The post – Gupta period saw emergence of new phenomenon where there was a tendency to grant the revenue of land or land in lieu of cash salaries to officers, a tendency which got intensified over time. This emergence of a new politic-economic structure was known as Feudalism. Local chiefs though defeated in war were allowed to keep their land in the form of grant. The grantees were equalivalent of vassals or feudatories who displayed their allegiance by handing over a part of the revenue from the land to king. From the revenue retained by the feudatories they were ordered to maintain troops for the king which the king could demand whenever he wanted. They also maintained law and order in their own territory.
Feudatories often had their own sub-feudatories thus building up a hierarchy. Sometimes the king took away the grant made to the feudatory but it occurred rarely. A separate group of guarantees were the Brahmans who for religious reasons were often given the land as well as the right to collect revenue. In this system the people who suffered the most were peasants who generally were of the Shudra caste. They not only paid the revenue to the lord but they had to do all kinds of free labor for him as well as to pay additional taxes. As the pressure on the peasantry increased they slipped further into the impoverishment.
Trade also declined. The surplus wealth of the feudatories and the king was used for conspicuous consumption. By the beginning of Medieval period many officers had begun to claim that land as theirs and the number of grantees increased manifold.