Management values in Kautilya's Arthashastra.

A PROJECT ON
MANAGEMENT VALUES IN KAUTILYA’S
ARTHASHASTRA

SUBMITTED BY:
HARIKRISHNAN SREENIVASAN POTTY

E-Mail I.D.: hari1.6180@yahoo.com

2

ACKNOWLEDGEMENTS:

Whenever we get on with a job, we need support in many ways.
Quite often, we get the support we require. When I sat down to
complete this project, I was not sure if I could have managed to
complete even twenty five percent of what I have done now. The truth
is- it wouldn’t have been, but for the priceless support I have received
during the course of the project work. So it is my privilege to mention
them and thank them for their help.

I would like to express my gratitude to Mrs. Aparna Jain, the
Head of Department for BMS course in S.K.Somaiya, for going
through my project several times. She was present every time to help
me out and she solved patiently, all my doubts and queries.

I would like to thank Mr. Radhakrishnan Pillai for providing me
with a lot of material using which I could complete the project. It
might have been impossible for me to carry on, without his help.

A special thanks to my family and friends for just being there
for me and letting me know that I could count on them every single
time. They gave me the will to get on with this project.

According to Chanakya, one must start all important works
after praying to The Gods. So, straight out of Arthashastra,

“Om. Salutations to Sukra and Brihaspati.”

Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com

3

INDEX:

• EXCECUTIVE SUMMARY
• OBJECTIVE OF STUDY
• LIMITATIONS
• RESEARCH METHODOLOGY

1.INTRODUCTION

1.1 PURUSHARTAS

1.2 MEANING OF ARTHA

1.3 MEANING OF ARTHASHASTRA

1.4 KAUTILYA

1.5 ROLE OF ARTHASHASTRA IN MODERN WORLD

2. PUBLIC GOVERNANCE

2.1 THE CONTROL OF THE STATE

2.2 ROLE OF THE STATE

2.3 TOWN BUILDING

2.4 LAW MAKING

2.5 UNFAIR TRADE PRACTISES


4

2.6 CONSUMER PROTECTION

2.7 MODERN GOVERNANCE

3.TAXATION

3.1 METHODOLOGY

3.2 AMOUNT OF TAXATION

3.3 EXEMPTIONS AND WAIVERS

3.4 THE MODERN METHODOLOGY OF TAXATION

4. TRADE

4.1 DOMESTIC TRADE

4.1.1 TRADE PROUTES

4.1.2 SAFETY OF GOODS IN TRANSIT

4.2 FOREIGN TRADE

4.2.1 TRADE &REVENUE

4.2.2 IMPORTS

4.2.3 EXPORTS

4.3 MODERN TRADE PRACTICES

5. BANKING,CO-OPERATIVES &RISK MANAGEMENT


5

5.1 RISKS & UNCERTAINITIES

5.2 PRIVATE SECTOR V/S PUBLIC SECTOR

5.3 LOANS & INTEREST RATE

5.4 GUILDS & INSURANCE

5.5 PRESENT SCENARIO

5.5.1 BANKING SECTOR

5.5.2 INSURANCE SECTOR

5.5.3 FUTURE TRENDS

6. AGRICULTURE &IRRIGATION MANAGEMENT

6.1 THE MAIN ACTIVITY OF STATE

6.2 SUPPORTS TO AGRICULTURE

6.3 METEROLOGY

6.4 CROPPING PATTERN

6.5 IRRIGATION

6.6 AGRICLTURAL TAXATION

6.7 SUSTAINABLE AGRICULTURE

6.8 PRESENT SCENARIO


6

7. PUBLIC SECTOR MANAGEMENT

7.1 ROLE OF PUBLIC SECTOR

7.2 INDUSTRIES IN PUBLIC SECTOR

7.3 PUBLIC SECTOR IN INDIA

8. HUMAN RESOURCE MANAGEMENT

8.1 WINNING PEOPLE/LURING PEOPLE

8.1.1 THE GROUP OF THE ENRAGED

8.1.2 THE GROUP OF THE FRIGHTENED

8.1.3 THE GROUP OF GREEDS

8.1.4 THE GROUP OF PROUD

8.2 WAGES &INCENTIVES

8.3 SELECTION & TRAINING

8.4 CURRENT HR POLICIES & MANAGEMENT

9. LEADERSHIP

9.1 PRIMARY GOALS OF THE LEADER

9.2 LEADERSHIP VALUES

9.3 BENEFITSOF A RIGHTEOUS LEADER


7

9.4 MAKING OF A LEADER

9.5 SPIRITUAL LEADER

9.6 CURRENT SCENARIO IN LEADERSHIP

9.6.1 AUTOCRATIC STYLE

9.6.2 PARTICIPATIVE STYLE

9.6.3 LAISSEZ FAIRE STYLE

10. CORPORATE SOCIAL RESPONSIBILITY & CORPORATE

GOVERNANCE

10.1 CORPORATE SOCIAL RESPONSIBILITY

10.2 CORPORATE GOVERNANCE

10.3 THE MODERN ENVIRONMENT

11. SUGGESTIONS AND RECOMMENDATIONS

12.CONCLUSION

13. ANNEXURES

13.1 CASE STUDIES

13.1.1 FLYING LOW

13.1.2 MEXICAN TELECOM INDUSTRY-UNWANTED


8

MONOPOLY

13.1.3 PUBLIC GOVERNANCE

13.2 ARTICLES

13.2.1 DON’T NEGOTIATE SAFETY & SECURITY

13.2.2 VETTING THE KING’S CABINET: ANCIENT

TECHNIQUES FOR A MODERN NECESSITY

14. REFERENCES


9

EXECUTIVE SUMMARY:

This project is a report of probably the greatest treatise on
management ever written in the world, ‘The Arthashastra’.
Arthashastra, written by Kautilya, also known as Vishnugupta or
Chanakya, surmises all the important aspects or areas of management
that we pursue or study today. It encompasses of a wide array of
ideals and fundamentals that could be put to use in today’s
environment.

It becomes mandatory for every Indian to learn The
Arthashastra because of its all pervasive nature. The Arthashastra had
been lost in oblivion since ages before it was finally resurrected for
the masses. The Arthashastra is indeed a book that is one of its kinds
in the world.

Going through his works, one could see that Kautilya, the
Prime Minister of Chandragupta Maurya has guided the Emperor in
his pursuit of greatness. He possesses a thorough understanding of
economics and all the prevalent economic policies. Kautilya has given
fundamentals of town building and public governance; which, if
implemented properly could change the deplorable condition of
governance in India. Kautilya has also given valuable insights on
trade and commerce. He has even stated the importance of
international trade and gave impetus to such trade.


10

The taxation policy and the wages structure of Kautilya can
itself be used as a reference book for the government of any country.
It gives importance to the happiness and welfare of subjects and not
only to the fulfilment of treasury.

Agriculture, co-operatives, banking, etc were all taken care of
by The Arthashastra. Human Resources Management and Leadership
are the highlights of Arthashastra. Kautilya has indeed given a great
sermon on leadership.

This project has tried to encompass all the required materials
about Arthashastra and put them to use with a modern perspective. It
has tried to solve all the modern woes of governance through the eyes
of Kautilya.

Case studies have been included at the end to give a better grip
on the subject matter and make it more practical in approach. All this
has been done keeping in mind that no individual or organisation is
hurt or offended with regards to anything written or referred to in this
project.

I hope that this work will go a long way in understanding the
intricacies of the great epic ‘The Arthashastra’ and will pave the way
for future research and studies on this less explored subject of
management.


11

OBJECTIVE:

The objectives of this project are to:

 Highlight the values in Arthashastra which could have a profound
influence on the management tactics used today.
 To arouse interest in wisdom that had been lost for years.
 To draw parallels and differences between the methods of
administration and management during the Mauryan Empire and
the present age.

METHODOLOGY:

The data used in this research work is secondary in nature. This
project is more of a compilation of many revered works coupled with
inputs from the researcher. Reference material has come in the form
of books and websites. Meetings with Arthashastra scholar, Mr.
Radhakrishnan Pillai have also helped in collecting secondary data
required for this project. Historical data method is mainly employed in
collection of data. Efforts have been taken to ensure the authenticity
of the data.


12

LIMITATIONS:

The project work is not without its own set of limitations
though care has been taken to ensure that they are at a minimum level.
The following limitations have come to the fore during the
compilation of this project:

 Lack of historical data has been a major problem. The Arthashastra
had been in oblivion for ages and much of the manuscripts are said
to have been destroyed or lost. It has been difficult to join the
broken threads.
 Secondary data is in the form of websites and books. Hence, it
would be fair enough to say that these may be subject to biasness
or prejudices of the respective authors.
 There has been a major shift in the psyche of people since the
Mauryan Era to the present age. Hence, reliability of the
reproduced works cannot be guaranteed. However, on reading the
manuscript, one gets a vivid view of the subject matter and efforts
have been taken to provide an unprejudiced and unbiased report
based solely on facts.


13

1. INTRODUCTION:

India has always been a land of great souls. Be it Maharishi
Ved Vyasa or Aryabhatta or more recently, Dr. APJ Abdul Kalam,
India has been a nation basking in the glory of being the birth place of
intellectuals with no equal. The nation has seen it all; from political
turmoil to epochal feats; from relentless struggle for an identity to
being one of the fastest growing economies in the world. Some
believe India’s success is an effect of Indians having vehemently
taken to modernism and the western ideology, while others credit the
success with going back to our roots and developing an Indian
ideology. Both views make sense as the world is beginning to warm
up to Indian ideologies and embrace what is possibly the oldest race in
the world.

India traces its history to the formation of Indus Valley
civilization, some ten thousand years ago. This was followed by
several monarchies and invasions, making this land the envy of many.
This period led to the development of the glorious history of India as
we know it today. Possibly, the seeds of Indianness were sown by the
Aryans who came to India. They started their first colonies and laid
down norms and regulations which they had to abide with. They
prepared the Vedas which gave rise to the Vedic Period in India’s
history. Within the Vedas, were enshrined the doctrines of the
Ashrama system. The Purusharthas followed the Ashrama system of
Vedas.


14

1.1 PURUSHARTHAS:

Purusharthas could be defined as the aim or objectives of
human life. They consisted of the following:

 Dharma: Dharma stands for Righteousness or Dutifulness. Dharma

was the corner stone of the entire ethos in the human context. It
was the prima doctrina of the ancient Indian values system.
 Kama: Kama stands for desire or passion. It is the drive that

motivates a certain course if action. Kama denotes the human
attribute of having a soft spot for worldly desires and a strong will
to achieve those desires.
 Moksha: Moksha means Salvation. Moksha aims to let go all
worldly ties and relations. It is the stage where a person attains
Nirvana or eternal freedom from all senses. Thus, Moksha stands
for Renunciation.

The fourth Purusharthas was Artha or Wealth. Artha
significantly symbolized more than just material pleasures or
treasures. It was wealth or power as we know it of today. As days
passed by, the importance of Artha grew in the human minds and
today, it has become the sole motivator or aim in Human life.


15

1.2 MEANING OF ARTHA:

Artha, as discussed earlier, means Wealth. However, it is not to be
confused as materialistic accumulation or treasures. Artha is wealth in
absolute terms. It covers everything from treasures to knowledge to
courage. Artha is everything that is valuable for human beings.
Indeed, Artha predominantly speaks about economy and not valour or
knowledge. However it is a narrow approach of assessing Artha.
Thus, Artha is complex in nature.

This complexity has propelled many scholars to comprehend the
subjectivity of Artha. Many have succeeded while many have failed to
solve the intrigues of this concept. There have been many approaches
towards learning the concept of Artha. Some have been purely based
on rules or certain set of beliefs like the exhaustive Manusmriti, while
many have been practical treatises on Artha. As one studies Artha and
its complexities, one could wonder at the realms of possibilities that
this subject provides. From the basic economic theory of demand and
supply to the ultra modern theory of environmental and social
accounting, Artha encompasses all.

Even more amazing is the fact that all this was prevalent since
the times of the Vedas. Many scholars have tried to convey the
ancient teachings of the sages in the most modern way possible;
however one must say, none have succeeded, but for one.


16

1.3 MEANING OF ARTHASHASTRA:

Now that we have discussed the meaning of Artha, we would
discuss the various approaches to learn it. Many scholars have tried to
interpret the meaning of Artha. The study of Artha came to be known
as Arthashastra. Arthashastra literally means “the science of wealth”
or “economics” as we know about it in the modern parlance.
However, as one studies Arthashastra, one gets a feeling that it is not
meant to throw light just on the topic of dealing with materialistic
riches, but also on the wealth that is intangible and cannot be
measured. The meaning of “wealth” takes a completely new paradigm
in the words of Arthashastra.

To learn about Arthashastra, one needs to learn about the composition
of Arthashastra and its author. The Arthashastra contains nearly 6000
sutras divided into 15 books, 150 chapters, and 180 sections.

The 15 books contained in the Arthashastra can be classified in
the following manner: Book 1 on ‘Fundamentals of Management’,
Book 2 dealing with ‘Economics’, Books 3, 4 and 5 on ‘Law’, Books
6, 7 and 8 on Foreign Policies and Books 9 to 14 dealing with ‘war’.
Book 15 deals with the methodology and devices used in writing the
Arthashastra.

Arthashastra is believed to have been written around 4th
Century, B.C. However, many question the authenticity of these
findings; stating that Arthashastra was written at a later date. This vast


17

treatise was written by Vishnugupta, who was also known as
Chanakya and Kautilya, the advisor to Emperor Chandragupta
Maurya. There are many contradictions surrounding this too. Some
believe that Vishnugupta was not Kautilya and that Arthashastra,
which was originally written by Vishnugupta, was rewritten by
Kautilya at a later period. However, we assume that all three were the
same person and he was the rightful author of Arthashastra which was
written during the reign of Emperor Chandragupta Maurya. Also,
there has been enough evidence about this assumption by reading the
manuscripts and comparing the style with other writings of the same
period.

1.4 KAUTILYA:

Having seen what the Arthashastra composes of, one has to
necessarily learn about its author to understand the subtleties in the
treatise. Arthashastra, as mentioned earlier, was written by
Vishnugupta. Vishnugupta was also known as Kautilya or Chanakya.
He got the name “Kautilya” as he was born in the “Kutila Gotra”. The
name “Chanakya” derived from the fact that he was born to a person
named “Chanaka”.

According to the legend, Kautilya was the principal of The
Taxashila University. On a meeting with the erstwhile Emperor,
Dhanananda, Kautilya was dishonoured and humiliated. He vowed
revenge and dethronement of the Nanda Empire. He took a child
named Chandragupta as his disciple and strived hard to make him the
Emperor. He succeeded in doing the same and crowned Chandragupta


18

Maurya as the new Emperor and this marked the beginning of the
Mauryan Dynasty, a golden age in Indian history. Kautilya was
shrewd and cunning. He had a mind which was faster than that of the
average human being. He guided Chandragupta Maurya and used all
his experience to carve out one of the greatest emperors, the world has
ever seen.

He made rules, dictated them and implemented them to the
fullest to run a highly skilled administrative set up that was unheard of
during those days. His political and administrative acumen was
exemplary to say the least. All this is compiled by him in a political
treatise called “Arthashastra”.

Kautilya is also credited with stopping the Greek invasion to
conquer the whole world. He was instrumental in the rise of the
Mauryan Empire under Chandragupta Maurya and his son, Bindusara,
who succeeded him.

As per the legend, Kautilya died of voluntary starvation after
Bindusara charged him of sedition. However, Bindusara realised his
mistake and apologised to him; but Kautilya was adamant and let go
his life at a ripe age.

His works were lost near the end of the Gupta dynasty and not
rediscovered until 1905. One of the first translations of Arthashastra
was done by R. Shamasastry in the year 1915. Thereon, we have seen
many translations and depictions of Arthashastra. However, there is
still a want of a lucid decipherment of the nuances of the Arthashastra.


19

1.5 ROLE OF ARTHASHASTRA IN MODERN WORLD:

Having seen what the Arthashastra is all about, one might want
to know how it is relevant in the modern parlance. An ancient saying
says that wisdom is never bound by time. Thus, Arthashastra has
many implications which do not alter much over time.

In the modern times of insecurity and political turmoil, some
glue is required to hold together the fragments of a collapsing world
or a nation, in the narrow sense. A treatise, widely accepted and
already having been put to test, is an effective mechanism to be the
glue. The various theses in Arthashastra are relevant even today as the
world is looking out for a better future. The best quality of
Arthashastra is that it has not been written keeping in mind a
particular timeframe or a region. Its attribute of all pervasiveness has
made it omnipotent.

At a time when the world is need of a true leader, Arthashastra
does exactly that; carve out excellent world leaders. The role of
Arthashastra will be evident as we proceed further.


20

2. PUBLIC GOVERNANCE:

Public governance implies structures and processes for
determining use of available resources for the public good. Good
governance, according to experts, implies the following: Universal
protection of human rights; laws that are implemented in a non-
discriminatory manner; an efficient, impartial, and quick judicial
system; transparent public agencies and official decision-making;
accountability for decisions made about public issues and resources
by public officials; participation and inclusion of all citizens in
debating public policies and choices. It is, of course, possible to add
many more aspects to the definition of good governance. Citizens are
equating responsive governance not only with formal institutions or
systems of democracy but also with the processes and culture of
democratic inclusiveness and participatory governance.

Public governance is something that emerged out of a
democratic set-up. However, in India, it is not a new concept. This
concept has been put to use very efficiently by the Mauryan Empire
under the rule of Chandragupta Maurya or one could say, under the
guidance of Kautilya. Kautilya believed that the state had a role in the
market as a regulator. He advocated the principle of a mixed economy
at a time when India was ruled by autocrats. He was meticulous in
outlining in detail, the technique of controlling every activity in the
state. He insisted on governance for the betterment of public and
equated the success of the king with that of the public.


21

2.1 THE CONTROL OF THE STATE:

Kautilya has suggested control of the State on almost all
activities of governance. While the individual merchants were free to
continue, they had to comply with the authorities appointed by the
state.

Kautilya had appointed superintendents for almost every
activity included in governance. They included superintendents for the
State, for weights and measures, for trade and commerce, for
agriculture, for mining, for prostitutes, for gems and jewels, for
horses, for elephants, for cows, for tolls, for storehouses, for forest
produce, for armoury, for weaving, for ships, for slaughter houses, for
liquor, for infantry, for passports, etc.

Thus, it is very much evident that the State exercised a strong
control over the governance. However, it has to be noted that the State
only acted as a regulatory body and did not interfere in the day to day
affairs of the public.

In theory, the State had absolute control over economic
activities; however in practice, it encouraged all types of private
professions too. It was recognized that the wealth of the State was
dependent on the wealth of the public. Though the State played a
supervisory role, Kautilya did not feel the need to interfere in the
planning and decision making aspects of commerce. In the words of
Kautilya, “There shall be no restrictions in the sales of those items


22

with a frequent demand; nor shall they be subject to the evils of
centralization.”

2.2 ROLES OF THE STATE:

According to Kautilya, the State had the following roles to play
in an economy:

 Role as a facilitator.
 Role as a regulator.
 Role as a protector.

The State was a facilitator according to the Arthashastra. It was
the duty of the State to facilitate transactions. Kautilya stressed for the
formation of a Welfare State. A Welfare State is a concept of
government where the state plays a key role in the protection and
promotion of the economic and social well-being of its citizens. It is
based on the principles of equality of opportunity, equitable
distribution of wealth, and public responsibility for those unable to
avail themselves of the minimal provisions for a good life. The
general term may cover a variety of forms of economic and social
organization

The State also played the role of a regulator. As discussed
earlier, the State had to overlook each and every activity of the
economy. The State formulated laws and practices which had to be
complied with. Even though the State did not interfere in the working


23

of any commercial activity, it had to be informed and reported
consistently about the functioning of the business.

The State also acted as a protector of masses. Kautilya favoured
free trade and believed in created mechanisms that would protect the
commercial interests of traders and artisans. According to Kautilya,
“those who conspire to lower the quality of the work of the artisans, to
hinder their income, or to obstruct their sale or purchase shall be
fined.”

2.3 TOWN BUILDING:

Kautilya insisted in creation of villages and not on mere
formation of them. According to Kautilya, villages had to be created
at strategic places. Many such villages were built from scratch during
this period. He also laid emphasis on building commercial towns and
trade zones.

This chapter taken from the Book II of Arthashastra translated
by R. Shamasastry explains the formation of villages during the reign
of Chandragupta Maurya:

“CHAPTER I: FORMATION OF VILLAGES.”

Either by inducing foreigners to immigrate
(Paradesapraváhanena) or by causing the thickly-populated centres of


24

his own kingdom to send forth the excessive population, the king may
construct villages either on new sites or on old ruins (bhútapúrvama
vá). Villages consisting each of not less than a hundred families and
of not more than five-hundred families of agricultural people of súdra
caste, with boundaries extending as far as a krósa (2250 yds.) or two,
and capable of protecting each other shall be formed. Boundaries shall
be denoted by a river, a mountain, forests, bulbous plants (grishti),
caves, artificial buildings (sétubandha), or by trees such as sálmali
(silk cotton tree), Sámi (Acacia Suma), and kshíravriksha (milky
trees). There shall be set up a stháníya (a fortress of that name) in the
centre of eight-hundred villages, a drónamukha in the centre of four-
hundred villages, a khárvátika in the centre of two-hundred villages
and sangrahana in the midst of a collection of ten villages. There shall
be constructed in the extremities of the kingdom forts manned by
boundary guards (antapála) whose duty shall be to guard the entrances
into the kingdom. The interior of the kingdom shall be watched by
trap-keepers (vágurika), archers (sábara), hunters (pulinda), chandálas,
and wild tribes (aranyachára).

Those who perform sacrifices (ritvik), spiritual guides, priests,
and those learned in the Vedas shall be granted Brahmadaya lands
yielding sufficient produce and exempted from taxes and fines
(adandkaráni). Superintendents, Accountants, Gopas, Sthánikas,
Veterinary surgeons (Aníkastha), physicians, horse-trainers, and
messengers shall also be endowed with lands which they shall have no
right to alienate by sale or mortgage. Lands prepared for cultivation
shall be given to tax-payers (karada) only for life (ekapurushikáni).


25

Unprepared lands shall not be taken away from those who are
preparing them for cultivation. Lands may be confiscated from those
who do not cultivate them; and given to others; or they may be
cultivated by village labourers (grámabhritaka) and traders
(vaidehaka), lest those owners who do not properly cultivate them
might pay less (to the government). If cultivators pay their taxes
easily, they may be favourably supplied with grains, cattle, and
money. The king shall bestow on cultivators only such favour and
remission (anugrahaparihárau) as will tend to swell the treasury, and
shall avoid such as will deplete it. A king with depleted treasury will
eat into the very vitality of both citizens and country people. Either on
the occasion of opening new settlements or on any other emergent
occasions, remission of taxes shall be made. He shall regard with
fatherly kindness those who have passed the period of remission of
taxes. He shall carry on mining operations and manufactures, exploit
timber and elephant forests, offer facilities for cattle breeding and
commerce, construct roads for traffic both by land and water, and set
up market towns (panyapattana). He shall also construct reservoirs
(sétu) filled with water either perennial or drawn from some other
source. Or he may provide with sites, roads, timber, and other
necessary things those who construct reservoirs of their own accord.
The same was applicable in the construction of places of pilgrimage
(punyasthána) and of groves. Whoever stays away from any kind of
cooperative construction (sambhúya setubhandhát) shall send his
servants and bullocks to carry on his work, shall have a share in the
expenditure, but shall have no claim to the profit. The king shall
exercise his right of ownership (swam yam) with regard to fishing,


26

ferrying and trading in vegetables (haritapanya) in reservoirs or lakes
(sétushu).”

2.4 LAW MAKING:

Kautilya held great reverence to law and order within the state.
The weights and measures were standardized and all merchants had to
comply with the same.

Kautilya also laid strict rules on the constitution of a “legal
agreement”. For him, the element of transparency was the foremost in
an agreement. During this period, oral agreements were valid;
however, there had to be a voluntary witness to these agreements. The
witness had to be of a sound mind and not a lunatic. The witness
should not act under provocation, anxiety or intoxication. Also, the
witness could not be those who had a criminal record.

Kautilya advocated the importance of forming associations. All
contracts within the association were considered legal. He also laid
out laws for joint ventures and partnerships. The Arthashastra also
gives much importance to arbitrations and trials in courts.

An interesting point to be noticed is that Arthashastra had given
due importance to passports. Every citizen had to carry a passport and
this was applicable to the foreigners as well. Non compliance with this
law led to a fine or imprisonment.


27

2.5 UNFAIR TRADE PRACTICES:

Kautilya stressed on the importance of fair trade practices. He
also laid down fines for adulteration and supply of goods of an
inferior quality. Kautilya emphasised the need for guidelines in case
of professional services.

As per Arthashastra, “Artisans shall, in accordance with their
agreement as to time, place, and form of work, fulfil their
engagements. Those who postpone their engagements under the
excuse that no agreement as to time, place and form of work has been
entered into shall, except in troubles and calamities, not only forfeit
¼th of their wages, but also be punished with a fine equal to twice the
amount of their wages. They shall also make good whatever is thus
lost or damaged. Those who carry on their work contrary to orders
shall not only forfeit their wages, but also pay a fine equal to twice the
amount of their wages.”

He also established guidelines for medical practitioners.
According to Kautilya, “Physicians undertaking medical treatment
without intimating (to the government) the dangerous nature of the
disease shall, if the patient dies, be punished with the first
amercement. If the death of a patient under treatment is due to
carelessness in the treatment, the physician shall be punished with the
middle-most amercement. Growth of disease due to negligence or


28

indifference (karmavadha) of a physician shall be regarded as assault
or violence.”

He appointed three commissioners to maintain peace in the State.
Thus, one can say that law and order was strictly followed in the
Mauryan Empire.

2.6 CONSUMER PROTECTION:

Kautilya realised that the role of the State was to ensure that the
consumers were not violated. Standard weights and measuring devices
were used. They were made of materials that were not expandable
under the influence of heat; nor condensable under wet conditions.

Arthashastra prescribed how much to pay the merchants,
artisans, craftsmen and goldsmiths. It also listed the wages to be paid
for metal workers and builders. Kautilya even prohibited beggars and
other entertainers from moving about during the monsoons.

The policy of consumer protection is evident in the
Arthashastra. According to it, “The Superintendent of Commerce shall
allow the sale or mortgage of any old commodities (purána
bhándanám) only when the seller or mortgagor of such articles proves
his ownership of the same. With a view to prevent deception, he shall
also supervise weights and measures. Difference of half a pala in such
measures as are called parimání and drona is no offence. But


29

difference of a pala in them shall be punished with a fine of 12 panas.
Fines for greater differences shall be proportionally increased.”

The Arthashastra also states the following: “When a trader sells
or mortgages inferior as superior commodities, articles of some other
locality, as the produce of a particular locality, adulterated things, or
deceitful mixtures, or when he dexterously substitutes other articles
for those just sold (samutparivartimam), he shall not only be punished
with a fine of 54 panas but also be compelled to make good the loss”

Thus, one can conclude that Kautilya truly believed in the
phrase “Consumer is the King”.

2.7 MODERN GOVERNANCE:

One can see the stark similarities between the governance of the
Mauryan State and the governance that we are being promised today.
It is a different matter that these policies were implemented back then,
but the modern economy mostly receives only promises.

During the time of Kautilya, the villages were built from
scratch and not merely formed. In India, we don’ have that kind of a
mechanism. There are no towns or cities in India that have been
consciously developed with the exception of Jamshedpur to some
extent. If one compares the same with global cities like Shanghai or
Tokyo, we may find out that we lag behind.


30

This could also be seen in the way our judiciary works. It is
clearly mentioned in the Arthashastra that the court would not allow a
person with a criminal background to appear as a witness. However,
in India, we see a lot of criminals not only standing as witnesses, but
also as governors and diplomats. This indeed raises a question mark
over the credibility of our judicial system.

The Consumer Protection Act has been enforced in India.
However, not many are getting access to the benefits of this act.
Unfair trade practices and adulteration is still rampant in India.

Speaking about diversity, one can say that the Indian State is
one of the most secular states in the world. We follow the principle of
Welfare State which was put to use by the British. However, it is
evident that this concept is much older than The Great Britain itself.


31

3. TAXATION:

Taxation is an important part of governance. Means by which
governments finance their expenditure by imposing charges on
citizens and corporate entities. Although, principally, taxation should
be neutral in its effects on the different sectors of an economy,
governments use it to encourage or discourage certain economic
decisions. The Kautilyan State had a very adept mechanism for
taxation. Kautilya knew the importance of collecting the right amount
of taxes at the right time from the right people.

3.1 METHODOLOGY:

According to Kautilya, "Taxation should not be a painful
process for the people. There should be leniency and caution while
deciding the tax structure. Ideally, governments should collect taxes
like a honeybee, which sucks just the right amount of honey from the
flower so that both can survive. Taxes should be collected in small
and not in large proportions".

Kautilya advocated taxation on the basis of the income of the
person. The following taxes were identified by Kautilya:

 Corporate Taxes: These taxes were collected from the guilds of

artisans and the merchants.


32

 Income Taxes: These taxes were collected by farmers and

agriculturists as a part of their produce.
 Indirect Taxes: These were levied on liquor, slaughter houses,

mining, transportation, etc.
 Land and Property Tax: These included taxes on houses,

agricultural or any other material property.
 Customs Duty: All imported goods had to bear customs duty.

 Entertainment Taxes: Gambling, entertainment, etc had to part

with a specific amount of taxes.
 Special Taxes: These were levied during special occasions such as

wars, famines, draughts, etc.

Kautilya’s method of taxation involved the element of sacrifice
by the taxpayers, direct benefits to them, redistribution of income and
tax incentives.

3.2 AMOUNT OF TAXATION:

As discussed earlier, Kautilya believed in collecting minimal
taxes. Taxes had to be collected on the excesses left after expenses.
The income structure during the Mauryan Empire was as follows:

Taxable income has to be calculated on the following:

 Current Income: It refers to the income which is steady. Normally,

1/6th of the income had to be paid in the form of taxes.


33

 Transferred Income: This is the income which has been transferred

to an individual. For instance, the wealth transferred to the son due
to the death of his parents comes under transferred income. 1/4th of
this income had to be paid as taxes.
 Miscellaneous Income: This category again had three subdivisions.

Which included recovery of previously written off debts, realisable
economies made in investment against planned budgets any other
value added income.

Every individual had to compulsorily maintain an account book
which had to be presented to the superintendent of commerce while
paying the taxes. Every transaction had to be recorded on the date of
transaction in the account book. Not maintaining such a book was
considered fraudulent and was punishable. Also, the accounting
system had to be uniform and as prescribed by the superintendent of
commerce from time to time.

3.3 EXEMPTIONS AND WAIVERS:

The Mauryan Empire had a very strict methodology for
collection of taxes. Though the collection amount was minimal, they
had a very effective mechanism for collection of taxes and this
ensured that the taxes were paid by every person on a timely basis.
However, the Mauryan State offered exemptions and waivers on
taxation. Some of the exemptions and tax waivers are as follows:


34

 In case of a widow with children to look after, the transferred
income due to the death of her husband is exempt from taxation.
 In case of faulty rainfall or draught, agricultural produce is
exempted from taxation.
 Taxes were exempted for soldiers with exemplary record.
 Taxes were also exempted in case of serious medical illness.

 The family of martyrs in war did not have to pay taxes.

These are a few of the cases where taxes were exempted. This
is indeed a testimony to the fact that Kautilya respected humanity and
acknowledged the efforts and pains of the citizens.

3.4 THE MODERN METHODOLOGY OF TAXATION :

India has a well developed tax structure with a three-tier federal
structure, comprising the Union Government, the State Governments
and the Urban/Rural Local Bodies. The power to levy taxes and duties
is distributed among the three tiers of Governments, in accordance
with the provisions of the Indian Constitution. The main taxes/duties
that the Union Government is empowered to levy are Income Tax
(except tax on agricultural income, which the State Governments can
levy), Customs duties, Central Excise and Sales Tax and Service Tax.
The principal taxes levied by the State Governments are Sales Tax
(tax on intra-State sale of goods), Stamp Duty (duty on transfer of
property), State Excise (duty on manufacture of alcohol), Land
Revenue (levy on land used for agricultural/non-agricultural


35

purposes), Duty on Entertainment and Tax on Professions & Callings.
The Local Bodies are empowered to levy tax on properties (buildings,
etc.), Octroi (tax on entry of goods for use/consumption within areas
of the Local Bodies), Tax on Markets and Tax/User Charges for
utilities like water supply, drainage, etc.

Since 1991 tax system in India has under gone a radical change, in
line with liberal economic policy and WTO commitments of the
country. Some of the changes are:

 Reduction in customs and excise duties.

 Lowering corporate Tax.

 Widening of the tax base and toning up the tax administration.

Personal Income Tax:

Individual income slabs are 0%, 10%, 20%, 30% for annual incomes
up to Rs 50,000, 50,000 - 60,000, 60,000 - 1,50,000 and above
1,50,000 respectively.

Corporate Income Tax:

For domestic companies, this is levied @ 35% plus surcharge
of 5%, where as for a foreign company (including branch/project
offices), it is @ 40% plus surcharge of 5%. An Indian registered
company, which is a subsidiary of a foreign company, is also
considered an Indian company for this purpose.

Thus, one can say that the Mauryan system of taxation has been
instrumental in the formation of the modern Indian system of taxation.


36

4 TRADE:

Being the prime minister of Chandragupta Maurya, Kautilya
was an economist par excellence. According to scholars, Kautilya was
the pioneer of economics in the world. His policies of trade and
commerce were exemplary to say the least. Kautilya was of the
opinion that trade was the most important ingredient for a State’s
prosperity. He laid emphasis on foreign trade as well as on domestic
trade.

4.1 DOMESTIC TRADE:

Domestic trade consists of trading within the countries amongst
the citizens. After agriculture, trading was considered to be the most
important occupation in the Mauryan Empire.

A] TRADE ROUTES:

It was the king’s duty to promote trade and commerce by
maintaining trade routes connecting markets and industrial zones.
Apart from promoting trade by improving infrastructure, the state was
required to keep trade routes free of harassment by courtiers, state
officials, thieves and frontier guards. Kautilya appears to mistrust
traders believing them to be thieves, with a propensity to from cartels


37

to fix prices and make excessive profits as also to deal in stolen
property. He prescribed heavy fines for discouraging such offences by
traders and with a view to consumer protection. Further, the law on
dealings among private merchants included:

(a) Selling on agency basis.

(b) Revocation of contracts between traders.

(c) Traders traveling together and pooling their goods.

B] SAFETY OF GOODS IN TRANSIT:

It was also enjoined upon the frontier officers to ensure the safe
passage of the merchandise and to make good any loss incurred.
Responsibility to recompense loss to traders vested with the village
headman barring, of course, goods that were stolen or sent away.
Further if any property of trader was lost or driven away in an area
between villages, the person responsible was the Chief Superintendent
of Pastures, (CSP).

4.2 FOREIGN TRADE:

Kautilya was of the opinion that foreign trade was most
necessary for the growth of national economy. He was probably the
first person to envisage the concept of a ‘nation’.


38

Kautilya imposed a few restrictions on foreign trade. Foreign
traders had to pay a sum of money in order to carry out business in the
state. This kept a regulation in the invaders who arrive to conduct
business. The foreign policy of Kautilya was really one of the
distinguishing factors of Arthashastra.

Kautilya considered the foreign businessmen as threats to the
kingdom. According to him, they should not be given the same status
as the local traders. However, Kautilya also explained the need for
foreign trade. He gave incentives for local traders exporting their
products. He strongly encouraged foreign trade, basing it on the
premise that for a successful trade contract to be established, it had to
be beneficial to all.

A] TRADE AND REVENUE:

Trade was conducted as a revenue generator in the Kautilyan
era. It was mostly carried out by he State and private trade was
allowed in areas other than the ones in which the State had a
monopoly. The revenues raised through trading went partly to finance
the army and to expand the territories.

Revenue from foreign trade was divided into three sources:

 Land Revenue: It consisted of taxes for using the land in the

kingdom. The land revenue was fixed at 1/6th of the share of the
produce from the land.


39

 Import Duties: Import duties on foreign goods were roughly
around 20% of their value. These also constituted revenue to the
State.
 Miscellaneous Levies: These consisted of tolls, road cess, ferry
charges, etc.

B] IMPORTS:

The sale of imported goods was allowed in as many places as
possible so that they were readily available to the people in towns and
countryside.

Rome was the major trading partner in the Mauryan Empire.
Wine, chemicals, high quality pottery, alloys, gold and silver, spices,
etc were imported from Rome. This trade was very favourable for The
Mauryan Empire.

Traders were given the following incentives:

 Local merchants who brought in foreign goods by caravans or

water routes were exempted from taxes so that they could enjoy
profits. Thus, entrepreneurship was encouraged during the
Mauryan Empire.
 Foreign merchants were not allowed to be sued by any parties for a
commercial dispute. The local partner was however allowed to be
sued. Thus the liability was always on the citizens to ensure fair
trade practices.


40

The threshold limit on profit was also indicated. The
permissible profit margin on imported goods was 10%.

C] EXPORTS:

Foreign trade was conducted on a barter basis. Exports were
carried out by the State Trading Office. It determined the level of
expenses for exports. The State also provided for the share of profits
payable to the foreign king. All the expenses were calculated and the
profitability of the trade was determined.

Arthashastra encouraged profitable trading. It was not
conducive towards trading which resulted in losses. The traders had to
keep in mind the importance of trading with strategic nations.
Kautilya emphasized on the importance of using trade to create
alliances with strong nations. Many Indian crops, spices, fabric were
exported to Rome and other countries.

In the words of Kautilya, “Having ascertained the value of local
produce as compared with that of foreign produce that can be obtained
in barter, the superintendent will find out (by calculation) whether
there is any margin left for profit after meeting the payments (to the
foreign king) such as the toll (sulka), road-cess (vartaní), conveyance-
cess (átiváhika), tax payable at military stations (gulmadeya), ferry-
charges (taradeya), subsistence to the merchant and his followers
(bhakta), and the portion of merchandise payable to the foreign king
(bhága). If no profit can be realised by selling the local produce in
foreign countries, he has to consider whether any local produce can be


41

profitably bartered for any foreign produce. Then he may send one
quarter of his valuable merchandise through safe roads to different
markets on land. In view of large profits, he (the deputed merchant)
may make friendship with the forest guards, boundary-guards, and
officers in charge of cities and of country-parts (of the foreign king).
He shall take care to secure his treasure (sára) and life from danger. If
he cannot reach the intended market, he may sell the merchandise (at
any market) free from all dues (sarvadeyavisuddham).”

4.3 MODERN TRADE POLICIES:

In recent times there has been considerable research about trade
liberalization and the numerous ways in which this can be achieved.
Kautilya’s views on trade reflected that he grasped among other things
a point that is extremely relevant even in the present era of globalized
commerce and trade. That is: There is no autonomous mechanism that
will ensure that a nation would benefit from trade in the absence of
certain safeguards and policy measures.

It is thus seen that the importance of the trader was recognized
by Kautilya as also the importance of the rule of law, by making
restoration for any loss caused by its failure. At the same time, traders
were prevented from oppressing people. This clearly shows that the
welfare of the people was uppermost in the mind of the king.

The connotations of harassment and obstacles to trade may
have changed. However, the fact that anti-dumping measures exist or


42

that cartelization has to be coped with or adverse terms of trade have
to be accounted for in certain sectors underscore that safeguards are
essential even in current times and those responsible for managing
these measures should be responsible. Furthermore, Kautilya was
cognizant of the fact that the terms of trade were not just dependent on
the economics but also on other various parameters. The traders had to
keep in mind the political or strategic advantages in exporting or
importing from a particular country. The proliferation of free trade
agreements in recent times underscores this point because there is a
definite political dimension to trade treaties and agreements.


43

5. BANKING, CO-OPERATIVES AND RISK
MANAGEMENT:

Banking and insurance sectors have always been the catalysts
of economic development. It was more or less the same during the
reign of Chandragupta Maurya. Arthashastra indicates that the
banking sector was very much developed during the Mauryan Empire.

5.1 RISKS AND UNCERTAINTIES:

Kautilya related the levels of risks and uncertainties to levels of
profits and interests. He was of the opinion that higher levels of risk
and uncertainty had to be compensated with higher levels of profits.
This could be seen in the trade policy of Kautilya. He allowed 10%
profits on imports while allowing only 5% on local trade. This was
because imports not only required a high amount of locked-up capital,
but also there was a risk of goods getting stolen or damaged in transit.

Kautilya provides for different rates of interest for different
sections of the society. According to the Arthashastra, “An interest of
a pana and a quarter per month per cent is just. Five panas per month
per cent is commercial interest (vyávaháriki). Ten panas per month
per cent prevails among forests. Twenty panas per month per cent
prevails among sea-traders (sámudránám). Persons exceeding, or
causing to exceed the above rate of interest shall be punished with the


44

first amercement; and hearers of such transactions shall each pay half
of the above fine.” This clearly shows that Kautilya has anointed
riskier ventures with greater rates of interest.

5.2 PRIVATE SECTORS VERSUS PUBLIC SECTORS:

In case of risk management, Kautilya had a centralized control
over all the transactions. Almost all the transactions relating to
insurance were taken care of by the state. However, this responsibility
was also taken up by landlords. The landlords though had to abide
with the interest rates prevalent in the economy.

The private money lenders had to pay a sum of profits on
interests to the state. They were also entitled to a limit on the amount
of money they lent. The private money lenders could also take up the
risk for investments in merchandise. However, all the people were not
allowed to take up money lending. This right was granted only to
people with enough income to dispose off and they have to be people
of good character.

On the other hand, the government treasury also undertook the
work of insuring and managing risks. They gave money only to the
needy and to people of good character. Thus, it has to be said that
Kautilya managed both, the private and the public sector in risk
management ably.


45

5.3 LOANS AND RATE OF INTEREST:

Kautilya distinguished six different kinds of interests:
compound interest, periodical interest, stipulated interest, daily
interest, and the use of a pledged article. Indeed the idea of expressing
interest as a percent originated in India.

According to Kautilya, “The nature of the transactions between
creditors and debtors, on which the welfare of the kingdom depends,
shall always be scrutinized. Interest in grains in seasons of good
harvest shall not exceed more than half when valued in money.
Interest on stocks (prakshepa) shall be one-half of the profit and be
regularly paid as each year expires. If it is allowed to accumulate
owing to the intention or to the absence of the receiver or payer, the
amount payable shall be equal to twice the share or principal
(múlyadvigunah). A person claiming interest when it is not due, or
representing as principal the total amount of his original principal and
the interest thereon shall pay a fine of four times the amount under
dispute (bandhachaturgunah).”

Kautilya outlined a structure based on the type of loans, factors
affecting the rate of interest, methods of calculating interest and
circumstances under which interest may not be calculated by the
lenders. Interest rates varied from 1.25% to 2% per month. The rate of
interest depended upon the risk involved and the potential
productivity of the money borrowed. The highest rate of interest was
20% per month and was charged to those involved in overseas trade as
the risk involved in this transaction was the maximum. It can be said


46

that the Kautilyan system of lending was very effective and even
modern.

5.4 GUILDS AND INSURANCE:

Kautilya also attributes a greater rate of interest to debts taken
by a group of individuals. Since the group would share the burden of
interest, it would not be heavy on one individual. Moreover, the group
was in a position of to pay high interest since it was involved in larger
projects with a greater profit margin. However, the creditors could not
charge an interest not approved by the state.

According to Kautilya, “Those who can be expected to relieve
misery, who can give instructions to artisans, who can be trusted with
deposits, who can plan artistic work after their own design, and who
can be relied upon by guilds of artisans, may receive the deposits of
the guilds. The guilds (srení) shall receive their deposits back in time
of distress.”

5.5 PRESENT SCENARIO:

Kautilya distinguished six different kinds of interests:
compound interest, periodical interest, stipulated interest, daily
interest, and the use of a pledged article. Prior to liberalization these
two sectors were controlled and regulated by the government.


47

Nationalized banks and insurance companies had a firm grip over the
market. Because of liberalization, the banking and insurance industry
opened up for private participation. The following are the reforms
made in the banking and the insurance sectors respectively in India.

A] Banking Sector:

The three major changes in the banking sector after
liberalization are:

 Step to increase the cash outflow through reduction in the statutory
liquidity and cash reserve ratio.

 Nationalized banks including SBI were allowed to sell stakes to
private sector and private investors were allowed to enter the
banking domain. Foreign banks were given greater access to the
domestic market, both as subsidiaries and branches, provided the
foreign banks maintained a minimum assigned capital and would
be governed by the same rules and regulations governing domestic
banks.

 Banks were given greater freedom to leverage the capital markets
and determine their asset portfolios. The banks were allowed to
provide advances against equity provided as collateral and provide
bank guarantees to the broking community.


48

B] Insurance sector:

The Insurance Regulatory and Development Authority Act
1999 (IRDA Act) allowed the participation of private insurance
companies in the insurance sector. The primary role of IRDA was to
safeguard the interest of insurance policy holders, to regulate, promote
and ensure orderly growth of the insurance industry. Some of the
prominent insurance companies are:

 Bajaj Allianz Insurance Corporation
 Birla Sun Insurance Co. Ltd.

 HDFC Standard Insurance Co. Ltd.

 ICICI Prudential Insurance Co. Ltd.

 Max New York Insurance Co. Ltd.

 Tata AIG Insurance Co Ltd.

C] Future Trends:

 Globally outsourcing industry would continue to grow.
 Following the success of US and UK, more countries in the
European Union would outsource their business.

 Technological power shift from the West to the East as India and
China emerge as major players..

Thus, if one compares the Kautilyan system of banking and risk
management with the modern system, one could see many


49

similarities. However, the Kautilyan ideology of keeping a threshold
over the amount of lending is the highlight in this section. It shows
that such a system was prevalent in India around 3000 years ago. The
government of U.S.A. would have, in all probability, not fallen into
the economic depression or the sub-prime crisis, had they read the
Arthashastra.


50

6. AGRICULTURE AND IRRIGATION
MANAGEMENT:

Agriculture was the most important economic activity. Kautilya
was of the view that cultivable land is better than mines because
mines fill only the treasury while agricultural production fills both
treasury and store houses. The Arthashastra spoke about the functions
of a Superintendent of Agriculture and states that the King should
understand the intricacies of agriculture. Agriculture has always been
the backbone of Indian economy. The government recognises
agriculture as the most important occupation in India. Agriculture
requires irrigation facilities to survive. This has given rise to the
irrigation sector. Hence, both go hand in hand.

6.1 THE MAIN ACTIVITY OF THE STATE:

According to the Arthashastra, agriculture, cattle-rearing and
commerce were the three main occupations in the State. However,
Chanakya gave agriculture the top status as the most important
activity in the State. In fact, Kautilya was of the opinion that a king
must also learn agriculture. Agriculture was the major constituent of
the Mauryan economy. Kautilya had appointed a minister to look after
the agricultural sector in the economy.


51

6.2 SUPPORTS TO AGRICULTURE:

Kautilya insisted in developing villages and creating an
agrarian economy. Kautilya supported agriculture at all costs. This is
evident from the following extract:

“Possessed of the knowledge of the science of agriculture
dealing with the plantation of bushes and trees
(krishitantragulmavrikshsháyurvedajñah), or assisted by those who are
trained in such sciences, the superintendent of agriculture shall in time
collect the seeds of all kinds of grains, flowers, fruits, vegetables,
bulbous roots, roots, fiber producing plants, and cotton. He shall
employ slaves, labourers, and prisoners (dandapratikartri) to sow the
seeds on crown-lands which have been often and satisfactorily
ploughed. The work of the above men shall not suffer on account of
any want in ploughs (karshanayantra) and other necessary instruments
or of bullocks. Nor shall there be any delay in procuring to them the
assistance of blacksmiths, carpenters, borers (medaka), rope makers,
as well as those who catch snakes, and similar persons.”

Thus, one can say that Kautilya indicated that agriculture
should receive policy and administrative support from the government
officials.


52

6.3 METEOROLOGY:

Weather forecasting was of prime importance in the Mauryan
Empire. The forecast or rain was made by observing the planetary
motion and the rise and appearance of the Sun. In the Mauryan Era, a
good rainy season was when one-third of the annual rainfall occurs in
the beginning and at the end of the season and two-thirds in the
middle.

According to the Arthashastra, “The quantity of rain that falls in
the country of jángala is 16 dronas; half as much more in moist
countries (anúpánám); as to the countries which are fit for agriculture
(désavápánam);--13½ dronas in the country of asmakas; 23 dronas in
avantí; and an immense quantity in western countries (aparántánám),
the borders of the Himalayas, and the countries where water channels
are made use of in agriculture (kulyávápánám). When one-third of the
requisite quantity of rain falls both during the commencement and
closing months of the rainy season and two-thirds in the middle, then
the rainfall is (considered) very even (sushumárúpam). A forecast of
such rainfall can be made by observing the position, motion, and
pregnancy (garbhádána) of the Jupiter (Brihaspati), the rise and set
and motion of the Venus, and the natural or unnatural aspect of the
sun. From the sun, the sprouting of the seeds can be inferred; from
(the position of) the Jupiter, the formation of grains (stambakarita) can
be inferred; and from the movements of the Venus, rainfall can be
inferred. Three are the clouds that continuously rain for seven days;
eighty are they that pour minute drops; and sixty are they that appear


53

with the sunshine-this is termed rainfall. Where rain, free from wind
and unmingled with sunshine, falls so as to render three turns of
ploughing possible, there, the reaping of good harvest is certain.”

Thus, one ac conclude that there was a very efficient
mechanism for meteorology during the Kautilyan Era. Agriculture
was solely dependent on weather and one had to maintain an alert
forecasting of meteorological conditions.

6.4 CROPPING PATTERN:

The Arthashastra says, “According as the rainfall is more or
less, the superintendent shall sow the seeds which require either more
or less water. Sáli (a kind of rice), vríhi (rice), kodrava (Paspalum
Scrobiculatum), tila (sesame), priyangu (panic seeds), dáraka, and
varaka (Phraseolus Trilobus) are to be sown at the commencement
(púrvávápah) of the rainy season. Mudga (Phraseolus Mungo), másha
(Phraseolus Radiatus), and saibya are to be sown in the middle of the
season. Kusumbha (safflower), masúra (Ervum Hirsute), kuluttha
(Dolichos Uniflorus), yava (barley), godhúma (wheat), kaláya
(leguminous seeds), atasi (linseed), and sarshapa (mustard) are to be
sown last. Or seeds may be sown according to the changes of the
season. Fields that are left unsown (vápátiriktam, i.e., owing to the
inadequacy of hands) may be brought under cultivation by employing
those who cultivate for half the share in the produce (ardhasítiká); or
those who live by their own physical exertion (svavíryopajívinah)


54

may cultivate such fields for ¼th or 1/5th of the produce grown; or
they may pay (to the king) as much as they can without entailing any
hardship upon themselves (anavasitam bhágam), with the exception of
their own private lands that are difficult to cultivate.”

It also states, “The superintendent shall grow wet crops
(kedára), winter-crops (haimana), or summer crops (graishmika)
according to the supply of workmen and water. Rice-crops and the
like are the best (jyáshtha, i.e., to grow); vegetables (shanda) are of
intermediate nature; and sugarcane crops (ikshu) are the worst
(pratyavarah, i.e., very difficult to grow), for they are subject to
various evils and require much care and expenditure to reap. Lands
that are beaten by foam (phenághátah, i.e., banks of rivers, etc.) are
suitable for growing vallíphala (pumpkin, gourd and the like); lands
that are frequently over flown by water (paríváhánta) for long pepper,
grapes (mridvíká), and sugarcane; the vicinity of wells for vegetables
and roots; low grounds (hariníparyantáh) for green crops; and
marginal furrows between any two rows of crops are suitable for the
plantation of fragrant plants, medicinal herbs, cuscus roots (usínara),
híra, beraka, and pindáluka (lac) and the like. Such medicinal herbs as
grow in marshy grounds are to be grown not only in grounds suitable
for them, but also in pots (sthályam).”

Thus, the cropping pattern during the Mauryan Empire has been
exhaustively dealt with, in the Arthashastra.


55

6.5 IRRIGATION:

Kautilya believed that irrigation was the major supporter for
agriculture. He therefore laid stress on the establishment of many
irrigation facilities within the State. He also established rules for
building tanks and dams.

According to the Arthashastra, “Irrigational works (sétubandha)
are the source of crops; the results of a good shower of rain are ever
attained in the case of crops below irrigational works.”

It also states the following: “Of forts such as a fort on a plain, in
the centre of a river, and on a mountain, that which is mentioned later
is of more advantage than the one previously mentioned; of
irrigational works (sétubandha), that which is of perennial water is
better than that which is fed wit water drawn from other sources; and
of works containing perennial water, that which can irrigate an
extensive area is better.”

Any one hiring, leasing or sharing water works could use them
with a pledge to keep it clean and safe. They could also give it to
others for use by holding a part of the produce.


56

6.6 AGRICULTURAL TAXATION:

Kautilya was against excessive taxation. It held nominal taxes
like 1/6th, 1/8th or 1/10th of the produce. However, it depended on the
annual production and the nature of the produce.

According to Arthashastra, “In case of construction of new
works such as tanks, lakes, etc; taxes on the lands below such tanks)
shall be remitted for five years (Panchavárshikah parihárah). For
repairing neglected or ruined works of similar nature, taxes shall be
remitted for four years. For improving or extending water-works,
taxes shall be remitted for three years. In the case of acquiring such
newly started works by mortgage or purchase, taxes on the lands
below such works shall be remitted for two years. If uncultivated
tracts are acquired (for cultivation) by mortgage, purchase or in any
other way, remission of taxes shall be for two years. Out of crops
grown by irrigation by means of wind power or bullocks
(vátapravartimanandinibandháyatana) or below tanks, in fields, parks,
flower gardens, or in any other way, so much of the produce as would
not entail hardship on the cultivators may be given to the Government.
Persons, who cultivate the lands below tanks, etc., of others at a
stipulated price (prakraya), or for annual rent (avakraya), or for certain
number of shares of the crops grown (bhága) or persons who are
permitted to enjoy such lands free of rent of any kind, shall keep the
tanks, etc., in good repair; otherwise they shall be punished with a fine
of double the loss. Persons, letting out the water of tanks, etc., at any
other place than their sluice gate (apáre), shall pay a fine of 6 panas;


57

and persons who recklessly obstruct the flow of water from the sluice-
gate of tanks shall also pay the same fine.”

6.7 SUSTAINABLE AGRICULTURE:

According to Kautilya, “The seeds of grains are to be exposed to mist
and heat (tushárapáyanamushnam cha) for seven nights; the seeds of
kosi are treated similarly for three nights; the seeds of sugarcane and
the like (kándabíjánam) are plastered at the cut end with the mixture
of honey, clarified butter, the fat of hogs, and cow dung; the seeds of
bulbous roots (kanda) with honey and clarified butter; cotton seeds
(asthibíja) with cow dung; and water pits at the root of trees are to be
burnt and manured with the bones and dung of cows on proper
occasions.”

Apart from being the major income provider, agriculture was also the
livelihood of many during the Mauryan Era. Most of the farmers
carried out subsistence farming and hence, agriculture was the driving
force of the Mauryan Empire. That is why Kautilya laid more
emphasis on agriculture than any other occupation.

6.8 PRESENT SCENARIO:

Government procurement policy, which guarantees a minimum
price for rice and wheat crops to farmers, has created a bias in their


58

favor and a distortion of cropping pattern, which is not market
determined. At times, these procurement policies result in such
surpluses of food grain that, given inadequate storage facilities for
them, the beneficiaries of food subsidies are Indian rats.
Professionalizing agriculture, especially for large farms, would be
needed with professionally trained managers able to study global
movement of prices, modern farming techniques and use of
technologies such as satellite farming. Courses on farm management
need to be more widespread. Similarly, agriculture is completely out
of the purview of the tax regime in India. The agricultural sector that
has been given a priority status for bank lending gets completely de-
prioritized for taxation. As against this, the Arthashastra has
highlighted the significance of taxes on agriculture and allied
activities (though it was one of the sole major sectors contributing to
state welfare).

The importance of irrigation and providing amenities could be taken
up on a priority basis. The agricultural economy that has to compete
with the international market continues to be at the mercy of the
vagaries of the monsoon. Although India had the second largest
irrigated area in the world, the area under assured irrigation drainage
is inadequate. Some land, which was fertile earlier, has become fallow
because of inadequacy of fertilizers or the incorrect usage of
fertilizers. Emphasis on organic farming, which obviates the need to
use chemical fertilizers, is an obvious alternative. Given the fact that
India has one of the natural factories for organic manure, one wonders
why organic farming has not yet got the attention it deserves.


59

Furthermore, this would also help to prevent slaughter of cattle
because if their manure provides a revenue stream to the farmer, he
would be averse to slaughtering them. Systematic cropping pattern
and irrigation system followed by the Kautilya Raj is what experts
need to recognize. Farmers and consumers would benefit if all
agricultural production were produced by ecologically sound and
sustainable means. Pricing and marketing of agro products and
providing adequate infrastructure to the agricultural sector are crucial.
Evidently, as in other spheres, many of the principles enumerated in
the Arthashastra are applicable to the agricultural sector in India.


60

7 PUBLIC SECTOR MANAGEMENT:

Kautilya believed in strengthening the public sector. He wanted
the kingdom to follow the dictates of a strong centralized power.
However, Kautilya has warned against the demerits of such
centralization. He was of the belief that people should be given rights
and responsibilities such that they actively participate in the
maintenance of the kingdom. Thus, Kautilya believed in a mixed
economy, though the centre vested some important powers.

7.1 THE ROLE OF PUBLIC SECTOR:

The main role of the public sector was maintaining the well
being of the nation. The public sector was supposed to hold all the
important economic posts in the kingdom. The public sector also
acted as a regulator of all economic activities in the society. It does
not mean that the private sector did not have a role to play. The
private sectors were free to carry out their transactions. However, they
had to intimate the state before any such activity took place. The state
allowed many private sectors to bloom and flourish. This was done
under the surveillance of the public sector which was run by the State.

Also, the public sector did not allow all private players to take
part in the economy. The private players were given permission only
after proper scrutiny of the character and ability of the individual(s).


61

7.2 INDUSTRIES IN PUBLIC SECTOR:

As discussed earlier, many sectors were run by the State and
hence consisted of the public sector. The following activities or
businesses were predominantly under the control of the State:

 Land: All barren and unoccupied lands were controlled by the
state. The ownership of unclaimed land was with the state. The
State regularly leased land for peasants and the underprivileged for
farming, for setting up businesses or for building settlements. He
tenants had to pay a nominal sum of money to the state as fees.

 Mining and Fishing: These were predominantly controlled by the

State. However, the State also allowed private sectors to carry out
this trade by paying a trade tax to the State.

 Salt Pans: Salt pans worked under the complete authority of the

State. A Salt superintendent was also appointed for controlling this
activity.


62

 Liquor and Gambling: Manufacture and sale of liquor and the

business of gambling and betting was the State’s monopoly. Any
person involved in this was severely punished

 Animal Husbandry: The State allowed Animal Husbandry to the
private sector. However, the State even volunteered to take care of
animals and cattle for a sum or a fee.

 Forestry and Mining: Forestry and mining were monopolies of the
State. Forest superintendents were appointed by the State who
grew and maintained forests. Mining was a major activity of the
State.

 Manufacture: Apart from weapon making and liquor brewing, all
other manufacturing activities were handed over to private sectors,
though the State regulated and controlled the working of these
manufacturing activities.

7.3 PUBLIC SECTOR IN INDIA:

India is a mixed economy where the public and the private
sectors go hand in hand. Public sectors were a monopoly in many
activities. However, as an effect of liberalization, the power is divided
among the private sectors as well.


63

Integration of Indian economy with global markets has thrown
up new opportunities and challenges. Some of the public sector
enterprises with strategic vision are actively exploring new avenues
and have increased their activities to go in for mergers, acquisitions,
amalgamations, takeovers and for creating new joint ventures. The
Navratna CPSEs, which enjoy greater autonomy to incur capital
expenditure and enter into joint ventures in India and abroad should
avail of these opportunities for rapid growth overseas. Acquisitions,
JVs and green field projects in Petroleum Sector have already taken
place and are under active consideration in Power, Coal and Mining
Sectors.

Another important initiative towards re-structuring of pubic sector
enterprises is ‘Disinvestment’ in select CPSEs. The Statement of
Industrial Policy of 1991 stated that in the case of selected enterprises,
part of Government holdings in the equity share capital of these
enterprises will be disinvested in order to provide further market
discipline to the performance of public enterprises.

Some CPSEs have been such as Videsh Sanchar Nigam Ltd. (VSNL),
Indian Petrochemicals Corporation Ltd. (IPCL), Maruti Udyog
Limited (MUL), CMC Ltd., etc. have been privatized. In addition,
there are CPSEs which have been acquired by other CPSEs by way of
disinvestment and open bidding such as acquisition of IBP by Indian
Oil Corporation Limited. There are also instances of acquisition of
private firms by CPSEs as in the case of MRPL, which was a joint
sector company and became a CPSE subsequent to acquisition of its
majority shares by ONGC.


64

8. HUMAN RESOURCES MANAGEMENT:

One of the most important aspects of Kautilya’s management is
his theories on managing Human Resources. Arthashastra boasts of
having a well defined Human Resource Management structure written
around 2400 years ago. Human resource is a term used to describe the
individuals who comprise the workforce of an organization, although
it is also applied in labour economics too; for example, business
sectors or even whole nations. Human resources is also the name of
the function within an organization charged with the overall
responsibility for implementing strategies and policies relating to the
management of individuals (i.e. the human resources).

In simple terms, an organization's human resource management
strategy should maximize return on investment in the organization's
human capital and minimize financial risk. Human Resources seeks to
achieve this by aligning the supply of skilled and qualified individuals
and the capabilities of the current workforce, with the organization's
ongoing and future business plans and requirements to maximize
return on investment and secure future survival and success. In
ensuring such objectives are achieved, the human resource function
purpose in this context is to implement the organization's human
resource requirements not only effectively but also pragmatically;
taking account of legal, ethical and is practical in a manner that retains
the support and respect of the workforce.


65

Key functions:

Human Resources may set strategies and develop policies, standards,
systems, and processes that implement these strategies in a whole
range of areas. The following are typical of a wide range of
organizations:

 Recruitment and selection.
 Organizational design and development.
 Business transformation and change management.
 Performance, conduct and behaviour management.
 Industrial and employee relations.
 Human resources (workforce) analysis and workforce personnel
data management.
 Compensation, rewards, and benefits management.
 Training and development (learning management).

Implementation of such policies, processes or standards may be
directly managed by the HR function itself, or the function may
indirectly supervise the implementation of such activities by
managers, other business functions or via third-party external partner
organizations. Applicable legal issues, such as the potential for
disparate treatment and disparate impact, are also extremely important
to HR managers.

8.1: WINNING PEOPLE / LURING PEOPLE:

Arthashastra identifies four kinds of people who could be lured;
the angry, the timid, the greedy and the proud. Kautilya believes that


66

these are the four basic behaviours which could lead to one’s
downfall. The body of an individual is controlled by his mind. The
mind recognizes desires which are either fulfilled or unfulfilled. The
unfulfilled desires linger on the mind of the individual. It takes many
forms like anger, fear, greed and pride. To fulfill those desires, the
mind succumbs to illusions and temptations posed by the
surroundings. Thus, these four are the primary vices of the senses
which have to be exploited by the King.

To exploit these behaviours, the King has to identify these
behaviours.

A] The group of the enraged:

Anger is exhibited when one's desires are obstructed. This group
includes the following people:

 The one who is cheated/denied after being promised certain

rewards (increment in pay, status etc).
 The one who is in disfavor because of a favorite of his superior.

 The one who is unable to deliver results on account of being

challenged to a particular assignment. This will particularly happen
in the organizations, which have a focus just on the results and not
on the efforts that a person puts.
 The one who is distressed after being transferred to a far-flung

area, or an area of his dislike. Here one possibility is that a person
is willing to take on the transfer but is not remunerated properly,


67

and another possibility is that the person is not willing to take on
such a transfer but is forced to do so.
 The one who is on an assignment not by his choice and not of his
choice. That is, being put on an assignment without even being
motivated for it. It could be something, which is away from the
promised career path of an employee - something that definitely
adds value to the organization but not to the employee as such (as
perceived by the employee) quite true in case of knowledge
workers.
 The one who has not achieved his objective in the organization

even after trying hard and giving his best service. This could be
because of a fault in the culture of that organization. For example
at times we see that even after being trained for a purpose the
employee is not able to add enough to his function - the answer
could lie with the fact that the employee hasn't learnt much, his
fault. But what concerns us here is that even though willingness is
there to perform but the culture hinders that performance.
 The one who is hindered from doing his duty. It may be because of

paucity of time, or because responsibility given is not
complemented with required authority.
 The one whose remuneration (financial and non-financial) is

incommensurate with the efforts he puts in.
 The one deserving but deprived of an office he aspires. This could

especially happen if there is delayed or no promotion (job
enrichment), and/or delayed or no inter-functional or to that extent
even intra-functional movement (job enlargement).


Management values in Kautilya's Arthashastra.

Management values in Kautilya's Arthashastra.

Recomendados

Recomendados

Más contenido relacionado

La actualidad más candente

La actualidad más candente (20)

Destacado

Destacado (20)

Similar a Management values in Kautilya's Arthashastra.

Similar a Management values in Kautilya's Arthashastra. (20)

Último

Último (20)

Management values in Kautilya's Arthashastra.