia’s economies, as well as the scholarship on their economic histories, have been transformed in recent decades. This landmark new reference history will guide economists and historians through these transformations in Bangladesh, India and Pakistan. Part 1 revisits the colonial period with fresh perspectives and updated scholarship, incorporating recent research on topics such as gender, caste, environment and entrepreneurship. The contributors highlight the complex and diverse experiences of different groups to offer a more nuanced understanding of the past. Part 2 focuses on economic and social change in South Asia over the last seventy-five years, offering a comprehensive view of the region’s historical trajectory. Together, the contributions to this volume help to reassess the impact of colonialism through a more informed lens, as well as providing analysis of the challenges and progress made since independence.

Pakistan’s seventy-five-year economic history can be divided into three distinct periods. The first decade after 1947 was a period of low growth, but one in which a functioning state was set up from scratch and rapid industrialization occurred. The 1960–1990 period saw high economic growth but high costs, including the secession of Pakistan’s eastern wing (now Bangladesh), the Soviet occupation of Afghanistan and the ensuing civil war, which spilled over into Pakistan. Between 1990 and 2022, growth halved, primarily due to the continuing conflict in Afghanistan – this time with the US- led invasion after 9/11 – coupled with poor economic management in dealing with recurring balance-of-payments crisis and frequent recourse to the IMF. The key factors responsible for these changes are identified through ten turning points, which capture major events both internal and external and the ensuing structural changes, including in the composition of the ruling elite. Failure to undertake economic reforms was a key factor in Pakistan’s overall disappointing performance after a promising start.

By the end of the nineteenth century, British-ruled India faced an ecological crisis due to the extension of cultivation, deforestation and desiccation. Famines since the 1870s had led to a decline in population in some regions. While colonial authorities attributed the famines to climatic factors, others held taxation, institutional reforms and economic policies responsible for these disasters. Colonial science emerged as a significant tool in managing and monitoring environments at the same time. The chapter examines the interlinked economic and ecological history of India in these times and the responses by the British imperial authorities and scientists to the perceived crisis.

This chapter provides an analytic account of the evolution of India’s industrial sector in the context of the overall performance of the economy in the post-independence era. Since trade policy has had a determining impact on overall growth as well as on the structure of the industry, special attention is paid to it. The chapter first reviews the performance of the industry as a whole during the seventy years from 1951/1952 to 2019/2020, dividing it into four distinct phases. It argues that the pursuit of self-sufficiency, specialization in heavy industry and a heavy hand of socialism were at the heart of growth below 4% during the first four decades after independence. Subsequently, liberalizing reforms did accelerate growth, but the slow pace of the removal of multilayered regulation of the early decades remained in the way of East Asian-style rapid transformation of the economy from a rural and agricultural structure to an urban and industrial one.

Several themes shape the historiography of economics in western India in colonial times, including the history of ryotwari land tenure, international factors like the growing engagement of agriculture with the world markets via cotton exports, dependence on monsoon agriculture and the outbreak of famines and epidemics, and the industrialization of Bombay and Ahmedabad. Although these processes may seem disparate, there were also deep connections between them. The chapter offers an economic history integrating these processes, and shows how western India in the colonial period saw significant innovation and entrepreneurship in industry, in the broader context of an economy that remained largely agricultural, with low productivity and high risk.

Soon after independence, the relationship between private enterprise and the state changed. The industrialization policy made certain sectors of high priority – machines, metallurgy or heavy chemicals – and made it easier for them to access scarce capital and foreign exchange. On the other hand, traditional businesses in textiles, plantations and commodity trades were deprived of access to capital and modernization opportunities, or even banned, along with moneylending. As some of the highly protected priority industries failed to become profitable, and bankruptcy accumulated in the low-priority sectors like textiles, the strategy became unsustainable. After a sharp break around the 1980s or 1990s, private enterprise faced a more liberal environment where it was easier to access capital and technology abroad and invest in offbeat fields. New patterns of inequality in the corporate sector developed again, now due to the challenges of operating in a globally connected and integrated world. The chapter presents this two-stage transition in a chronological narrative.

The chapter describes colonial India’s unique urbanization story. In 1750 India had big urban centres such as Hyderabad and Delhi and urbanization was close to the global average. While urbanization in India increased over the next two centuries, the increase was small compared to the rest of the world and Indian urbanization had fallen significantly below the global average by 1950. Yet the modest temporal change masks the important shift in urban centres from inland in the 1700s to the eastern and western coasts by the 1900s. As British rule expanded, the port cities of Bombay and Calcutta emerged as the new centres of administration, trade and commerce. More generally, cities close to railways grew faster than cities close to rivers. Unlike rural India, colonial towns and cities were characterized by more educated residents, more industrial and service sector jobs, male-biased sex ratios and growing political influence.

The Indian economy has grown rapidly since it began to liberalize in the 1990s, but industrial growth has fallen short of expectations. Curiously, Indian industry did not perform particularly well even during the colonial period, when the state’s approach was close to laissez-faire. How can we explain this? This chapter first shows that colonial India’s industrial stagnation is well represented by the slow progress of labour productivity of leading industrial sectors, which coincided with slow capital formation and slow total factor productivity growth. The chapter then shows that the slow growth of capital and total factor productivity were related to inflexibility in policy choices under the laissez-faire economic policy framework, and the shortcomings of institutional and organizational settings.

During British rule, almost half of the subcontinent’s area and a quarter of its population were governed by Indian princes and chiefs, subject to varying amounts of control by the Crown. These rulers varied greatly in their stature, legitimacy and political vision. This chapter provides a brief history of how the princely states emerged, evolved and differed in their social policies. Despite their lower revenue potential on average, many of the larger states incurred higher social spending than British Indian districts in their proximity. We focus especially on the two states of Baroda and Travancore, and on their education policies. These states introduced free and subsidized education well before most of the Western world. These policies had large and lasting effects on the welfare of their populations.