Lichhavi Economy

Introduction to Lichhavi Economy

The Lichchavi Dynasty experienced a period of prosperous economic conditions. This favorable situation laid the groundwork for a content and well-managed society based on Varna Vyavastha. During this era, the pillars of economic growth were primarily based on agriculture, animal husbandry, industry, and trade. These sectors played a crucial role in driving the dynasty’s economic development and resulted in the Golden Age of Nepal’s History.

In terms of agriculture, the Lichchavis cultivated a wide variety of crops and utilized advanced farming techniques including rice, wheat, maize etc. The fertile lands of the Kathmandu Valley yielded abundant harvests, ensuring food security and a surplus for trade. Animal husbandry also thrived, with the dynasty focusing on rearing livestock for various purposes such as milk production, transportation, and labor. It was also exported to other Villages.

Furthermore, the Lichchavis excelled in various Local and Small-Scale industries. Skilled artisans produced exquisite pottery, textiles, and metalwork, which were highly sought after both domestically and in neighboring regions.

To sustain and govern their flourishing economy, the Lichchavis implemented an efficient taxation system. This system served as the primary source of revenue for the administration. Taxes were levied based on income, property, and trade, and special emphasis was placed on Land and Agricultural taxation.

Major Sources of Lichhavi Economy


Agriculture played a crucial role in society during the Lichhavi period, as evident from numerous inscriptions discussing land and land donations. It was the primary source of income for the people at that time. In those days, the term “Bhumi” was used to measure land, while “Manika” was used as a unit to measure grain.

The agricultural practices of that era encompassed various types of crops to ensure steady production. The cultivation of paddy and wheat emerged as the major crops. Additionally, there was an abundance of vegetables and fruits, enhancing the diversity of agricultural output. The region was known for its flourishing harvests of garlic and onions, which served as valuable spices. In fact, even the Chinese traveler Huan Chang, in his travelogue, expressed astonishment at the abundant food and fruits found in this region.

To boost agricultural production, effective irrigation systems were put in place. The management of water resources was carefully planned, and “tilamak” or “kulo” (canals) were strategically constructed to reach every arable land. This ensured that the fields received sufficient water for cultivation. In the event of disputes arising over the usage of these canals, the final decision was made by the king’s inner court, known as the “antarasan.”

The Proper usage of Water Canals equitably optimized agricultural produce and hence the King guaranteed the proper placement of such Canals and regular water facilities on all lands.

Apart from irrigation, various other techniques were employed to maximize crop yields. Farmers of the Lichhavi period implemented innovative methods such as crop rotation and the use of organic manure to maintain the fertility of the soil.

Society’s reliance on agriculture extended beyond food production. It was also closely tied to the economy and trade. The surplus agricultural products were often traded with neighboring regions, fostering economic growth and cultural exchange. Such Agricultural Products were transformed into economically exchangeable Goods and traded in International Markets as well. The Kings also exempted Taxes from Agriculturally Viable Areas and Products in order to promote the production of those Crops.

Animal Husbandry

Animal husbandry was a thriving practice during the Lichhavi period in Nepal. The people of that time were known for their exceptional skills in raising and nurturing various animals. Oxen, sheep, goats, pigs, and even fish were reared in abundance across the land.

In those days, the act of cow slaughter was considered a grave offense. The cow held a revered position and was worshipped as the embodiment of the goddess Laxmi. In fact, the cow was even designated as the national animal of Nepal nearly 1500 years later showing the perennial importance of Cows in Nepal.

Travelers like Huan Chang documented their observations, noting that Nepal was home to unique creatures such as the yak and the mingming bird (also known as Jimanjim). These were either reared

Recognizing the importance of animal husbandry for the welfare of the kingdom, the Lichhavi rulers encouraged and incentivized it. They generously rewarded individuals and communities engaged in this occupation. These rewards ranged from financial benefits to exclusive privileges. Generally, Tax Exemption was the best method of Incentivizing Animal Husbandry,

One particular region that stood out for its exceptional care of animals was the Bungmati area. The residents there displayed exemplary dedication in tending to their chickens, pigs, sheep, and fish. Their commitment to animal husbandry was so remarkable that the administrative tribunals had placed restrictions on their entry, ensuring their uninterrupted focus on this crucial trade.


During the Lichchavi period, significant advancements were made in the field of trade. Both internal and external trade flourished, with Nepal establishing trade relations with Tibet and India. To facilitate these transactions, various currencies made of gold, silver, and copper were introduced. However, it’s important to note that gold currency, known as “Swarna mudra,” was not commonly used for everyday trade but primarily for religious purposes. Within this context, several types of mudras were prevalent, including Mananka, Gunanka, etc. Interestingly, historical evidence suggests that copper coins from the Lichchavi period are the only currency found thus far.

According to Chinese chronicles, it is reported that Nepal had a greater number of merchants compared to farmers. These merchants were often seen conducting business in their shops or moving around engaging in trade activities. The accounts also highlight an intriguing difference in currency between Nepal and China. Unlike Chinese currency, Nepalese currency did not have a hole in the center. Instead, the mudras depicted a man on one side and the symbol of a bull on the other.

The records of Amsuverma‘s Tistung shed light on the items that were exported from Nepal during this era. It is believed that a customs system was established in Tistung, further supporting the notion of thriving trade during the Lichchavi period. Anshuvarma’s liberal trade policy played a pivotal role in expanding commerce during this time. To ensure the safety of traders, outposts known as Gulmak were established at various strategic locations.

One notable aspect of trade during this period was the prevalent fear of thieves and robbers. As a precautionary measure, traders would often travel in groups to protect themselves and their merchandise. These groups of traders were referred to as “Sarths,” and their collective journeys were called “Sarthavahas.” Sarthavahas were also provided much security by the state and probably escorted as well. They were a major source of Export and Foreign Revenue for the Lichhavi Kings.


Taxes played a crucial role in generating revenue during the Lichchavi period. The state primarily relied on taxes to fund its activities, and these taxes were categorized into three parts: Bhag, Bhog, and Kar. The tax levied on agriculture was referred to as “Bhag,” while the tax on animal husbandry was known as “Bhog.” Additionally, the tax imposed on trade was simply called “Kar.” Collectively, these three taxes were known as “Trikar.”

Among the various trade taxes, there were specific taxes imposed on different goods. For instance, there was an oil tax, which was a tax on oil products. Additionally, there was a nail tax, which pertained to paints and coatings. Another tax called “sinker” was imposed on wood, while the “chail” tax was levied on the bark of the chail tree or cloth. Garlic and onion were not exempt either, as there were taxes specifically imposed on these items as well. These taxes, such as the garlic tax and palandukar (onion tax), constituted significant sources of revenue for the government.

To oversee the collection of trade taxes, a customs office known as the “Shulkshala” was established. The officers responsible for collecting these fees were referred to as “Shaulkik.” Their role was crucial in ensuring that the appropriate taxes were collected and accounted for. This systematic approach allowed the government to manage its revenue effectively.

During the Lichchavi period, several goods were exported in substantial quantities. Iron, leather, wool, musk, and copper utensils were among the prominent exports. However, it was essential for traders to obtain government approval before exporting these goods. This approval was necessary to regulate and monitor trade activities, ensuring compliance with regulations. Goods that received government approval for export were considered “indispensable” and could be traded with confidence.

The government’s regulation of trade and the collection of taxes aimed to maintain control over economic activities. By imposing taxes on various goods and services, the government generated revenue necessary for the administration and development of the state.


During the Lichhavi period, agriculture was the primary source of income in Nepal. Paddy, wheat, vegetables, and fruits were cultivated, and irrigation systems were established to optimize production. Agriculture also drove trade and economic growth. Animal husbandry, particularly cow rearing, was highly valued.

Trade flourished with Tibet and India, using currencies made of gold, silver, and copper. Taxes played a crucial role in generating revenue, with specific taxes imposed on goods such as oil, nails, wood, and garlic. Government regulation aimed to control economic activities and fund state development.