The era of the Pala Pratihara and the Rashtrakutas from 750 to 1000 AD was marked with the growth of the number of landed intermediaries. The decline of the trade and the restrictions on the movement of the traders and the artisans strengthened the tendency. The Palas made large number of religious grants of land to the Buddhist, Vaishnava and the Saiva sects. Grants were also made to various universities and the educational institutions. The Rashtrakutas made enormous land grants or Agrahaara to the Brahmins. Therefore the priestly institutions grew up in large number in this period. Apart from this, Pala Pratihara and the Rashtrakutas made enormous land grants to the individual owner. As a result under the three houses vast number of secular and non-secular intermediaries sprang up. They had the right to increase their landed jurisdiction by bringing more areas under direct cultivation under the authority. Hence the growth of the landed gentries resulted into the growth of feudalism during the period. With the growing trend of Feudalism there remained no limit on the extent of the territorial jurisdiction of the landed intermediaries.

The intermediaries of the period could extend their landed area by resumption of the ownerless properties and by undermining the agrarian rights enjoyed by the village communities. The transfer of such rights referred to the transfer of the maximum rights of the villagers in the hands of the barons. The growth of feudalism completely shattered the right to pasture the cattle, use of water reservoirs and the forest products without paying any tax to the king. The feudatories charged taxes or cesses to the villagers for almost everything they are using from the land. The feudatories claimed all the barren lands and the wastelands as their own property. They also denied the farmers to plough the land. As a result, land, which was used to be a "communal property" transformed into a feudal property.

Serfdom became one of the chief features of feudalism of the Pala-Pratihara-Rashtrakuta period. Serfdom signified that the peasants should be tied to the land without having any ownership to the land. The practice of "sub infeudaton" of land holding was extensive in this period. The system of land grant during the Pala period showed that an official sub infeuded his land with the prior permission of the king. The Pratiharas granted the vassals of intermediaries and gave them not only the right to sub in feud but also to evict the tenants. In Malwa, Rajasthan and Gujrat the grantees got absolute right to practice the system of sub infeudation. Therefore the landowner or the intermediaries who were granted the land by the kings had the right to expel the tenants from the land who is still working. Therefore the peasants suffered from the loss of security of his tenure on the land.

With the growth of sub infeudaton, the grades of intermediaries began to multiply. The Vyasa Smriti referred to the four grades of intermediaries in the villages. In this system, the grantee got the absolute right to impose the fair and unfair taxes to the peasants or the tenant farmers. As a result the peasants were converted into the virtual serfs. The tendency of this serfdom was most prominent in Rajasthan, Malwa and in Gujrat region. In this system the tenants or the landless farmers had nothing to say in their favor, they had to act according to their masters in order to earn livelihood. During the transfer of the ownership of the land, the tenants were also tied along with the transferred land. Under the new master the tenants` farmers may also lose his employment. Hence in the feudal society of the Pala Pratihara and the Rashtrakutas the tenants not only lost the security of their tenure to the land but also their employment was threatened.

Under the feudal system the practice of the forced labor was also in vogue. The Pala grants compelled the peasants to "Sarva-pida" i.e. subjected to the forced labor if it was demanded by the grantee. The Pratiharas also initiated the system of "Visti" or forced labor for the grantee or intermediary. Generally the intermediaries forced the peasants to cultivate the land. The peasants had to work under the grantee farmers. Besides the forced labor was demanded by the suzerain for the construction of forts, roads, dams etc.

Apart from forcing a labor, various taxes were also imposed on them. Also the additional taxes were demanded from them. In the contemporary records the imposition of taxes to the tenants were mentioned. The tenants were forced to pay the additional taxes to the grantee. During the supremacy of the Pala Pratihara and the Rashtrakuta, there was no legal machinery where the peasants could redress. Hence the peasants could not complain against the illegal taxation and oppression of the intermediaries. The intermediary or the grantee enjoyed the absolute power.

Feudalisation of trade and commerce was also prevalent in the Pala Pratihara and Rashtrakuta period. From the records of Dharmapala it is known that he made land grants for market. The grantees always had some jurisdiction over the traders in the market granted by the king. The picture of the Pratihara period was also same. During the Rashtrakutas, the guilds had to part their income with the local lord.

In feudal economy local needs were locally supplied. Thus under the Pala-Pratiharas village economy were self-sufficient. All sections of primary producers were lived in the villages. Some towns were also self sufficient as they owned lands to provide their food. There was no uniform measure in the feudal economy. Local weights and measures prevailed therefore.

Trade and commerce was limited during the period. Hence there was a lack in the circulation of the coins. Since in the feudal economy trade was declining there was no gold coins. The Pratiharas used copper coins in a small degree. The decline of trade restricted the growth of money economy. The declining process of the money economy gave rise to the barter system in the feudal economy.

The feudal economy of the Pala Pratihara and the Rashtrakuta period marked the early medieval economy. Individual ownership of land, subjection of peasantry, conversion of income and self-sufficient economy characterized the Pratihara-Pala and Rashtrakuta feudalism.