Medieval/Malla Economy

Introduction to Medieval/Malla Economy

The medieval period marked a significant era in the history of the Nepali Economy as it witnessed remarkable economic development and prosperity in the valley. This period was characterized by a diverse range of industries, including jewelry making, cloth dyeing and weaving, pottery, weapon manufacturing, and oil extraction. These small-scale industrialists played a pivotal role in driving the economic growth of the region.

One of the key factors contributing to economic prosperity was the emphasis placed on the irrigation system. The Bagmati, Bishnumati, Hanumati, Manohara, and Tukucha rivers played a vital role in providing water for irrigation, leading to abundant cultivation of food grains and cash crops. The settlements within the valley were organized into different categories such as Gram, Drang, Kot, and Tala, facilitating effective administration and resource management.

Foreign travelers, like Francis Buchanan Hamilton, who visited Nepal during this period, observed various crops such as corn and wheat, indicating the agricultural diversity of the region. Moreover, the popularity of “ghattas,” as mentioned by Hamilton, highlighted the prevalent trade practices during that time. King Jayasthiti Malla‘s reforms fostered a caste-based division of labor, leading to the development of specialized professions within each caste. This specialization resulted in the production of goods that were not only consumed locally but also exported to neighboring states.

Furthermore, the presence of Kashmiri Muslims in the valley, actively engaged in the Tibet-India trade, contributed to the growth of international trade. Currency trading, in particular, proved to be highly profitable, as Nepal’s currency production maintained close ties with both Tibet and India. This international trade bolstered Nepal’s economic progress and solidified its position in the global marketplace.

In addition to international trade, Nepal conducted significant trade with the British East India Company. The Newar communities of Shakya and Udash played a crucial role in this trade relationship, importing gold, salt, sheep, and tigers from Bhot (Tibet) to Nepal, while exporting wool, musk, leather, wood, herbs, chillies, rice, and ivory to India and Tibet. The Malla kings derived considerable wealth from these trade activities, earning an estimated annual income ranging from millions of Nepali Rupees.

Sources of the Malla Economy

Land in Medieval Economy

During the Malla period in Nepal, the land was divided into four parts: Rajkshetra, Birta, Jagir, and Guthi. The Rajkshetra referred to the land reserved for kings and royal families, which was extensively cultivated.

On the other hand, Birta was the land granted by the king as a reward to those who made significant contributions to the state’s administration or to scholars. Birtas came in various types, such as Kush Birta, Fikdan Birta, Sun Birta, Baksa Birta, Dowry Birta, Sarvakar Sarvangamafi Birta, and more. Additionally, the land given as a salary for government work was called a job.

In ancient times, Guthi, which functioned as a social reform institution, undertook various social welfare activities. However, during the Malla period, Guthi’s primary focus shifted towards religious practices. Many lands were designated for Guthi, as mentioned in the copperplates and documents from that era.

Like Birta, Guthi also had several names and was divided into two parts, Rajguthi and Duniya Guthi. Some of the Guthis were Bakas Guthi, Suna Guthi, Loha Guthi, Gulfool Guthi, Duika Birta Guthi, Fakirana Guthi, and Kotmamuli Guthi, among others.

The Malla kings actively worked to improve land-related issues, and Jayasthiti Malla is particularly esteemed for their efforts. Jayasthiti Malla implemented a system of land classification and measurement based on ropani. He divided the land into four categories, with different cubits determining the size of each plantation.

The people responsible for measuring agricultural land were called Kshetkar, and those measuring house land were called Takshakar, which eventually became a surname. Jayasthiti Malla also introduced rules for mortgaging and selling land, as well as determining house values based on their location and size.

Agriculture in Medieval Economy

During the Malla period in Nepal, there was extensive farming in the Kathmandu Valley. The soil in this region was highly fertile, allowing for the cultivation of a variety of crops. The primary food crops grown were paddy (rice) and wheat. . The fertile lands of the Kathmandu Valley yielded abundant harvests of foodstuffs and vegetables like mustard, millet, chickpeas, and bananas. However, maize cultivation didn’t gain momentum until later.

In the central part of the Kathmandu Valley, the emphasis was primarily on agriculture rather than animal husbandry. This was mainly due to the limited availability of grazing pastures for cattle and the fertility of the Valley Soil. Nonetheless, people still raised a modest number of animals for their milk, ghee, and meat. On the other hand, the surrounding areas of the Kathmandu Valley witnessed significant cattle rearing. Animals such as Khasi (castrated male goats), sheep, and goats were imported from Terai and Tibet to meet the demand for livestock.

The agricultural practices in the Kathmandu Valley were carefully executed to optimize the productivity of the fertile land. Farmers followed traditional methods passed down through generations, utilizing their expertise and local knowledge. They paid close attention to the timing of planting and harvesting to ensure optimal yields. The abundant supply of water from rivers and streams flowing through the valley facilitated irrigation, enabling farmers to cultivate their crops effectively.

Moreover, the farmers of the Malla period actively engaged in maintaining the fertility of the soil. They employed techniques such as crop rotation, where different crops were grown in succession on the same land to prevent soil exhaustion and increase nutrient availability.

As agriculture thrived in the Kathmandu Valley, it brought about economic prosperity and food security for the local communities. The surplus produce was not only sufficient to meet the needs of the residents but also allowed for trade with neighboring regions.

Trade in Medieval Economy

During the Malla period in Nepal, industry and trade thrived, as observed by foreign travelers and documented in historical materials. The production of various wooden and metal artistic objects flourished during this era, indicating the prosperity of the industries involved.

Furthermore, the practice of weaving cloth on looms had been carried out continuously from ancient times until the Malla period. Brass, copper, and iron industries were widespread, producing utensils, arms, and extracting oil. Nepal also excelled in crafting gold and silver ornaments, which were exported.

Trade was an essential aspect of the prosperous Malla period. Both internal and external trade played significant roles in the economy. Internal trade took place within Nepal, while external trade occurred continuously with Tibet and India. Nepal served as a vital link in the trade between Tibet and India.

During the reign of King Pratap Malla, even after Tibet’s invasion by Kazi Bhima Malla, trade between Nepal and Tibet remained uninterrupted. In fact, Nepal established a Nepali consul in Lhasa, the capital of Tibet, and opened a chamber for Nepali traders. These traders were granted special rights in Tibet.

Since Tibet did not mint its own currency due to religious beliefs, Nepal took on the responsibility of producing currency for Tibet. In return, Nepal imported gold and silver from Tibet. Besides currency, Nepal exported brass and copper utensils, clay idols, and various types of clothes to Tibet, and these goods further reached China through Tibet. Nepal primarily engaged in trade with Tibet through two routes, namely Kerung and Kuti. Indian traders greatly benefited from utilizing Nepal’s trade routes as well.

Trade flourished not only between Nepal and Tibet but also between Nepal, Tibet, and India. Nepal exported metal goods, herbs, leather, bones, and other items to India. Nepali traders established trading posts in Patna and Banaras.

On the other hand, Nepal imported spices, salt, silk cloth, and more from India. Swords produced in Nepal and High-Quality Copper in Nepal were highly sought after in the Indian market. Some have even stated that Indian traders profited between seventy and 130 percent from trading with Tibet through Nepal.

Father Horace Della Penna, an early 18th-century visitor to Nepal, described the trade between Nepal and India in his writings. He mentioned imports from India to Nepal, such as fine cloth, silk, zari, spices, oranges, incense, dyes, cotton seeds, jewelry, perfumes, and medicine. Conversely, Nepal exported musk, chaunri’s tail (a decorative item), various types of wood, animal skins, ivory, herbs, wool, brass, religious items, and artistic goods to India.

When Ippolito Desideri visited Kathmandu, he noted the advanced state of business in the city. Traders from Tibet (Lamas) and India (Sannyasis) actively engaged in commerce, while Kashmiri traders maintained shops within the city. The currency of great value was known as Mahendra Malli or Mohar, and Mughal currency was also circulated. Two Mahendra Mallis equaled one Mughal currency.

Tax in Medieval Economy

The primary way the government of Nepal during the Malla period generated revenue, just as in ancient times, was through various types of taxes imposed on the people. These taxes can be divided into three categories: cash, property, and services.

Cash taxes were collected on lands, houses, and forts (known as Kawath). Services and land taxes were paid as part of excise taxes. The customs tax collected by the court was referred to as seva ku. Seva ku was used for the royal family’s worship, fasting, marriages, and visits by the king. The items required for seva ku included chips, salt, oil, pulp, eggs, betel nut, butter, cardamom, pork, duck, goat, sesame, banana, and, leaves.

Jhara referred to the voluntary labor performed by the people for the betterment of the nation, without receiving any form of remuneration. Officials who were unable to mobilize the people to work were also subject to punishment. An inscription from King Jitamitra Malla of Bhaktapur states that everyone was required to participate in the construction of a water canal in Bhaktapur once a year.

The tax system played a crucial role in providing the necessary resources for the functioning of the state. The collected revenue supported the government in carrying out various activities, including infrastructure development, maintenance of forts and palaces, and the construction of religious structures. It also served as a means to redistribute wealth and ensure the equitable distribution of resources among the people.

The taxes imposed during the Malla period were essential for the smooth functioning of the state apparatus. The cash taxes on land, houses, and forts helped fund the administration, enabling the government to provide security, maintain law and order, and undertake public works projects.

The excise taxes, such as seva ku, not only generated revenue but also played a role in maintaining social and cultural practices, particularly in relation to the royal family’s ceremonies and rituals.

The taxation system also reflected the importance placed on the preservation and development of religious institutions. Jinsikar, the tax collected for the construction and renovation of monasteries and temples, ensured the preservation of these sacred sites and supported the religious activities carried out within them.


The medieval economy of the Malla period thrived through a combination of agricultural productivity, specialized craftsmanship, and active trade relations with neighboring regions. The valley’s economic strength relied on a well-developed irrigation system and the cultivation of various food crops and cash crops.

International trade, both with Tibet and the British East India Company, brought wealth and prosperity to the region. However, political upheavals, economic blockades, and internal conflicts ultimately led to the decline of the powerful Malla kingdoms.