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What purposes did small towns serve?

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Hint: A temple town, administrative centre, small town, commercial town, or port town are all examples of mediaeval towns. Many towns possessed characteristics of all of the aforementioned types of communities. Many towns, for example, simultaneously operated as administrative centres, centres of commerce and artisan production, and temple towns.

Complete answer:
From the eighth century onward, a number of small towns appeared throughout the subcontinent.
Local villagers would come to sell their produce at a mandapika or mandi in these towns. Market streets, known as halta or hoot, were lined with stores in these towns as well.

Market streets, known as haat or hoot, were lined with stores in these towns. Different types of craftspeople, such as potters, oil pressers, sugar market toddy producers, and so on, had their own streets. Many traders came from far and wide to these settlements to buy local goods and sell faraway products like salt camphor horses, etc.

In or around these small villages, a Zamindar built a fortified palace. They imposed taxes on traders, artisans, and trade items, and they occasionally "donated" the "right" to collect these fees to local temples founded by themselves or wealthy merchants. These "rights" were documented in inscriptions that have remained to this day.

Note: There were lively markets selling grain, spices, cloth, and jewellery, which were important parts of the towns. The town's water supply came from wells and tanks. Clothing was created by Thanjavur and Uraiyur Saliya weavers. Cotton was created in two types: fine cotton for the monarch and aristocracy, and coarse cotton for the common people. These garments were also used to create banners for temple festivities. Svamimalai's sculptors, known as sthapatis, created superb bronze statues and tall, ornate bell lamps.