Economy under Chola Dynasty was prosperous and contented. The villages enjoyed an autonomy which simultaneously created economic self-reliance. This prevented the feudatory chiefs to interfere in village economy and land system. This was unique to the Chola kingdom. Villages were completely self sufficient and most of the needs of the villagers were satisfied. They grew their own food, manufactured their own clothes and had their set of craftsmen and other professionals to cater to their requirements. Thereby there was no surplus of any item as everything was used within the village itself. This scenario changed with the growth of towns and foreign trade. The requirement for commodities increased and villages started producing surplus goods for sale, with the economic system entering the rural market.

Land System During Chola Rule
There were two kinds of tenancy practiced in the Chola Kingdom. Land was on ownership basis where the whole village would pay the tax. Land could be individually held by peasant owners. Service tenure was very much practiced. In these cases tax is not paid instead it is compensated through personal service. Some peasants held lands as occupants of temples and the king gave away the land as grant. The temples received different service like water fetching to flower collection from these tenants. Thereafter military service tenures were introduced. Brahmins received lands free of tax. There were caste based distinctions in the village society. There were economic divisions and tax would be collected on that basis. The peasants had to reclaim waste land and cut off trees in order to get new arable land. Cattle`s breeding was also one of the occupations of the people. However a peasant had al rights to make an appeal to the king against very high taxation.

Changes came about in the Chola economy since the 11th century. Growth in trade created more and more towns. The town dwellers purchased items in cash which led to introduction of money in the economy. The traditional nature of the economy was declining and bourgeois economy was taking over.

Trade Under Chola Rule
The manufacturers of the Chola kingdom also produced goods for export to foreign countries. Textiles of high quality, metals, pottery were manufactured to sell overseas. Spices, precious stones, pearls, ivory were also exported. Since the Chola kingdom was located in South India it had greater access to the sea and was the centre for sea trade. It had trade relations with many Asian and European countries. It was a trading partner of China. Ports of Mahablipuram, Shaliyur, Kaveripattanam, were well known for dealings with China. This created a monopoly of the Chola merchants. South India also became influential in facilitating sea trade between Asia and Europe as many other countries were routing their goods through them. As a result of prosperous business in exports, many industries started producing exclusively for export purposes. The Cholas did extremely well in foreign trade and maritime activity. Southern India had developed extensive maritime and commercial activity towards the end of the 9th century. The main trading partners were the Tang dynasty of China, the Srivijaya Empire in the Malayan archipelago and the Abbasid Kalifat at Baghdad.

The merchant guilds were an important part of industry and were centered mainly in the towns. They specialized in goods procurement and its distribution. As there was an increase in internal and external demand for goods they formed a vital part of the economy. The state would assist them in negotiations with a foreign country if they faced difficulty. However there was no direct interference by the state in the functioning of the guilds. They exercised a tremendous influence on the economy and were instrumental in maintaining a healthy economy. Many Brahmins were involved in the guilds so they discouraged politics in any form. Due to this guild system in the Chola Kingdom monetary system had spread its wings as well as use of gold and copper coins became common.

The economy of the Cholas was an example for all the subsequent administration set ups. They had introduced novelty in state economy and administration as a whole. Concept of economic self sufficiency of the villages was unique. Centralisation was moderately practiced along with complete autonomy in certain aspects which reminds us of the present Panchayati Raj system.