Kautilya's Arthashastra

 

 

Kautilya’s Arthsastra ..is an encyclopedia of Indian Mangmeent and Economics. He has based his work on six Vedic principles: 1.Vasudha-Eva-Kutumbakam (Accepting the whole world as one and one’s family), 2. Samarpan Bhaav (Dedication), 3. Lokasangraha (Welfare of all beings), 4. Shubh Laabh (Ethical Profits), 5. Nishkaama Karma (Deeds without greed) and 6. Ati-Hyaastha-Varjayet (Shunning extremes).

The very first stanza of Arthashastra “I, therefore, write this book for the greater good and uplifting of the world…”.

Book I of the Arthashastra which reads “… King… shall maintain his subjects in the observance of their respective duties by exercising authority; keep up his personal discipline by receiving lessons in wisdom, and endear himself to the people by bringing them wealth and doing good to them.” Also, “… The King shall keep away from hurting the innocent and their property; avoid not only lust, even in a dream, but also falsehood, haughtiness, and evil proclivities; and keep away from unrighteousness and uneconomical transactions.”

In Chapter 7 of Arthashastra he notes “Not violating righteousness and economy, he shall enjoy his desires. Then he shall never be devoid of happiness. He may enjoy in an equal degree the three pursuits of life, charity, wealth and desire, which are interdependent on each other. Anyone of these three, when enjoyed in excess, hurts not only the other two but also itself.” 

While mentioning the “Duties of the King” he writes, “A King by overthrowing the aggregate of the six internal enemies, namely lust, anger, greed, vanity, haughtiness and overjoy, shall restrain the sense organs…” Also, in the same chapter, “The King may enjoy his desires but only by ensuring non-violation of righteousness and no harm to the economy. “

“In the woods”, he says “that tree is chopped first which is straight.” The essence of life is” finding the balance between good and bad actions, happiness, and unhappiness, pain and pleasure, cries and laughter.”

 

Roughly written around 300 BC Kautilya declares that his treatise brings together the principles already established by the 'artha saastraas' hitherto existing (A2-K0). Kautilya and Yaajnavalkya--who came first but it may be that yajnavalkya came before as he is mentioed in Upanishads. Kautilya’s masterpiece was lost and was rediscovered in early 20th century AD in Tanjore (South India)  J J Meyer translated the work into German and published in Leipzig in 1926. Shama Sastry's work in 1915 seems to be the first translation into English. Bernhard Breloer in the 1920s on Kautilya's work, says, "What, ..., must be borne in mind is that, while our knowledge of India makes a halt before the Indus, we should not think that India is therefore outside the world. The more we free ourselves from the prepossessed ideas, the greater is the impetus given to the advance of our knowledge of Indian History" [as quoted in Shama Sastry (1967). Also see Kangle (1986).

There is quite a bit of similarity in Kautilya Artha Saatra and Yaajnavalkya Smrutee

1. Cartels, Collusions, Adulteration and Middlemen: Merchants who conspire to prevent sales, or try to affect sales and purchases playing with prices are punishable. Middlemen who cause losses to merchants or purchasers by false means are punishable. Adulteration of grains, oils, alkalis, salts, perfumes, and medicines are punishable. The entire difference between the sale price of the merchant and purchase price of the buyer is not the income or profit. The trader must pay some part to the middlemen for their livelihood. (The punishment rates are also specified here.) The profit rate allowed is 5 per cent for the local produce, and 10 per cent for the foreign goods. (A2-K1)

2. Excess supplies: In the case of excess supplies, the market superintendent should centralise the sales, and use this for daily wages (A kind of food-for work programme). Sale of non-centralised stock should be prohibited until the central stocks are exhausted. (A2-K2)

3. Taxes and Procurement: One of the chapters prescribes a salary structure for the government's employees. In another chapter, treasury build-up is taken up. This part stipulates the rates of tax collections applicable to cultivators, merchants, animal farm households, and artisans. The king may collect one-fourth or one-third of the harvest depending on the capacity to pay from the rich cultivators in the good rainfall regions. He should not collect from the cultivators with low quality land, from the households who generally participate in public works, from the people who are poor and from those who live in border areas. Rather he should help them with cattle and grains in return for their services in developing waste lands. If the king wants further amounts of grains beyond these taxes, he may purchase up to a maximum of one-fourth of what is remaining with the cultivators after the requirements of seed, feed are netted out, with payment made in gold (This corresponds to food procurement policy) (A2-K3). Further, certain categories were mentioned from whom such procurement should not be made. Later on, collection of taxes from merchants, animal farm owners, forestry, artisans and even brothels were discussed. Details are avoided here.

4. Importance of Treasury: Income from mines is a great source for building up treasury; treasury oozes power. Thus the earth (i.e. kingdom) shines both by the treasury and the power. (A2-K4)

Other :

Aksha Suktam in Rug Veda :Don't play with dice; instead cultivate your corn fields with the help of your cattle and wife. Enjoy your wealth with proper respect (A2-O3). Taittireeya Upanishat and Anna Suktam in Yajur Veda : produce plenty of food; do not abuse it; that should be your oath (A2-O4). Varaahamihira's Bruhat Samhita :  crop productivity and growth.

Shanti mantras: "Sam no astu dvipade, sam chatushpade"let there be happiness to all the two-feet beings and four-feet beings.Peace be for individuals, families, for the society and all the existence : to have peace and happiness (Ome Saantih Saantih Saantihi; and Saantireva Saantihi--let there be peace and peace and peace only). Sage Atri's "sarve janaassukhino bhavantu, sarvey santu niraamayaah" (let all people be happy and healthy).Rug Veda "Simply obtaining food is foolish with no purpose served; truly, that is as bad as death. One becomes an absolute sinner, if he consumes all the food by himself without feeding first the elders and friends" (A2-S1).
"O Lord, see that none of our people or our cattle is frightened, or becomes ill. We orient our minds towards that strong and enemy-destroying Lord so that all the two-feet and four-feet beings in this village remain happy, and shine with fullness with no worries. Kindly don't harm our elders, weak among us, our kids born and offspring unborn yet, our parents and our bodies. Don't you harm our horses, cows and our heroes! We offer oblations and salutations to you" (A2-$3).( namakam)

Tanme manas Siva samkalpamastu (Let this be the auspicious intention of mine)! Tannoe Rudrah prachoedayaat (Let Rudra the Lord initiate us)!

 "These waters are the dearest to our lives, giving us energy, keeping our limbs in attractive condition, bringing us auspicious occasions and making us participate, caring for us like mothers; they bring us progeny, ...," so on (A2-S5)."Know that whoever realises this interdependence would possess virility, progeny and cattle" (A2-S6).  Bhupaala Mandanam : a king should appropriately protect the nature's welfare, unconcerned about whether something is a fact or not, liked or disliked by others (A2-S7).

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Arthashastra has many implications :

 

PUBLIC GOVERNANCE: 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 is summed up as good governance as per experts.A responsive governance not only means formal institutions, systems and channels of democracy but also with the processes and culture of non formal  inclusiveness and participation.

Kautilya believed that the state should be the market regulator and advocated the principle of a mixed economy when India was ruled by autocrats. He was meticulous in technique of controlling every activity and insisted on governance for the betterment of public

Though  individual merchants were free to contribute they also had to comply with the rules and regulations set by the state and authorities appointed by the state including  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. Yet State did not interfere in the day to day affairs of the public and  encouraged all types of wealth creation. “There shall be no restrictions in the sales of those items” (Created by: Harikrishnan Potty. ) Thus the evils of centralization were avoided.

According to Kautilya, the State had the following roles facilitator.  regulator.  protector. to facilitate transactions for the formation of a Welfare State. 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 State formulated laws and practices

Need to be informed and reported consistently about the functioning of the business was made essential and thereby the State acted as a protector of masses. Especially it created mechanisms that would protect the commercial interests of traders and artisans… “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.”

Kautilya insisted in creation of towns and villages at strategic places with commercial areas and  trade zones. (Book II of Arthashastra translated by R. Shamasastry) explains the formation of villages during the reign of Chandragupta Maurya: “CHAPTER I: FORMATION OF VILLAGES.”

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)”

Kautilya dictated that the unprepared lands shall not be taken away from those who are preparing them for cultivation. Rather confiscate land from those who do not cultivate them and give  to others including village labourers (grámabhritaka) and traders (vaidehaka), “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.” Also remission of taxes shall be made either on opening new settlements or on any other emergent occasions, with fatherly kindness, 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) were the duties of the king or governor. To construct reservoirs (sétu) filled with water either perennial or drawn , to provide with sites, roads, timber, and other necessary things for those who construct reservoirs, or places of pilgrimage (punyasthána) or  groves of their own accord is the duty. For cooperative construction (sambhúya setubhandhát) either each will participate or shall send his servants and bullocks to carry on his work, then he shall have a share in the expenditure, but no claim to the profit. The king shall exercise his right of ownership (swam yam) with regard to fishing, ferrying and trading in vegetables (haritapanya) in reservoirs or lakes (sétushu).”

Kautilya held great reverence to law making and law abiding acticity. “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.”

The importance of forming associations, collective units was stressed and all contracts within the association were considered legal and also there were laws for joint ventures and partnerships. And for  arbitrations and trials in courts. Every citizen and foreigners had to carry a passport and non compliance with this law led to a fine or imprisonment.

The importance of fair trade practices and fines for adulteration and supply of goods of an inferior quality were in place and so was documenting f good practices and 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.” 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

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

He appointed three commissioners to maintain peace. Arthashastra wrote about how much to pay the merchants, artisans, craftsmen and goldsmiths, list of the wages to be paid for metal workers and builders, prohibited ‘beggars and other entertainers from moving about during the monsoons’. The policy of consumer protection- “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, difference of a pala in them shall be punished with a fine of 12 panas. Fines for greater differences shall be proportionally increased.”

 

“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”

 

The court would not allow a person with a criminal background to appear as a witness.

 

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. “

These taxes were collected from the guilds of artisans and the merchants.  Income 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.

  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: This shows respect for humanity and acknowledged the efforts and pains of the citizens.

Kautilya laid emphasis on foreign trade as well as on domestic trade. It was the king’s duty to promote trade and commerce by maintaining trade routes connecting markets and industrial zones, by improving infrastructure and to keep trade routes free of harassment by courtiers, state officials, thieves and frontier guards.

heavy fines were designed on traders for discouraging financial offences by traders and with a view of consumer protection. Laws on private merchants included: ‘(a) Selling on agency basis. (b) Revocation of contracts between traders. (c) Traders traveling together and pooling their goods.’ frontier officers  were to ensure the safe passage of the merchandise and to make good any loss incurred.  recompense loss to traders vested with the village headman barring, of course, goods that were stolen or sent away, if any property of trader was lost or driven away in an area between villages, the person responsible was the Chief Superintendent of Pastures,

Foreign traders had to pay a sum of money in order to carry out business in the state and this was to regulate the traders with invaders who arrived to conduct business. The foreign businessmen being threats to the kingdom should not be given the same status as the local traders and  incentives for local traders were given for exporting their products. In all areas other than the monopoly areas. Trade was allowed freely. The revenues raised through trade was 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. Import Duties: Import duties on foreign goods were roughly around 20% of their value. Miscellaneous Levies: These consisted of tolls, road cess, ferry charges, etc. Wine, chemicals, high quality pottery, alloys, gold and silver, spices, etc were imported from Rome and local merchants who brought in foreign goods by caravans or  water routes were exempted from taxes. Entrepreneurship was encouraged and in a partnership with foreign merchant, it was the local partner which was  allowed to be sued in order to fix the responsibility on citizens for fair trade.

The threshold limit on profit was on imported goods was 10%. Arthashastra encouraged profitable trading especially with strategic nations. Kautilya emphasized on the importance of using trade to create alliances with strong nations. 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 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).”

‘Kautilya was cognizant of the fact that the terms of trade were not just dependent on the economics but also on other various parameters. Banking and insurance sectors have always been the catalysts of economic development. 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. 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 first amercement; and hearers of such transactions shall each pay half of the above fine.”

Kautilya centralized control over all the transactions relating to insurance though the landlords though had to abide with the interest rates prevalent in the economy. There was a limit on the amount of money they lent. The private money lenders were to take up the risk for investments in merchandise and right to lend was granted only to people with enough income to dispose off and people of good character. Government treasury also  gave money only to the needy and to people of good character.

Kautilya wrote about six different kinds of interests: compound interest, periodical interest, stipulated interest, daily interest, and the use of a pledged article. Most probably 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 wrote also on the type of loans, ‘the rate of interest, methods of calculating interest and circumstances under which interest may not be calculated by the lenders. While the Interest rates varied from 1.25% to 2% per month, interest rate 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.’

GUILDS AND INSURANCE: Kautilya also attributed a greater rate of interest to debts taken by a group of individuals or guilds ..(as) it would not be heavy on one individual and the group was in a position to pay high interest since it was involved in larger profit margin. 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.”

Kautilya considered cultivable land as better than mines ‘because mines fill only the treasury while agricultural production fills both treasury and store houses.’ ‘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.’….agriculture, cattle-rearing and commerce were the three main occupations in the State. ‘a king must also learn agriculture.’ And it is essential to develop villages and create an agrarian economy. “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.”

 

Weather forecasting was made by observing the planetary motion and the rise and appearance of the Sun. 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 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.”

 

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)  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.” “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).” It is evident that the cropping pattern has been exhaustively dealt with, in the Arthashastra.

 

 

 

 Kautilya believed that irrigation was the most crucial contributor for agriculture. So was the establishment of many irrigation facilities within the State and 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.”

 

Kautilya was strictly against excessive taxation. The  nominal taxes like 1/6th, 1/8th or 1/10th of the produce depending 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; and persons who recklessly obstruct the flow of water from the sluice- gate of tanks shall also pay the same fine.”

 

SUSTAINABLE AGRICULTURE was a very important concept in Arthshastra: 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.”

The main role of the public sector was maintaining the well being of the nation and also  act as a regulator of all economic activities in the society. The private sectors were free to carry out their transactions but with a precondition to intimate the state before any such activity. Thus state allowed many private sectors to bloom and flourish under the surveillance of the public sector as the private players were given permission only after proper scrutiny of their past record, character and capacity, skills, etc.

Business of gambling and betting was the State’s monopoly and any private party involved in this was severely punished.

 Animal Husbandry was allowed to private sector while  the State volunteered to take care of animals and cattle for a nominal charge. Forestry and mining were monopolies of the State. Apart from weapon making and liquor brewing, all other manufacturing activities were privatized while the State regulated and controlled them.

Arthashastra wrote about a well thought of Human Resource Management structure. The individuals who comprise the workforce and  by aligning the supply of skilled and qualified individuals and by selecting, training, grooming the capabilities of the current workforce, for  the organizations ongoing and future business plans to maximize return on investment and secure future survival and success. This has to be done not only effectively but also pragmatically, in view of legal, ethical and spiritual matters.

 

To develop policies, standards, systems, and processes that implement these strategies : The cycle is :  ‘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.’ ‘Arthashastra identifies four kinds of people who could be lured; the angry, the timid, the greedy and the proud. 

 

‘Every good in business – peace, conquest, order, proper organization, dharma1 (social responsibility & ethics) and so on depends on the business acquiring wealth and using it wisely. ‘

"material well being alone is supreme" Kautilya continued by saying that, the king (Owner/Manager) will be happy only when his subjects are happy, and, "Therefore, being ever active, the king should carry out the management of material well being. The root of material well being is activity, material disaster its reverse."(A.1.19.35, 34, 47).

In this statement we find the key to the proper financial management actively according to Varkey. The goals are always "wellbeing and security" (A.8.1.23, 387)

As translated by Chaturvedi (2001) in his book Kautilya's Arthashastra "…..He may enjoy in equal degree the three pursuits of life, charity, wealth and desire, which are inter-dependent on each other. Any one of these when enjoyed to an excess, hurts not only the other two, but also itself."

‘Kautilya had listed several ways by which funds are misappropriated. Some of these frauds relevant in today's corporate environment are as follows:

(a) Falsification with a motive of personal profit.

(b) Misrepresentation (of income received or expense incurred) with a motive of personal profit:

(c) Discrepancies (arising out of willful fraud) in:

- Personally supervised work

- Account heads

- Labour and overhead charges

- Work measurement ‘….

‘Kautilya admitted that some degree of corruption would always exist, and cannot be scrutinized perfectly, ' It is possible to mark the movements of birds flying high up in the sky; but not so is it possible to ascertain the movement of personnel of hidden purpose.' He therefore recommends strictest punishment, both material and corporal, as a disincentive to cheat.’

(Financial Management Lessons from Kautilya's Arthashastra  Chitranka Dalakoti Varkey)

               The widespread assumption that technology and management techniques are value-free needs to be challenged. The  apparent failure of technology and management in accomplishing the developmental objectives is due to an inadequate appreciation of the historical context in which these techniques emerged and have been deployed successfully. ‘It suggests that the intervention of advanced techniques of management may have actually contributed, even if inadvertently, to further intensification of the state of underdevelopment in many underdeveloped countries. What is necessary is a recognition that the developmental objectives of highly advanced societies like that of the United States and of underdeveloped countries like India are significantly different; and only by a critical re-ordering of the institution of management can modern technology and management be harnessed towards these different objectives.’ (Management Movement in India: Towards a Critical History, V. Padaki , Economic and Political Weekly , Vol. 16, No. 35 (Aug. 29, 1981), pp. M90-M91+M93-M94)