KAUTILYA

RESEARCH METHODOLOGY The research methodology adopted in this project is mainly descriptive, diagnostic and qualitative and analytical. This project is based on secondary data gathered from various sources such as books, journals, magazines, newspaper and law websites and reporter. Descriptive research: it includes surveys and fact-finding enquiries of different kinds. The major purpose of research is description of the state of affairs as it exists at present and at the time of Kautilya. The main characteristics of this method are that the researcher has no control over the variables. Qualitative research: it is concerned with qualitative phenomenon, i.e., investigating the reasons for human behaviour. it is often called motivation research. In this project we have attempted to answer many research questions like: 1. Kautilya is relevant in todays scenario? 2. To what extent has Kautilya been followed by other thinkers? 3. If Kautilyas principles are applied in present society, would it prove to be a boon or a bane?

Contents

Chapter 1. Introduction

Chapter 2. Kautilya

Chapter 3. Arthashastra

Chapter 4. Kautilya : as an Economist

Chapter 5. Kautilya : as a Political Thinker

Chapter 6. Comparison with Political Thinkers Chapter 7. Kautilyas relevance in the Contemporary World

Chapter 8. Critique

Chapter 9. Conclusion

Chapter 10. Bibliography

Chapter 1. Introduction The more one delves into the seminal work, Arthashastra, the more one marvels at how current and topical Kautilya is to present dynamic and uncertain economic and social milieu. His work has relevance not only in contemporary India but also the contemporary world. Though written in Sanskrit, it is unique in its entire canon of Indian Literature, because of its unabashed advocacy of real politic and disciplined economic management. Kautilya's period is marked by emergence of studies by Manu, Brahaspati, Ushanas, rise of Buddhim and Jainism on one hand and political disorder, mal administration, and misrule of Nanda King. He generated a sense of patriotism through his discourses and deliberations to fight against foreign invaders. He also reorganized the administration of the entire kingdom to ensure an honest, efficient and compassionate administration. In accordance with his advice Chandragupta built a strong state, defeated the invaders, established a clean administration and subsequently became the imperial king of India.[1] Kautilya by taking a holistic and integrated approach to governance had provided a new dimension to the field of economics, which has unfortunately remained neglected all this time. He has talked about how economics works well with resource management, efficient administration, fair judicial system, and knowledgeable people with integrity capable of taking high positions. He also suggested an important dimension of economic growth with equity and social welfare as a means to render sustainability to the economys management system. His most important contribution pertains to treasury management which was designed in a holistic way. This included the ruler being honest, committed and truly deserving of his position, the required systems and procedures and norms that are to be observed being in place, and clearly spelt out. The most striking feature is Kautilyas penchant for pragmatic and realistic perspectives on crucial determinants of governance. Strangely enough, we still grapple with the problems that Kautilya had pointed straightforward solutions, years back. But what Kautilya propagated was tackling fundamental problems relating not just to the economy but also human resource management, which we lack today. Therefore, we are not able to practise his ideas.[2] Only if we could learn and apply methods proposed by this great scholar, we would not have been suffering from a lot of miseries that the world faces today and could be better prepared for the future. His foresight and vision can benefit us in almost all areas of life. This project mainly

aims at highlighting Kautilya's ideas on Political and Economic machinery of a country as well as analyze how adaptation of those ideas have helped us develop many more ideas and most importantly realize where we still lack.

Chapter 2. Kautilya Kautilya, also known as Chanakya or Vishnugupta was born in 300 B.C. He was a philosopher and statesman who wrote a classic treatise on polity known as Arthashastra. It is compilation of almost everything that had been written in India up to his time on the science of Artha or material prosperity which is one of the four goals of human life. The means of subsistence according to Kautilya is primarily, wealth and secondarily, earth.[3] Born in a Brahmin family, he received his education at Takshasila, the renowned centre of learning at that period, where he studied politics, defence, architecture, medicine and a few others. He became a counsellor and adviser to King Chandragupta, founder of the Maurya dynasty, after a brief stint with the previous Nanda Dynasty. It is believed that he was instrumental in assisting King Chandragupta to overthrow the Nanda dynasty which ruled the kingdom of Magadha.[4] He served as the Mahamatya[5] in the Mauryan Empire which is a post similar to the present day Prime Minister and thus possessed rich experience in political administration and defence matters. Eventually, Kautilya became an intelligent scholar, fearless thinker, capable secretary and astute politician. Later, he retired from active politics and took upon the task of writing Arthashastra. Being a profound scholar, he studied the literature available to him on subjects like philosophy, religion, politics and diplomacy. However, he came out with an independent account and commentary of his own in the form of Arthashastra.[6] Arthashastra is an exceptional compilation of his political theory and ideas on public administration, which is more a treaty on statecraft.

Chapter 3. Arthashastra Arthashastra is an authentic production of a genius and a sagacious statesman who was instrumental in founding the Mauryan Empire and who represented a long tradition of his predecessors called the Arthashastra School.[7] Arthashastra is concerned with the means of fruitfully maintaining and using land. Kautilya had immense knowledge about various aspects of governance such as taxation, diplomacy, trade, business, administration etc. It is said that he had a fair knowledge of medicine and astrology as well. It is a treatise on political economy similar to Machiavellis The Prince and hence he has been compared to Machiavelli by some and Aristotle and Plato by others. Arthashastra deals with the governance safeguards without presenting any overt philosophy or religion. It also advocates practical economics and real politic. Kautilya speaks of the way states economy is organized, how ministers should be chosen, and war conducted, and how taxation should be arranged and distributed. Emphasis is placed on the importance of a network of spies and informers which functioned as a surveillance corps for the king focusing on external threats and internal dissidence.[8] Arthashastra is a unique work among the ancient classics on science, polity, administration, etc. It contains two basic parts: the first dealing with the state, kingship, theory of government, military function, welfare functions, etc. The second part talks about statecraft. Arthashastra is divided into 15 Adhikarans and 180 Prabhakarans; it is also a compilation of sutras and dhasyas. Sutras probably applied on the heading Prabhakaranas and dhasya is a commentary on it with a mixture of verses. Its 15 Adhikaranas or volumes deal with different aspects of state and administration. First one deals with education, discipline of prince, qualification of ministers, different kinds of spies, duties of the king, etc. The second part deals with the land and village administration, conduct of government servants, the officer and superintendent of treasury, etc. The third part deals determine forms of agreement, legal disputes regarding marriage, regarding sales and purchase, etc. Forth part deals with the removal of dangerous elements and criminal law. Fifth part deals with methods to remove state enemies and fill the treasury of the King; the sixth and seventh parts deal with the seven elements of kinship and six lines of policy. Eighth part deals with the vices of the king and calamities such as food, fire, etc. Ninth and tenth parts deal with the military campaign. Eleventh part deals with the corporation and guild; twelvth and thirteenth parts deal with methods to win wars and how to be popular in conquered country.

Fourteenth part deals with preparation of powders and mixtures to produce illusive appearance spread diseases, etc. The fifteenth part deals with the description of the plan of work.[9] A deep understanding of Arthashastra offers important lessons in contemporary times. Even though circumstances prevailing at the time of Kautilya were vastly different, his teachings are still relevant and have universal appeal. He charted a path of economic prosperity through entrepreneurship and astute strategising to achieve prosperity under any situation. Kautilya realized that wealth creation was crucial for establishing a welfare state therefore; he has given utmost importance to the economy of a state. He outlined appropriate strategies for creation, protection and conservation of nations wealth. His specific commentary on areas like public finance and treasury, investments in productive assets, techniques of agriculture and cattle breeding and trade and commerce are found to be very relevant today as well. These strategies need to be suitably adapted, given the prevailing political and social environment, as also the availability of advanced technologies. It could also be treated as the quintessence of the art of good governance.[10] The latest concept Corporate Social Responsibility (CSR) seems to have its origin rooted in Arthashastra. It also provides for techniques of enforcement of law and justice. The universality of his teachings stems from his focus on techniques required to enforce principles. He has laid special stress on implementation of rules and regulations in an orderly fashion. His sense of pragmatism in matters of governance needs to be imbibed by politicians and practising managers, apart from research scholars. India is endowed with a rich treasure trove of knowledge. The present day economic administrators could immensely benefit from Kautilyas teachings with suitably adapted applications in diverse areas of Indian economy. Kautilyas emphasis on excellence in economic and business management remains relevant in todays globalized environment.

Chapter 4. Kautilya : as an Economist Arthashastra is a comprehensive account encompassing political administration and defence matters along with economic administration. In the process, he came to a conclusion that economics was the most important aspect of public life as it provided the basis for human existence and survival. Kautilya concentrated on things relevant at his time like agriculture, trade, cattle-breeding, etc. However, while commenting on other matters of administration, he has made reference to various dimensions that have strong bearing on economics. Thus, he provided a detailed analysis of public finance, public expenditure, taxation, investment, free market economy, etc.[11] Kautilya : Father of Economics in India Kautilya in Arthashastra has talked about various economic concepts and ideas which have parallels in modern economic theory of economics. It wouldnt be wrong to say that he was a remarkable visionary, the economic ideas which are applicable in the present economic systems of the world were given by Kautilya, some 2,400 years ago. Many of the same ideas have been restated and rediscovered since his time. Treasury
All [State] activities depend first on the Treasury. Therefore, a King shall devote his best attention to it.

Treasury or Kosa has been told by Kautilya as the very basis for the functioning of an economy. It is the wealth of the State. Without this wealth all activities of production or acquistition cease. He says from wealth comes the power of the Government (danda). The treasury and army together, i.e. the kosadanda, can acquire the earth.[12] There should be several routes of treasury replenishment, which have to be transparently laid down. The strength of the treasury depended upon the accumulation of wealth by the state which was made possible by the fact that the King was the principle and the residual owner of all the property. For example, land which was not specifically owned by an individual was presumed to be Kings property. All water resources belonged to the King and users were required to pay the King for its use. Fixation of prices and provision of loans Kautilya well understood the relationship of demand and supply in the determination of price. He even wrote about the estimation of demands and control of supply. As he puts it, A king should

not arbitrarily fix the price of a product without regard to its supply and demand. Even today, largely for social considerations, prices of certain products are arbitrarily fixed, which have their effects on fiscal area. [13] Kautilya believed that the State should have watch over commercial activities that affect the general welfare of the State which is similar to present system of watchdogs that supervise commercial activities in Central Bank, SEBI, etc. to provide legitimacy and security to them to make the business environment robust. Unlike Aristotle who considered charging of loans as unjust, Kautilya outlined a structure of rates based on the type of loans, factors affecting interest rates, methods of calculating interest and circumstances when interest may not be collected by the lenders. Agriculture The Arthashastra states that the main activities of the economy were agriculture, cattle rearing and commerce. Agriculture, he believes is the basis of any economy.[14] Besides providing food grains to feed the population, it generates revenue and employment. Land is a very important asset according to him. In the area of agriculture, he has talked about minute details of cultivation, farm products, farming and trading transactions. He had an exhaustive methodology for cultivation, selection of seeds, and more importantly, meteorology and rainfall. With the coming of Green Revolution, India also revolutionized its agricultural practices like use of modern machinery for cultivation, use of High Yield Variety seeds, etc. Indian agriculture is still vastly and mainly dependent on monsoon rainfalls hence meteorology department also has an important role to play. Given the fact that he had foreseen all this 2,400 years ago, it is remarkable that he advocated a scientific approach to farm operations and management. Arthashastra pointed out that the responsibility of a govt. was not, of course, limited to ensuring the proper planning and allocation of central and procedures. Kautilya was of the opinion that a king must also learn about agriculture. Kautilya opined that the govt. should also ensure strong financial management systems to be introduced in agencies and organizations at the village level which interface with the public and private sectors. Such systems should also be in place in public corporations that are subject to govt. regulations. This is not ruling out the fact that in all of these, sound and reliable standards of governance are often needed.[15]

He pointed out that irrigation should be planned and there should be a provision for buffer stock, which is a state responsibility. Public Finance His major contribution is also in the area of public finance. He attached considerable importance to financial management by the State recognizing that the financial strength of the State is critical in normal times as also in times of war, famine and other calamities.[16] Kautilya has identified 15 heads of expenditure. At the same time, he enumerated seven sources of revenue : 1. Income from crown property including revenue from crown agricultural lands (Sita), from mining and metallurgy, from animal husbandry, irrigation works, forests. 2. Income from State controlled activities including industries like textiles, salt, alcoholic liquor, leisure activities like prostitution, betting, gambling, courtesans and entertainers. 3. Taxes in cash and in kind including custom duties (shulka), transaction tax (vyaji), share of production (bhaga), tax in cash (kara), taxes in kind (pratikara), countervailing duties or taxes (vaidharana), road cess (vartani), monopoly tax (parigha), royalty (prakriya), taxes paid in kind by villages (pindakara), army maintenance tax (senabhaktham) and surcharges (parsvam). 4. Trade including state trading, compensation payments, and excess value realization. 5. Fees and Service charges including weights and measures, stamping fee, ferry charges, port dues, land survey charges, coining fee, testing fee, escort charges, fixed charges. 6. Fines including special levies, taxes and collections, punishments. 7. Miscellaneous including lost property, revenue from controller of temples and holy places, recovery from thieves, interest on commodities loaned, received as aids, presents, redemption of prisoners, reversion of property to state, court cases, debts, confiscated property, intestate property, treasure trove, savings from expenditure, unforeseen receipt.[17] Misappropriation of funds Around two millenniums ago he talked about how public funds can get misappropriated and how such malpractices could be contained and controlled and taking inspiration form Arthashastra is the need of the hour, especially for India due to prevalent corruption. In the Arthashastra, stress has been given both on fraud prevention as well as fraud detection. Kautilya had listed several ways of misappropriating public funds by way of fraud against which auditors at the royal

treasury had to always be on their guard. [18]Some of these frauds prevalent in todays corporate environment are: Showing a later date than the one in which income was received or showing an earlier date than the one on which expenditure was incurred and using the proceeds in both cases for personal profit for a period or revenue due on a given date is allowed to be collected at a later date for a consideration; revenue not due till later is collected earlier by force or deceit but credited on due date; revenue paid by one is credited in the name of another for a consideration e.g. fraudulent gift deeds; revenue for treasury realized in the capacity of a collector is misappropriated by an individual by force or deceit, a lot of times due to the corrupt lobby of civil servants and bureaucrats ; creating discrepancies in personally supervised work, account heads, overhead charges, totalling, quantity, price, weights & measures, containers of goods, etc., the kind of misappropriation is mostly seen in the Public Distribution System, the ration shops and subsidy markets. Record maintenance Kautilya argued for collection and maintenance of data on agriculture as it provided necessary information for revenue assessment and collection. He made suggestions for the improvement of land records too.[19] This fact need to be emphasized as many Indian states do not have land records which obstructs land reforms. Foreign trade Arthashastra describes in detail the trade and commerce carried on with foreign countries, and the active interest of the Mauryan Empire to promote such trade. Goods were imported from China, Ceylon, and other countries. However the medium of tax payments was either in gold bars or in coins. For silver coins he used the term karshapanas. Kautilya also propounded duties Nitishastra, as the ideal way of living for every individual of the society. His principles of foreign trade are even today taught in universities. The land revenue was fixed at one sixth the share of the produce, and import and export duties were determined ad valorem basis. Import duties on foreign goods were roughly 20% of their value. Similarly, tolls, road cess, fairy charges were all fixed. Kautilyas overall emphasis was on equity and justice in taxation.[20]

Taxation Kautilya advocated fairness and equity as the basis of taxation. He says, Thus, a wise Collector General shall conduct the work of revenue collection.... in a manner that production and consumption should not be injuriously affected.... financial prosperity depends on public prosperity, abundance of harvest and prosperity of commerce among other things. Keeping welfare of the citizens, the utmost priority, he has made a strong case for avoiding discontent among the taxpayers. He has also indicated towards a system of subsidies and exemptions so as to benefit the citizens. Though, at the same time, he has strongly advocated judicious planning of subsidy system and suggests that these exemptions should be provided to women, minors, students, disabled and others.[21] In the contemporary time also, India needs a strong system for proper implementation of subsidy system. Though, it has existed in India since independence, yet the system has proved to be a failure along with the Public Distribution System. The intention behind providing subsidies to the poor population of India has been defeated time and again in the history. Whenever any such system was introduced, the corrupt middlemen misappropriated the funds. Many a times the subsidized product is stolen. E.g. kerosene is subsidized. It is a cheap fuel for the poverty stricken population but almost 39 % of it is stolen. Subsidized diesel being misused to drive SUVs and using it as a fuel for generators in marriages. Hence the actual scheme could never reach those who needed it the most and never benefit the section it targets. The result is increase in rich and poor income gap. Also in India, subsidies are not given on a lot of things which are of utmost importance like education and health care. Therefore, judicious planning is required. Fertilizers are subsidized for the farmers but now due to overuse of urea, soil has lost its nutrition value and now it has resulted in crop failure, increase in import rates, and increase in food prices and a decline in agriculture. He classified land into arable and non-cultivable land. Arable land was given to the farmers for life only and he insisted that taxes be paid by farmers. He also advocated that rich farmers be taxed at higher rates. India, at present, is engaged in a debate about tax on agricultural income, which still remains inconclusive. As of now, agricultural income is exempted from income tax. He realized the need to give relief to needy citizens and hence suggested that tax free land should be allocated to certain specified categories of people.

Kautilya has also showed remarkable foresight and suggested ways for investments in virgin lands, irrigation, dams, tanks and mining.[22] In the current scenario also, much stress is laid upon water management and conservation of water resources as it has been discussed in the annual budgets every year. Free Market Economy Kautilya believed that the state had a role in the market as a regulator. Such a view would not be very different from the actual price in current free market economies, where the state is expected to provide the institutions required for the efficient conduct of economic activities. Kautilya was meticulous in outlining, in detail, the technique of controlling practically every aspect of economic activity. However, his prescription for control was to discipline and streamline the various economic activities for the greatest economic activities for the greatest economic welfare of the state. Kautilya viewed the welfare of the state to be coterminous with the prosperity of its subjects. He outlined the techniques for regulating agriculture, domestic non-agricultural business, as well as foreign trade.[23] All of these are relevant, and strike a chord in the minds of todays consumers. The employee and employer relationship was monitored to prevent exploitation of labour or disruption of production by the workers. The state ensured that all the contractual obligations between them were fulfilled, as this would be in interest of the state to see that production did not cease. The output was not allowed to be sold at the point of origin; it was to be sold only in designated market places so that price regulation on products could be systematically applied. Today in India also we have laws imbibed in The Consumer Protection Act, 1986 and The Sale of Goods Act, 1930 aim at protection of rights of consumers as well as sellers and strive to maintain a healthy relationship. The states determine the prices of products depend upon the estimate of demand and supply. The price was so regulated that it allowed a profit of 5% for local business, and about 10% for foreign trade.[24] The State often controlled the supply if the predetermined price could not be maintained. It also provided social overhead capital and often gave tax incentives for business to operate profitably.

Economic Governance The principle of economic administration was laid down in Kautilyas Arthashastra in the following words-

The root of wealth is economic activity and lack of it brings material distress. In the absence of fruitful economic activity, both current prosperity and future growth are in danger of destruction. The king shall populate the countryside by creating new villages on virgin lands or reviving abandoned village sites.[25]

1. Village economy Kautilya orders the king to populate the countryside, whereas unfortunately, in todays India, the reverse is taking place. People from rural areas are migrating to urban areas, resulting in proliferation of slums that become breeding grounds for crime, prostitution, drug trafficking, diseases etc. The Government of India should follow Kautilyas suggestion on decongesting big cities. The former President of India Dr. A.P.J. Abdul Kalams suggestion of initiating the project called providing urban amenities in rural areas was very much in line with Kautilyan thoughts. Rajiv Gandhis Grameen Vidyutikaran Yojana provides incentives for the ruralisation of population. 2. Mixed economy and public sector Kautilya was first one among political economists, to have propounded the concept of mixed economy. He said that the state should run a diversified economy actively, efficiently, prudently, and profitably. For example, any officials who did not generate adequate profits in crown undertakings were punished for, swallowing the labor of workers. A crucial command was given to the chief controller of state trading that he should generate profits and avoid losses.[26] The politicians of this country must take a lesson from it; especially those who take home a free salary for no labor. When the States commodities were sold by private merchants, they had to pay a charge to compensate the state for profit, which the state would otherwise have got by selling directly. Thus, it is obvious that for Kautilya the word profit is not anathema but a must in business. According to Kautilya, public and private sectors had their own roles to play. Land was in public sector, the state held all virgin lands, forests and water resources. Arable land was both in public and private sectors which further developed into the concept of Public Private Partnership. Private Sector In theory, the state had absolute control over all aspects of economic activities; in practice, it allowed and even encouraged the growth of private business. It was recognized that the wealth of a state depend upon the wealth of the people, hence, it could not stifle individual initiatives in production and profit. While the economic welfare of the subjects and private businesses were

not in conflict with the welfare of the state, Kautilya streamlined all economic, administrative, political, legal and social activities to strengthen the state. Though Kautilya envisaged a very strong supervisory role for the government in the conduct of commercial activities, he did not believe that the state had a role in centralizing and planning commercial activities.[27] Kautilya felt no need for price, production, or quantity controls for consumer goods. There shall be no restriction on the time of sale of those commodities for which there is frequent demand; nor shall they be subject to evils of centralization (sankuladosha).[28] Kautilya advocated the concept of just price which is to maintain the incentive for private sector by allowing them 5% to 10% profit in their operations. As state owned businesses competed with the private businesses, conflicts were bound to occur. Therefore he suggested some parity in price be maintained so that private sector was not completely choked off. Unlike in the recent example of Reliance Petroleum Industry in the Indian context. Petrol prices were Rs. 60 per litre but Government subsidized it and brought the rates down to Rs. 48-50. The demand increased at the Government owned petroleum industries and Reliance started going in loss. Hence, a balance has to be chalked out for private sector to exist and survive in the market. Private companies can also act as saviours in the time of deficits and payment of loans. Kautilya had realized importance of Private sector and has thus suggested for proper policy framework for co-existence of public and private sector. Therefore he suggests that an arbitrary price cannot be dictated by the state without any regard to the cost of production , the ratio of supply to demand, a reasonable level of profit, etc. In case of glut of a commodity, the state was expected to intervene and centralize the sale of that commodity so that the price did not slump. Nowadays, Public Private Partnership (PPP) has also started which was an idea given by Kautilya only. The Indian Railways had a history of running in losses but when it resorted to PPP things shaped up in the manner that now Indian Railways apart from being the biggest employment provider in the world, it is above most of Fortune 500 Companies in terms of profits. Though centralization of railways worked for The UK at the time of Margaret Thatcher but in the present context, PPPs have proved to be a better option. Local trade Both private merchants and the state were involved in local trade. The chief controller of trading was responsible for the equitable distribution of local and foreign goods, buffer stocks, sale of

crowns commodities and public distribution. The chief controller of private trading kept a watch over merchants, inspecting their weights and measurements periodically and ensuring prevention of hoarding, adulteration, or add extra mark-ups.[29] Public Distribution System in India is a failure also because of the reason that the chief controllers responsible for it are themselves involved in malpractices. Cases of cheating with weights and measures at ration shops, at dairy outlets, etc are highly prevalent. Risk and uncertainty He relates the levels of risk and uncertainty to the levels of profits and interests. He opined that higher levels of risk and uncertainty need to be compensated by the chance of receiving higher profits or interests. E.g. he recommended the allowable profit on imports to be twice as high as on domestic goods.[30] The associated risk was considered to be an important reason for allowing 10% of profits on imports and only 5% on domestic products. This was because not only did imports require a lock-in of large amounts of capital, but also because of the danger of goods being stolen in transit. He provides for different rate structures for different sectors of the economy. He states, Five panas per month per hundred is commercial interest (vyavahariki); ten panas per month per hundred prevails among forests; twenty panas per month per hundred prevails among sea-traders (samudranam), clearly showing that the riskier the venture, the greater the interest should be taking into account the higher risk.[31] Budget accounts and audit: revenue budgeting The councillor in charge of budget making had to first estimate the revenue for the tax year by determining the likely revenue from each sphere of activity under different heads of accounts, total them up by place of activity to arrive at the grand total. Deductions were made for expenditure on the king; standard rations for others and exemptions granted by the king. Outstanding revenue was estimated by taking into account the works under construction from which revenue was to accrue only on completion, unpaid fines and penalties, dues recoverable and advances to be repaid by officials.[32] Kautilyas method of calculating net revenue was to deduct expenditure from income taking into account the actual as well as deferred payments. It appears that this method did not allow for budget estimates, revised estimates and actual, which are practiced in India today by Finance ministers.

Maintenance of account books In the account books, every entry was to have the date of transaction on the receipt side, while revenue was to be classified according to main heads of accounts, viz., cost price, share (bhaga), transaction tax (vaiji), monopoly taxes, fixed taxes, manufacturing charges, fines and penalties. On the debit side, expenditure was classified under 11 broad heads, such as charitable expanses, palace expenditure, administration, foreign affairs, maintenance of granary, ordinance depots, warehouses, manufacturing expenses, labour charges, defence, cattle and pastures, forests and game sanctuaries and fire wood, fodder and other consumables. Strict audit of accounts was recommended.[33] Today, one has only to read various CAG reports to know how badly accounts are maintained by the state agencies in India. Responsibility of auditors was underscored in the Arthashastra. Failure to conform to regulation was punishable offence. The auditor had to be ready when the accounts officer presented himself for audit, otherwise he would be punished. High officials were responsible for rendering the accounts for their sphere of activity without any contradiction in them. Those who told lies were liable to pay a heavy penalty. Similarly, elaborate penalties were imposed on those officials whose activity resulted in a loss to the state, for lying about accounts, for not being ready for audit ad for making contradictory statements in the accounts. Fear of severe punishments kept irresponsible auditors on guard while they prepare audit reports. Today, no matter what fraud an official commits, bribes do the work for him. The deterrent effect of punishments and fines has totally disappeared. Indeed we have come a very long way. The State as a Facilitator The Kautilya state considered it its duty to facilitate transactions; it also deemed it important to regulate the nature of transactions for the maximum welfare of the state. In terms of facilitating commercial activities, Kautilya laid stress on the removal of thorns to society by protecting artisans (guilds) and their commercial interests. In the Kautilyan state those who conspire to lower the quality of the works of artisans, to hinder their income, or to obstruct their sale or purchase shall be fined .[34] Given the private of place in current literature (i.e., in economics, political science, and public policy) to transactions costs and the business environment, Kautilya was indeed addressing

economic issues that continue to remain serious concerns of the modern state. In some ways, Kautilyas stress on the state as a regulator is very interesting. He favoured free trade and believed that the state should create mechanisms to protect and promote commercial activities; at the same time, he favoured a situation where the state should have a major role in the conduct of commerce. The department of commerce in the Kautilyan system had a very important role as a facilitator. It also had distinct roles in domestic commercial policy ad trade policy. The Superintendent of commerce shall ascertain demands or absence of demand for, and rise or fall in the price of, various kinds of merchandise which may be the product either of land, or of water, and which may have been brought in either by land or by water. He shall also ascertain a time suitable for their distribution, centralization, purchase, and sale.[35] Conclusion Looking at the entire document (Arthashastra), it can be seen that Kautilya has attempted to set down ways of achieving excellence in economic and business administration. He wrote a very scientific and articulate book on agricultural economics. It is amazing that he showed such great vision and foresight while talking about agriculture, which ensured a sustainable basis for human existence and livelihood. His foresight, apart from giving brilliant economic concepts, has also helped India in attaining a stable political setup under Chandragupta Maurya, through which India flourished and prospered.

Chapter 5. Kautilya : as a Political Thinker ON STATE Origin of State: Kautilya has mainly adopted the conclusions and dogmas of his predecessors on deeper problems of political theory. His contribution lies in systematization and clarification. He implicitly leads to say that he accepted the social contract theory. In the course of a dialogue he says that the state originated when people got weary of the law of the fish (matsyanayaya). They selected Manu as their King. It was settled that the King should receive one-sixth of the grain and one tenth of the merchandise and of gold as his due share. The revenue enabled the King to ensure the safety, security and well being of the subjects, punish the wrong doer and maintain the individual and social order. Elements of State: Saptanga theory of the State Kautilya nowhere exactly defines the state but he frankly adopts the time honoured seven limbs, Saptanga theory of the State. The body politic is supposed to possess the various limbs and each limb is supposed to be at par in importance to the other, though their importance depends upon the achievement obtained by them. These are technically called the prakriti (nature) of the rajya (state), i.e. the natural constituents of the state. The seven limbs are: (i) Swami, the King (ii) Amatya, the minister (iii) Janpand, the territory (iv) Durg, the fort (v) Kosha, the treasury (vi) Sena, the army (vii) Mitra, the ally. The state can function properly only when all the limbs of its politic are mutually integrated and cooperate with each other.[36] To Kautilya the swamin could be one person or a number of persons. However, swamin of Kautilya is not a feudal chieftain but a veritable sovereign owing allegiance to none. Amatya (minister or any kind of high official) must be native of the country and posses steadfast devotion towards the swamin. Janapad is interpreted as territory by some and population by others. Durg or forts were considered vital part of the empire and were of great importance for the defence of the empire. He refers to four kinds of forts, a water fort, a hill fort, a desert fort and a forest fort. Kosha or Treasury is given wide importance because a good state should be rich in gold and silver as well as big and variegated so that it may be capable of withstanding calamities for long.

Kautilya mentions six types of armies or Bala hereditary forces, hired troops, troops belonging to an ally, troops belonging to an enemy and soldiers of wild tribes. Ideal army is hereditary one which has come down to him directly from his fathers and grandfathers. Kautliya envisaged two types of allies (mitras), sahaj and kratrima. Sahaj mitra consisted of persons whose friendship was derived from the time of father and grand-father and were situated close to the territory of the immediately neighbouring enemy. Kratrim ally, on the other hand, was an acquired ally whose friendship was resorted for the protection of wealth and life. Ally of first category were superior to the second one.[37] Nature of the State 1. Monarchy The normal form of government was monarchical. The Hindu state rarely presented that high degree of centralization as that in the historical Roman Empire and the present day nation-state. 2. The King The centre of the state administration was the king, usually hereditary in accordance with the rule or primogeniture, living in high style and blaze of glory, in an enjoyment of immense revenue from private and public property. From the ethical standpoint, king was expected to lead a blameless life, disciplined to ceaseless administrative labour and committed to the public good. So long he was on the throne, he presided over the executive and judicial departments of government and was expected to take the lead on the field of battle. 3. Executive Machinery The machinery for executive administration was well organized. It was the special care of the king assisted by the ministers and a number of high officials. Below the great functionaries stood a host of minor officials, military officers, diplomats and spies, secretaries, clerks, technical employees and so forth. 4. Council of Ministers Kautilya advises his king to see through the eyes of his aged ministers and to follow the course of conduct that it approved them but he also advises the king to not depend upon the advice of a single minister because such an advice could possibly be based on selfish motives. He wanted king to consult a number of ministers and then come to his own conclusion. He insists that a minister should be native, born of high family, influential, well trained in arts, possessed of

foresight, wise, of strong arm, bold, eloquent, skilful, intelligent, possessed of enthusiasm dignity and endurance, pure in character, affable, and firm in loyal devotion. 5. No separation of powers There was no separation of executive and judicial functions. But in practice there were a number of people whose primary function was adjudication and who were assisted by a set of minor functionaries. 6. Centre-State relations Such was the machinery that normally worked at the centre. But it was difficult to ensure it extension to the provinces, districts and villages. It was necessary to devise means for reconciling central with local government and administration. Three lines were struck by political theory: (i) (ii) Federalism: A great deal of autonomy was left to feudatories and sub feudatories. Feudalism: The King or feudatory organized a regular system of provincial and district administration. (iii) Autonomy: A great deal of autonomy was left to villages, more in the Deccan, less in the north. 7. Parallel Organizations There existed parallel organization on the basis of function, in the form of village communities, kinship associations and guilds of manufacturers, merchant, bankers or others. They enjoyed considerable autonomy in the management of their affairs. Their customs or rules were recognized by the state and upheld by the law givers. 8. Horizontal and Vertical Government[38] Thus, organization was both horizontal and vertical and comprised a number of local and functional jurisdictions and intermediate associations standing in various more or less ill-defined relations with the state. For instance, Shreni or a guild consisted of persons following the same craft though belonging to different castes, while the Nigama formed a guild of traders belonging to various towns. Four instruments of the state policy Kautilya enumerated four instruments of state policy viz Sama or conciliation; Dama or gift, Danda or chastisement; and Bheda or sowing dissensions. Kautilya recognized deceitfulness or secret punishment among the legitimate means of statecraft. It was a natural consequence of this

state of things that there should grow up conventions and rules on relations between independent sovereigns and suzerain and vassals. The six fold policy determines the relations of states with one another: (i) (ii) (iii) (iv) (v) (vi) Sandhi (treaty of peace or alliance); Vigraha (war); Asana (neutrality); Yana (making preparation for attack without actually declaring war); Samsharaya (seeking the protection of another); Dvadhibhava (making peace with one and waging war against another). [39] Functions of the State: The state described by Kautilya is not a police state. The end of the state is not merely maintenance of peace and order or protection but also to enable the individual to attain the highest self-development with the help of the state. Here Kautilyas opinion is similar to that of T.H. Green. These aims are clear both from the description of the quality of a good state(limbs) and the long list of departments of administration the major functions of the state according to Kautilya are : Protection against internal as well as external threats; maintaining the common law; upholding the social order; promoting the welfare of the people. GOVERNANCE The Arthashastra is more a practical guide meant for kings than a theoretical composition. The Arthashastra is a tome on how the king should rule and what aims should he strive for. Kautilya knew the drawbacks of an evil ruler. He knew that even the strong republics that existed in India and later succumbed easily to Persian and Greek invasion, fell primarily because of maladministration. He realized the need for creating a strong and centralized monarchy benevolent to the people. He could visualize the realization of a strong normal rule in place of an evil one. He succeeded in creating an ideal state ruled by an ideal king, Chandragupta Maurya. He administered the kingdom as prime minister and then wrote the Arthashastra as a guideline for the benefit of the king. The relevance of Kautilyas Arthashastra to present day India and, indeed, the whole world needed not be doubted. The work is relevant in many ways. For example, governance in general and good governance in particular is the most relevant aspects. Those on an endless search for

good governance can expect a treasure trove in the Arthashastra. A number of modern thinkers, from Hobbes to Rawls, including Gandhi and Marx believed that human being conceded coercive power to the state only in the hope of realizing good governance. Kautilyas treatise on the art of government and administration, the duties of kings, ministers, officials and art of diplomacy is a guideline on good governance. Kautilya wrote about governance in context of monarchic state and he enumerated principles for governance of such a state. [40] The political organization is said to have held seven elements such as: the king, the minister, the territory, the fort, the treasury, the army and the ally. The state is headed by the King who is bound by duties and obligations. Kautilya has described Kings background, and his supreme position in all matters concerning state. Kautilya prescribed a comprehensive daily routine, divided into seven phases from early morning to late evening, so that Kings time was spent effectively on effective administration. According to Kautilya, the four functions of the king are: i) to acquire what is not gained, ii) to protect what is gained, iii) to increase what is protected and iv) to bestow the surplus upon the deserving. In the happiness of his subjects lies his happiness, in their welfare. Whatever pleases him personally he shall not consider as good but whatever makes his subjects happy he shall consider goods. The three powers of the king according to Kautilya are: power of good counsel, the majesty of the king himself, and the power to inspire. The king is referred to as the promulgator of dharma and hence Arthashastra advocates that the king should be free from the six passions such as sex, anger, greed, vanity, haughtiness and over joy.. In the happiness of the subjects lies the kings happiness, says the Treatise.[41] The king should possess knowledge of philosophy, old scriptures, political ethics, diplomacy and the functioning of the economy. Since monarchy, is viewed as the only guarantee against anarchy in those days, Kautilya advocates that the kings duty is to avert providential visitations such as famine, flood, and pestilence. Hence he is bound to protect agriculture, industry, and mining, the orphan, the aged, the sick and the poor. The king has also to control crime with the help of spies, and to settle legal disputes.[42] King should administer law and justice and he was the final arbitrator and the fountain of justice. Although the king was at the centre of the body politic in Kautilyas time, Kautilya makes it clear that the king is bound by an implicit social contract and that the ultimate objective of the

king, in economic and other affairs, should be to benefit his subjects. Their happiness or welfare should be the prime objective of State policy. Good governance in Kautilyas mind was aimed at the welfare of the people. The principles of good governance in Kautilyas Arthashastra are well-drawn out. The king has no individuality. His duties merged into his personality. He himself was one of the organs of the state, albeit the most important organ. In Arthashastra, polity and society are merged and both are restrained. In good governance, the objectives of the state are to be fulfilled and realized. This is possible through a properly organized and guided administration. This principle is relevant even today. A government is good, if it is administered well. Kautilya suggests that good governance should avoid extreme decisions and extreme actions. Soft actions (sama, dana) and harsh actions (danda) should be taken accordingly. In what seems to be a very modern tone of voice, Kautilya opines, Sovereignty is practicable only with the cooperation of others and all administrative measures are to be taken after proper deliberations. The King and Ministers were supposed to observe strict discipline. Kautilya recommended a strict code of conduct for himself and for his administrators. This code of conduct is useful and applicable to modern executives. Even 2400 years ago, Kautilya emphasized capping at a quarter of the revenue the salaries of the king and his officials. It was the duty of the king to maintain law and order in society and to ensure protection of life, liberty and property. Ministers are directly responsible for administration. They must be selected with great care. Their abilities must be tested before their selection. They should be tested according to the jobs they will be assigned. Their abilities and sincerities should be tested from time to time. All these measures are relevant to the civil servants in present administration. Kautilya also deals with the problem of corruption, in fact he points out about 40 ways by which government funds can be embezzled. Good governance and stability go hand in hand. If rulers are responsive, responsible, accountable, removable, recallable, there will be instability. This is very essential in the present democratic set up. As in Kautilyas monarchical set up, similar qualities are required in our rulers and administrators. The Arthashastra equates political governance with economic governance. The end is economic governance while political governance is the means. But as economic objectives are not realized in the absence of political ones, then political governance becomes an end and economic governance the means. The end justifies the means; this is supposed to be the basis of

Kautilyan and Machiavellian philosophy. Political power and material wealth according to Kautilya are the means and ends of governance. And good governance-political or economicdepends upon justifying the ends and means as the socio, economic and political conditions. Good governance is fundamental to the Kautilyan ideas of administration. Judging by the countless governance scandals that are uncovered nearly every day in India, a reading of Arthashastra, and imbibing its principles, ought to be the topmost priority of our leaders, both political and corporate. Arthashastra also finds classification of legal matters in to civil and criminal.[43] He laid down elaborate guidelines for administering justice of evidence, procedures, and witnesses. He strongly believed in Dandniti, though he maintained that the penalties must be fair and just, and proportionate to the offence created. This propagation was used to create a deterrent effect.[44] As for the states political administration, Kautilya has provided a full-fledged commentary on how this should be undertaken. He gave instructions about defence of state boundaries, protection of the forts, and the manner in which an invasion by the enemy should be handled.[45] He has described day-to-day functions to be performed by the King, ministers and other state officials. He consolidated the Mauryan Empire into a unified central regime and he believed in expansion and consolidation of states position. He believed in end results and hence was not too sensitive about the means deployed. He is considered immoral on these grounds. Though he upheld moral and ethical standards in his personal life. However he straightforwardly recommended fair and foul means for achieving goals. While talking about good governance also, he has touched upon misappropriation of state funds. He has given dubious methods employed for embezzlement of funds and other similar malpractices. He explained working of checks and balances back then only which is followed in the political setup of most democratic nations today. Civil administration The king was in charge of an elaborate machinery to control civil administration. The heads of the administration were the treasurer, chancellor, chief comptroller, and auditor. Under the chancellor were frontier governors, provincial governors and judges. Under provincial governors were magistrates. Under the chief comptroller and auditor were city commander, city administrators, ministers head of manufacturing establishments, and city governor-generals.

Under the ministers were forest commanders and danda palav, chief forest officers and the head of departments directly under chief comptroller and auditor.[46] Civil services An honest, efficient and experienced civil service (i.e., bureaucracy) is a prime requirement for efficient, equitable and just governance. Kautilya knew that a few civil servants would feel the temptation to bite into a bite of the states wealth. Therefore, Kautilya recommended that only those officials who did not eat the kings wealth, but increased it in just ways should be made permanent in civil service. While an officer negligent in his work was fined double his wages and losses incurred, an officer who accomplished a task as ordered or did better than that, was promoted and rewarded. Conclusion The ideal country of Kautilya is described as self sufficient villages. The picture of ideal Kautilyan state that emerges is one of a well run state, prosperous and bustling. Among other things, for him, the state should be easy to defend, should provide easy means of livelihood, such as agricultural lands, mines, forests, pastures, trade routes, and so on and should be inhabited by hardworking agriculturalists and men mostly of lower varnas. The rule of Yatha Raja Yatha Prajah (As the King is, so are the people) must be upheld.[47] It is a sacred task of the king to continuously strive for the happiness and welfare of his people. He should treat them all as equals. In the happiness of the subjects, lies the kings own happiness and what may be dear to the king may not be beneficial to him rather what is dear to the people may be beneficial to him. The king would act as a good leader and take his people to where they ought to go. It is prescribed that the Law of Inheritance (dharma), which may be peculiar to any region or community or village should be recognized and upheld. One of the major reasons of disputes in the country of India is this only, that one community or religion does not respect the ideas of the other, so much so that they cannot tolerate each others existence. Kautilyas ideas on polity also inspire us to see through the fact that power comes from the countryside, which is the source of all activity.

Chapter 6. Comparison with Political Thinkers Kautilya and Machiavelli Both concentrated on the practical administration and evolved some logical conclusions. Both emphasized the necessity of having a strong ruler to overcome the anarchical conditions prevailing in the society and to meet possible threats of neighbouring states. Both favoured keen observation of the conditions in the neighbouring enemy states to have first hand information about their activities, designs and strengths. Both made frequent references to history and earlier authorities to substantiate their points. Both believed in the principle of political expediency.[48] To Machiavelli, power and morality are mutually exclusive. He sacrificed moral principles to promote end of public welfare. Kautilya did not subordinate ethics to politics and believes that power acquires legitimacy only if it promotes human happiness and enriches life. He permitted immoral statecraft only in extreme cases and even pleaded for benign treatment of subjects. Prof. Ghoshal puts it, Kautilyas politics was based upon a deeper knowledge of human nature than that of his European counterpart, Machiavelli. Kautilyas ruler was expected to be a good man, a virtuous person, in words, thoughts and deeds. Machiavellis prince was not required to be an embodiment of virtues. However he was apparently to look virtuous.[49] Kautilyas work was more extensive because lit covered wide field ranging from civil law, public administration and military science. On the other hand, Machiavelli mainly concentrated on the art of governance. However, in another respect, Machiavelli covered a wider field in so far as he studied the conditions prevailing in monarchies as well as republics, while Kautilya in the main concentrated on the problems of the monarchic state. Machiavellis politics was guided by ideal of territorial aggrandizement, while Kautilya concerned himself with the security of the state and achievement of political influence over circle of states. Machiavelli favoured strong monarchy without any restrictions on his authority. His sovereign was absolute. Kautilyas King was not an absolute ruler and worked within limitations like the Law (or Dharma). Kautilya considered Law as the King of Kings. According to Machiavelli, the individual liberty consisted in what the state permitted him to enjoy. The individual could not claim any liberty from the state as a matter of right. Kautilya, on the other hand, permitted the individual great amount of independence and autonomy. No doubt he envisaged a powerful king but the individual was not sacrificed at the alter of the king.

Max Weber pointed out how Machiavellis ruthless ruler and ideas on morals and politics being kept separate, use of spies, assassinations were classically expressed in Indian literature in the Arthashastra of Kautilya (written long before the birth of Christ). The prince is comparatively harmless.[50] Kautliya and Plato Kautilya says the prince has to study anvikshiki under academic exoerts after after he has been initiated into Vedic studentship. The prince is to maintain the vow of Brahmacharaya or studentship till the age of sixteen. It is too short a time limit for study of advanced logic and philosophy.it appears thus that Plato had far more serious and exalted conception of dialectical philosophy as contrasted to the Anvikshiki of Kautilya. Kautilya has no scheme of advanced mathematical and scientific studies unlike Plato. Plato ascribes the function of rulership to the philosophers and the job of defence t the auxiliaries. It is clear thus, that he has strictly separated the governing or sovereign functions and the military function. While according to Kautilya, the Kshatriya varna has to supply the personnel who will be concerned both with rulership as well as with military defence.[51] While Kautilya is a thorough and orthodox believer in the fourfold varnas, Plato is more democratic in his view that there can be transposition of ranks between the children of the guardians, of the auxiliaries and of the agriculturalists.

Kautilya and Aristotle They were not antagonistic but complimentary to each other, opines Saletore.[52] The two thinkers portray political organization in a unique manner. Kautilya in fact goes in more details and fills up the gaps. Both the political thinkers attached greater importance to the goals of politics than to the acquiring of political power as such. Both consider monarchy the best form of state. Still they had quite opposite views on slavery. For Aristotle, slave was an animate possession of a master, for Kautilya, a slave has his own rights and privileges. He talks of slavery as a more dignified institution. Both, though being near contemporaries discussed the problems from different angles. For Kautilya slavery was not a hereditary institution where as for Aristotle it was so for all purpose. Contrary to Aristotle, Kautilya discussed circumstances under which a

master is bound to end his right over his slave. Aristotle also talks about emancipation of slaves but from a very different point of view as he also talks of how enslaving Greeks was a sin. Kautilya and Marx Both pay lot importance to economy in the life of a human. While Kautilya explains economy as the basis of survival and a basic necessity of a human being, as economics being the most important aspect of public life, Marx talk about Economic Determinism, as to how the entire system is determined by economy. Kautilya does not have a particular metaphysics unlike Marx. Kautilyas theories find parallels with certain thinkers and does not match certain others. Yet parallels of his theories can be found in application in the modern economy.

Kautilya and Sun Tzu Your neighbour is your natural enemy and the neighbours neighbour is your friendsays Kautilya and so does Sun Tzu. Sun Tzu is his Art of War also reckons the same fact, however he also recognizes the existence of neutral and mediating states.
Sun Tzu says, supreme excellence consists in breaking the enemies resistance without fighting; Kautilya goes one step ahead by saying, the arrow shot by an archer may or may not kill a single person; but skilful intrigue, devised by wise men, may kill even those who are in the womb.[53] Economic Sanctions today are in the same line of thought. It may kill thousands without a single shot of bullet.

Both were cautious, calculative and preached to view the enemy as superior in all conditions and preferred an indirect approach in dealing with them. Sun Tzu advocated for use of spy. But Kautilya goes further on use of spies not only externally but also internally. He suggests employing spy behind his own ministers even. He also cynically proposes using fake holy men for this purpose. He encouraged fifth column activities inside the enemy territory. Propaganda in Kautilyas time was practiced not as telling lies, but selecting the truth mixed with some ideas and options. The major distinction lies in the fact that Kautilya is more of an empire builder and his strategic concept of mandala advocates conflictual relationship with the neighbouring states. His concept stands as barrier against the idea of integration, both at regional and global level. On the other hand, Sun Tzu preaches us to be moderate, to use brainpower instead of physical power and to

defeat the enemy without going into the battlefield. He also viewed war as the unfortunate last resort in human interaction.[54] Kautilya and Adam Smith Arthashastra literally translates from Sanskrit as the science of wealth. Artha corresponds to the work wealth in Sanskrit, and shastra to science. Just as Adam Smith was concerned with the wealth of nations, not individuals as such, so was Kautilya. Also like Adam Smith, he recognized that the wealth of nations does not depend purely on narrow economic factors but on a broad array of factors. His treatise, therefore, takes into account economic, political, diplomatic, social, military, and other aspects that may affect the wealth of a nation. While Adam Smiths advocacy of a liberal market-based economy differed from Kautilyas support of a centrally planned (mixed) economic system secured by the monarchy, both had the same conception of what constitutes the wealth of a nation and what the economic goal of a nation should be. Both agreed that money per se does not constitute a nations wealth. Both agreed that the nations resources had to be developed by investments and other means to add to wealth. The fact that Adam Smith and Kautilya did not propose the same social mechanisms for expanding the wealth of nations is not surprising. For one thing, they lived in very different times and in different social and cultural contexts. To a large extent, appropriate social and economic systems depend upon historical circumstances. In that respect, the position of Kautilya is interesting. Kautilya anticipated the teachers of the Historical School, when he rejected the absoluteness or cosmopolitanism of Economic Theory. He did not believe that there was One Universal Law which is applicable to all conditions and all times. He held that economic laws should be adapted to changing conditions of time and place. Therefore, we can conclude that Kautilya would have accepted the proposition that appropriate social mechanisms for the efficient creation of national wealth could vary with the passage of time and could differ between nations.[55] Kautilya and Social Contractualists (Hobbes, Locke and Rousseau) Kautilyas thought emphasizes that the duty of the king (State) is to protect the people, maintain peace and justice and be active in providing economic assistance to individuals and groups. Those services provided the rationale for taxation. Thus an implicit social contract existed

between the king and the nations citizens. If the king did not keep to this contract, he did so at his own peril. For example, in areas where he failed to protect his citizens, they might even ask for remission of taxes paid. While Kautilya supported absolute monarchy, it was necessary for the king to be a benevolent despot to have a legitimate place as head of State. [56] Unlike, Social Contractualists, he does not give a state of nature or human nature and the formation of contract, but in his theory of state it is implicit that he, in a way, believed in the social contract theory.

Chapter 7. Kautilyas relevance in the Contemporary World At the beginning of the 21st century, we cannot escape the hyper-driven global economy we live in. Yet the very forces that link all of us have accelerated the dissolution of traditional sources of social authority and historical identity, spurring increasingly violent counter movements.[57] We realize traditional national politics and the reorganization of all social values around markets cannot hold together the six and a half billion inhabitants of this small planet-the world needs a new global order based on a common global ethic and global justice. The system of secular state built on non-violence and reverence for life had been perfected by Kautilya, a statesman, who had mastered economics. Kautilya, one of historys greatest political geniuses, proclaimed that accumulation of material riches as the chief underpinning of human society. He addressed the questions of political realism and idealism, the role of force and violence in international relations, and the tension between economics and ethics. [58] Kautilya gave importance to these assets as a part of economic planning and his logic must be extended and an exhaustive list of productive assets should be prepared by a modern economy like India. Kautilya gives the idea of contribution by companies and businesses houses to the society. Furthermore the concept of Corporate Social Responsibility has grown and many corporate houses and state owned companies of India can be seen following this. E.g. Indian Oil,[59] or the Arvind Mills runs entirely on solar power. It is the concept based on the idea of returning what one takes from the society and finds its base in Kautilyas policies. Kautilyas wisdom is inspirational and we can certainly learn from him the proper functioning of an economy, just administration, relation between states, or relation between state and its citizens. When Kautilya talks of kulasamghas clan oligarchies we can see similarities to the rule, by a collection of princes, of modern Saudi Arabia.[60] When he suggests that the death of a king should be kept secret until a series of measures had been taken to protect the kingdom, we note that it was practiced in the Soviet Union as well. Kautilya gives a list of methods of imposing an unwelcome additional tax burden on people, in times of adversity; one suggestion is that secret agents should start the fund-raising by putting a high figure against their own names. These days Presidents and Prime Ministers start off public collections with large public subscriptions. Kautilya accords the Purohita a very high place, though his official function was restricted to religion and ritual, he influenced great influence over the King as the sacrificer and

magician. Such influence is visible on some modern date Indian politicians. Kautilya describes various secret methods by which a foreign ruler may be killed, he would not have been surprised by the United States attempts to kill Fidel Castro with an exploding cigar or about the arguments whether a CIA supported coup could end in the accidental death of a foreign ruler. The Arthashastra recommends apparently immoral means against traitors and enemies of the state and distinctly adds that such means are not to be used against law abiding subjects. What are the limits to the methods that a state may use against terrorists who kill innocents is a matter of continuing debate in all civilized countries. Dr. Kange says, We still have the same distrust of one nation by another, the same pursuit of its own interest by every nation tempered only by consideration of expediency, the same effort to secure alliances with the same disregard of them in the in self-interest, the same kind of intelligence service as maintained by one nation in the territory of another which we may find referred to in the Arthashastra. It is difficult to see how rivalry and the struggle for supremacy between the nations can be avoided and the teachings of this shastra which is based on these basic facts rendered altogether superfluous until some sort of a one-world government or an effective supra-national authority is established. But, until that happens, the teachings of this shastra would in actual practice be followed by nations, though it may be unknown to them and though it may be openly condemned by those who know it.[61] Identification of corrupt practices and prescription of stricter and more stringent remedies and penalties for containment of malpractices is the most urgent task. The enforcement machinery could benefit from the study of Arthashastra especially from this point of view. The relevance of Kautilyan thoughts in the Indian Economy gains another dimension when judged in the context of the general perception that India along with China is likely to drive global economy in the 21st Century. The relevance of Kautilyan economics could enable India to pursue a holistic and integrated development plan. The realization of this dream requires that all areas of public policy and governance are streamlined to create an enabling and supportive environment. Here, Kautilyas work would prove most useful. But Kautilya had his own ways which are not admired by everyone. He is also criticized for his beliefs over certain aspects.

Chapter 8. Critique Kautilya is mainly criticized for his techniques of warfare. He is considered immoral by some. Use of espionage and killing of enemies by the Kings secret agent is unethical. He does not consider victory by deceit immoral. So long as the ends are met, means deployed do not matter. As in his system of mandala, Kautilya advocated six-fold policy to interact with the neighbours which included co-existence, neutrality, alliance, double policy, march and war. To achieve this he advised the king to resort to five tactics: conciliation, gift and bribery, dissention, deceit and pretence, open attack or war. As such on the question of treaty and alliance he suggests: A King should not hesitate to break any friendship or alliances that are later found to be disadvantageous. Kautilya stated very frankly that the only way a king can survive in the world is the rule of the fish, the big one eating up the smaller; only an empire of considerable size and power and free from all internal instability could deter big fishes or alien invasions. He focuses too much on the monetary basis of an individuals life rather than his rights and his happiness quotient. He gives too much power to the King and does not clearly put across how the concept of checks and balances worked in his system. His brutal honesty is not looked upon with great reverence also. Many people consider a lot his ideas, the reason behind a lot of problems for South-East Asian countries and a threat to global stability.

Chapter 9. Conclusion For centuries to come and centuries that went by, which recorded in history talking of the great men and legendary characters who shaped time through vision and exemplary actions. Kautilya, is perhaps the only personality who has been accepted and revered as genius by both Indian and western scholars. He is a historical milestone in the making of India amidst tremendous upheavals and myriads of reversals. Celebrated as a shrewd statesman and a ruthless administrator, he comes across as one of the greatest diplomats of the world. He had the guts to speak his heart out even in front of the rulers, which shows his strong inclination to democratic values and the audacity to put his views through. Although, he lived around the 3rd Century BC, his ideas and principles show concurrence and validity in the present day world. Politics was his forte. Diplomacy in a politically charged environment shows his self-confidence and the ability to stay calm in trying situations. He was a great laureate of economics with a glittering intellect to perceive the intricate dynamics of the various economic activities and principles. The centuries that succeeded him show distinct effects of his thoughts on the way a kingdom is managed and other facets of economic administration. Chanakya, apart from being a man of wisdom and unfailing strategies, propounded Nitishastra, the ideal way of living for every individual of the society. He looked at the country like a person surrounded by problems. He worked at the total annihilation of the problems by the roots. The re-appearance of troubles only shows its growth . His contribution to foreign policy in the present day world is immense. Universities teach his principles to aspiring foreign policy experts showing the infallibility of his principles. Kautilya's art of diplomacy is well known across India and practiced in the areas of defence, strategy formation and foreign relations. Quite remarkably, long before Clausewitz came up with the quote, which said, "War is only the continuance of state policy by other means", Kautilya had already written it in his book 'Chanakyaniti'. Most of his views were so far sighted that they appeared to be prophesies. Talking on diverse subjects such as corruption, he commented very rightly, "It's just as difficlut to detect an officials' dishonesty as it is to discover how much water is drunk by the swimming fish". As a person, Kautilya has been described variously, as a saint, as a 'ruthless administrator', as the 'king-maker', a devoted nationalist, a selfless ascetic and a person devoid of all morals. He created controversy by saying, "The ends justify the means' and the ruler should use any means

to attain his goals and his actions required no moral sanctions. All his written works namely 'Arthashastra', 'Nitishastra' and 'Chanakyaniti' were unique because of their rational approach and an unabashed advocacy of real politic. His views were dimensionally novel. He recommended even espionage and the liberal use of provocative agents as machineries of the State. In politics, he even attested the use of false accusations and killings by a king's secret agent without any ambiguities. The observance of morals and ethics was secondary to the interests of the ruler. Some of his stark views made him into an ambivalent personality for the world. The Arthashastra suggests a policy when addressing a stronger opponent. It suggests that first the elements (Prakritis) which make the enemy stronger must be studied and compared to the conquerors elements in detail and the calamities (Vyasana) which affect the elements must be taken into consideration while planning. This would lead to understanding the relative Power dynamics and thus suitable combinations of the Six Methods (Sadgunya) and the conflict resolution methods (Upayas) could then be employed to contain and enngage China. The Arthashastra advocates use of the four options mainly to ally with a stronger nation, go in for alliances with Chinas neighbours, use silent and covert war to weaken the Prakriti elements of China or economically enmesh India and China. As this decade draws to an end, China is inching towards challenging the world order economically and diplomatically. It is thus appropriate that India should look at the Indian predilections through the prism of Arthashastra as to cull out a distinctive and comprehensive strategy for India to deal with the future challenges which the new emerging world order poses both to its rise. If India has to make it big, its leadership, the highest power according to Kautilya, has to take some hard and prompt decisions to put Indias future on a compelling trajectory with a cogent cohesive, concerted, and comprehensive (the 4Cs) effort. It is only Vision, Conviction, Strategy and Will which can assist India gain its rightful place in the comity of nations.[62] This great statesman, Kautilya has often been compared to Machiavelli, Aristotle and Plato, exemplifying his potentiality and influential status. In his conception of the factors that influence the wealth of nations, Kautilya was well ahead of Western thinkers. It took around 2000 years for Western economic thought to reach and then possibly surpass the level of economic sophistication apparent in Arthashastra.[63]

He has been criticized for his ruthlessness and trickery and praised for his profound political wisdom. Kautilya, the timeless man, was in pursuit of truth fearlessly 2,000 years ago and was proved right with Vivekanand's words, "Arise, Awake, Sleep not until the goal is reached."[64]

Chapter 10. Bibliography Books 1. Rangarajan L.N., Kautilya : The Arthshastra, Penguin Books, New Delhi, 1992. 2. Bhagwan Vishnoo, Indian Political Thinkers, Atma Ram and Sons, Lucknow, 2006. 3. Sen Adeep, World great Political Thinkers, Anmol Publications Pvt. Ltd., New Delhi, 2006. 4. Roberts Peri & Peter Sutch, An Introduction to Political Thought : A conceptual Toolkit, Atlantic Publishers and Distributors, New Delhi, 2004. 5. Mukherjee Subrata & Sushila Ramaswamy, A history of Political Thought : Plato to Marx, Prentice Hall of India Pvt. Ltd., New Delhi, 2006. 6. Jayapalan N., Comprehensive history of Political Thought, Atlantic Publishers and Distributors, New Delhi, 2011. 7. Sharma S. & Urmila Sharma, Western Political Thought: From Bentham to present day, Atlantic Publishers and Distributors, New Delhi, 2003. 8. Haribhakti Sailesh, Kautilyas Arthashastra : The way of Financial Management and Economic Governance, Jaico Publishing, Mumbai, 2010. 9. Ambirajan, S., The Concepts of Happiness, Ethics, and Economic Values in Ancient Economic Thought, Routledge, London and New York, 1997. 10. Rao M. V. K., Studies in Kautilya, Munshi Ram Manohar Lal, Delhi, 1958. 11. Varma V.P., Ancient and Medieval Indian Political Thought, Varma Publishers, Patna, 1997. 12. Mehta V.R., Foundations of Indian Political Thought, Manohar, New Delhi, 1999. 13. Sharma Urmila and S.K. Sharma, Indian Political Thought, Atlantic Publishers and Distributers, New Delhi, 1996. Web sources 1. 2. 3. 4. 5.
http://www.karmayog.org/messages/message.aspx?id=1373 http://www.jstor.org/pss/4373251 http://online.wsj.com/article/SB10001424052748703615904575052921612723844.html http://www.aapssindia.org/articles/vp2/vp2h.html http://bss.sfsu.edu/mbar/ECON605/Arthashastra.pdf

6. http://ageconsearch.umn.edu/bitstream/90523/2/WP%2018.pdf 7. http://infinityfoundation.com

[1] Sailesh Haribhakti, Kautilyas Arthashastra : The way of Financial Management and Economic Governance, Jaico Publishing, Mumbai,
2010, p. 7. [2] V.P. Varma, Ancient and Medieval Indian Political Thought, Varma Publishers, Patna, 199, p. 88. [3]Vishnoo Bhagwan, Indian Political Thinkers, Atma Ram and Sons, Lucknow, 2006, p. 56.

[4] Available at http://www.karmayog.org/messages/message.aspx?id=1373 visited on 23-04-2011 at 3:05 P.M. [5] L.N. Rangarajan, Kautilya : The Arthshastra, Penguin Books, New Delhi, 1992, p. 14 [6] Sailesh Haribhakti, Kautilyas Arthashastra : The way of Financial Management and Economic Governance, Jaico Publishing, Mumbai,
2010, Pg. no. 2. [7] Vishnoo Bhagwan, Indian Political Thinkers, Atma Ram and Sons, Lucknow, 2006, p. 55. [8] Available at http://www.karmayog.org/messages/message.aspx?id=1373 visited on 22-04-2011 at 11:45 P.M. [9] L.N. Rangarajan, Kautilya : The Arthshastra, Penguin Books, New Delhi, 1992, p. 19-21. [10] Sailesh Haribhakti, Kautilyas Arthashastra : The way of Financial Management and Economic Governance, Jaico Publishing, Mumbai, 2010, p. 3-4. [11] Sailesh Haribhakti, Kautilyas Arthashastra : The way of Financial Management and Economic Governance, Jaico Publishing, Mumbai, 2010, p. 4. [12] L..N. Rangarajan, Kautilya : The Arthshastra, Penguin Books, New Delhi, 1992, Pg. no. 5. [13] Sailesh Haribhakti, Kautilyas Arthashastra : The way of Financial Management and Economic Governance, Jaico Publishing, Mumbai, 2010, p. 34. [14] L.N. Rangarajan, Kautilya : The Arthshastra, Penguin Books, New Delhi, 1992, p. 41.

[15] L.N. Rangarajan, Kautilya : The Arthshastra, Penguin Books, New Delhi, 1992, p. 43. [16] Sailesh Haribhakti, Kautilyas Arthashastra : The way of Financial Management and Economic Governance, Jaico Publishing, Mumbai,
2010, p. 7. [17] L.N. Rangarajan, Kautilya : The Arthashastra, Penguin Books, New Delhi, 1992, p. 255-274. [18] Sukanto Bhattacharya, From Kautilya to Benford trends in forensic and investigative accounting, Bond University e-Publications, London, 2002, p. 3-5.

[19] Sailesh Haribhakti, Kautilyas Arthashastra : The way of Financial Management and Economic Governance, Jaico Publishing, Mumbai,
2010, p. 6-7. [20] Ibid 35. [21] Ibid 18-19. [22] Sailesh Haribhakti, Kautilyas Arthashastra : The way of Financial Management and Economic Governance, Jaico Publishing, Mumbai, 2010, p. 21. [23] Sailesh Haribhakti, Kautilyas Arthashastra : The way of Financial Management and Economic Governance, Jaico Publishing, Mumbai, 2010, p. 36.

[24] Vishnoo Bhagwan, Indian Political Thinkers, Atma Ram and Sons, Lucknow, 2006, p 58.
[25] V.P. Varma, Ancient and Medieval Indian Political Thought, Varma Publishers, Patna, 1997, p. 90. [26] S. Ambirajan, The Concepts of Happiness, Ethics, and Economic Values in Ancient Economic Thought, Routledge, London and New York, 1997, p. 45. [27] L.N. Rangarajan, Kautilya : The Arthshastra, Penguin Books, New Delhi, 1992, p. 38. [28] Sailesh Haribhakti, Kautilyas Arthashastra : The way of Financial Management and Economic Governance, Jaico Publishing, Mumbai,
2010, p. 15.

[29] V.P. Varma, Ancient and Medieval Indian Political Thought, Varma Publishers, Patna, 1997, p. 92.

[30] V.R. Mehta, Foundations of Indian Political Thought, Manohar, New Delhi, 1999, p. 91.
[31] L.N. Rangarajan, Kautilya : The Arthshastra, Penguin Books, New Delhi, 1992, p. 47. [32] Sailesh Haribhakti, Kautilyas Arthashastra : The way of Financial Management and Economic Governance, Jaico Publishing, Mumbai,
2010, p. 29.

[33] M. V. K. Rao, Studies in Kautilya, Munshi Ram Manohar Lal, Delhi, 1958, p. 31.
[34] L.N. Rangarajan, Kautilya : The Arthshastra, Penguin Books, New Delhi, 1992, p. 45. [35] L.N. Rangarajan, Kautilya : The Arthshastra, Penguin Books, New Delhi, 1992, p. 253.

[36] L..N. Rangarajan, Kautilya : The Arthshastra, Penguin Books, New Delhi, 1992, p. 212. [37] V.R. Mehta, Foundations of Indian Political Thought, Manohar, New Delhi, 1999, p. 89.

[38] Urmila Sharma and S.K. Sharma, Indian Political Thought, Atlantic Publishers and Distributers, New Delhi,
1996, p. 60 [39] Ibid p.61. [40] Sailesh Haribhakti, Kautilyas Arthashastra : The way of Financial Management and Economic Governance, Jaico Publishing, Mumbai,
2010, p. 8. [41] L..N. Rangarajan, Kautilya : The Arthshastra, Penguin Books, New Delhi, 1992, Pg. no. 110-113. [42] Ibid p. 114. [43]Sailesh Haribhakti, Kautilyas Arthashastra : The way of Financial Management and Economic Governance, Jaico Publishing, Mumbai, 2010, p. 8.

[44] Urmila Sharma and S.K. Sharma, Indian Political Thought, Atlantic Publishers and Distributers, New Delhi,
1996, p. 91. [45]Sailesh Haribhakti, Kautilyas Arthashastra : The way of Financial Management and Economic Governance, Jaico Publishing, Mumbai,
2010, p. 9. [46] Sailesh Haribhakti, Kautilyas Arthashastra : The way of Financial Management and Economic Governance, Jaico Publishing, Mumbai, 2010, p. 89. [47] Adeep sen, World great Political Thinkers, Anmol Publications Pvt. Ltd., New Delhi, 2006, p. 37. [48] Subrata Mukherjee & Sushila Ramaswamy, A history of Political Thought : Plato to Marx, Prentice Hall of India Pvt. Ltd., New Delhi, 2006, p. 137-138.

[49] Vishnoo Bhagwan, Indian Political Thinkers, Atma Ram and Sons, Lucknow, 2006, p. 63-64. [50] Available at http://philpapers.org/rec/BOEMMC visited on 29th April, 2011 at 12:21 A.M. [51] V.P. Varma, Ancient and Medieval Indian Political Thought, Varma Publishers, Patna, 1997, p. 91. [52] Vishnoo Bhagwan, Indian Political Thinkers, Atma Ram and Sons, Lucknow, 2006, p. 64. [53] Available at http://www.zimbio.com/World+Politics/articles/1314/Chinese+Sun+Tzu+vs+Indian+Chanakya+Kautilya visited on 29th April,
2011 at 12:30 A.M. [54] Supra 27. [55] Available at http://ageconsearch.umn.edu/bitstream/90523/2/WP%2018.pdf visited on 29th April, 2011 at 1:08 A.M. [56] Supra 29. [57] Sailesh Haribhakti, Kautilyas Arthashastra : The way of Financial Management and Economic Governance, Jaico Publishing, Mumbai, 2010, p. 3-4. [58] Adeep sen, World great Political Thinkers, Anmol Publications Pvt. Ltd., New Delhi, 2006, p. 36. [59]Available at http://www.iocl.com/Aboutus/corporatesocialresponsibility.aspx visited on 29th April, 2011 at 4;06 A.M.

[60] L.N. Rangarajan, Kautilya : The Arthshastra, Penguin Books, New Delhi, 1992, p. 14. [61] L. N. R [62] Available at http://panchajanyacribs.blogspot.com/2010/03/those-who-win-every-battle-are-not.html visited on 29th April, 2011 at 12:40
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[63] Available at http://ageconsearch.umn.edu/bitstream/90523/2/WP%2018.pdf visited on 29th April, 2011 at 1:08 A.M. [64] Adeep Sen, World great Political Thinkers, Anmol Publications Pvt. Ltd., New Delhi, 2006, Pg. no. 63-64.