A very important development of the period was the rise of a self-sufficient village economy where production was according to the local requirements with little attempts at producing a surplus to be used for trade or exchange. This existing system led to accepting the standard of minimum production since the incentive to improve production was absent. As a result pressure on peasantry was increased and production stayed at a subsistence level only.

The subsistence economy of the village led to decline in trade. Trade was further hampered by the emergence of wide range of local weights and measures making long distance trade more difficult. The unstable political conditions and internal fighting in India only helped this process of decline in trade.

This decline in trade affected the growth of towns. In coastal areas and Bengal towns however prospered because they continued to trade with West Asia and South East Asia. The only prosperous class in north India during this period was feudal lords. But the surplus wealth was not invested in trade or craft production. It was on the other hand used for conspicuous consumption. The huge amounts were given to temples also thus attracting outsiders.