Management values in Kautilya's Arthashastra.

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This is a project on Arthashastra by Kautilya, better known as Chanakya. His wisdom is of profound importance in today's fickle political and economic scenario. Comparisons between Arthashastra and the modern management practices will highlight the importance of this particular subject.

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Management values in Kautilya's Arthashastra.

  1. 1. A PROJECT ONMANAGEMENT VALUES IN KAUTILYA’S ARTHASHASTRA SUBMITTED BY:HARIKRISHNAN SREENIVASAN POTTY E-Mail I.D.: hari1.6180@yahoo.com
  2. 2. 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. 3. 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 PRACTISESCreated by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  4. 4. 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 MANAGEMENTCreated by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  5. 5. 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 SCENARIOCreated by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  6. 6. 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 LEADERCreated by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  7. 7. 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-UNWANTEDCreated by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  8. 8. 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. REFERENCESCreated by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  9. 9. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  10. 10. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  11. 11. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  12. 12. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  13. 13. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  14. 14. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  15. 15. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  16. 16. 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 vastCreated by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  17. 17. 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 ChandraguptaCreated by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  18. 18. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  19. 19. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  20. 20. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  21. 21. 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 itemsCreated by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  22. 22. 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 workingCreated by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  23. 23. 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 ofCreated by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  24. 24. 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).Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  25. 25. 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,Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  26. 26. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  27. 27. 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 orCreated by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  28. 28. 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. ButCreated by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  29. 29. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  30. 30. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  31. 31. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  32. 32. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  33. 33. 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:Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  34. 34. 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-agriculturalCreated by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  35. 35. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  36. 36. 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 cartelsCreated by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  37. 37. 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’.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  38. 38. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  39. 39. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  40. 40. 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 beCreated by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  41. 41. 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 orCreated by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  42. 42. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  43. 43. 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 theCreated by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  44. 44. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  45. 45. 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 saidCreated by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  46. 46. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  47. 47. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  48. 48. 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 manyCreated by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  49. 49. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  50. 50. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  51. 51. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  52. 52. 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 appearCreated by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  53. 53. 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)Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  54. 54. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  55. 55. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  56. 56. 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;Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  57. 57. 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 theirCreated by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  58. 58. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  59. 59. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  60. 60. 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).Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  61. 61. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  62. 62. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  63. 63. 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  64. 64. 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 organizations human resource management strategy should maximize return on investment in the organizations 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 organizations 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 organizations 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.Created by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com
  65. 65. 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 thatCreated by: Harikrishnan Potty. E mail: hari1.6180@yahoo.com

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