How a monastery lived
Indian monasteries were supported by land grants, villages, and assignments of revenue from kings, officials and merchants, recorded on copper plates and stone. Nālandā, Vikramaśīla and Odantapurī held estates and taught hundreds of students from across Asia.
Tantric practice, with its need for qualified teachers, initiations and ritual, made those centres more valuable and also more dependent on them. Learning of that kind cannot be carried on by a village without specialists.
Money that moved elsewhere
The Pāla kings of Bengal and Bihar, from the 8th to the 12th centuries, were the last great Buddhist patrons of northern India. Elsewhere, royal grants went increasingly to temples and to Brahmin settlements, which brought a ruler the same prestige in a religious idiom more of his subjects shared.
Trade changed too. Buddhism had grown along the trade routes, supported by merchants, from its earliest centuries. As urban patterns and routes shifted, that support thinned.
Concentration as a risk
A tradition whose teachers, libraries and training were gathered into a handful of very large institutions was fragile in a way that village religion is not. When those places were emptied, the learning in them went too, and there was no second layer underneath to carry it.
Why it matters
Buddhist institutions in India depended heavily on royal and elite patronage.
History and tradition
What historians can say
This is reconstructed from inscriptions recording grants, from the absence of later ones, and from Tibetan accounts of Indian teachers arriving as refugees. How much weight to give economic change against military destruction is still argued, and the honest answer is that both were at work.