The nature of the economy during the Harshavardhana regime became increasingly more feudal and self sufficient. The decline of trade and commerce which began during the Gupta era itself went on unabated during the Harshavardhana.
This is obvious from the decline of trade centre, scarcity of coins and complete disappearance of guilds of trader and merchants. Naturally, the decline of trade and commerce affected the handicraft and other industries for the deficiency of demand.
This decline, even affected the agriculture, though indirectly because most of the raw material for handicraft and industries came from agricultural production. But during this period, there was lack of large-scale demand for agricultural goods.
Therefore, agriculturist now began to produce only to meet their own demands, needs and of the locality but not for the market. This led to the rise of self-sufficient village economy in which all the needs and requirements of the community were met from within and also distinguished by an increasing dependence on agriculture.
In general, there was prosperity with in the empire. The cities like Peshawar and Taxila in North-West were, of course destroyed by the invasions of the Hunas and Mathura and Pataliputra had lost their previous significance but Prayag, Benaras and Kanauj were prosperous cities within. As usual, agriculture was the main profession.
There flourished a number of industries such as- textile, architecture, sculpture and leather. There were different types of skilled and semi-skilled worker such as- Carpenters, goldsmiths, jewelers and other metal-workers, weavers, spinners, painters etc.
The butchers, fishermen, public farmers, executors and scavengers were looked down by the society and were to live separately outside the city. The sources of revenue were not many in the days of Harshavardhana.
The main source of income was land revenue which was generally one sixth of the total produce. Customs, sales-tax and presents from visitors were the other source of income. On the whole taxation was not heavy according to Huein-Tsang.