Merchants, moneylenders, karkhanedars, and the emergence of the informal sector

Discourses on ‘informality’ in South Asia typically refrain from providing historical context or emphasise postcolonial history. Its historical antecedents in economic interaction are strongly related to colonial attempts to ‘formalise’ the economy as part of a project of ‘modernisation’, however, and the responses by economic actors seeking to cope with, or evade, the direction of this colonial endeavour. Partially, these actors made use in these attempts of prevalent socio-economic structures frequently summarised under the rubric of the bazaar economy. Yet the encounter with colonial ‘modernity’ also encompassed reinterpretations and reimaginations of economic interaction. This chapter studies the historical development of ‘informality’ by observing patterns in late colonial commercial, financial, and labour markets.