Economics of Kautiliya Shukra and Brihaspati.pmd
Economics of Kautiliya Shukra and Brihaspati.pmd
Economics of Kautiliya Shukra and Brihaspati.pmd
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CHAPTER ONE<br />
INTRODUCTION<br />
Hillebr<strong>and</strong>t drew attention to a number <strong>of</strong> quotations from a prose<br />
work ascribed to Chanakya, also known as Vishnugupta <strong>and</strong> Kautilya.<br />
Pr<strong>of</strong>. Hillebr<strong>and</strong>t was unaware at the time that this original treatise had<br />
already been discovered by R Shyamashastry <strong>of</strong> Mysore. Mr. Vincent<br />
Smith noticed this work in his Early History <strong>of</strong> India. (<strong>Brihaspati</strong>sutra,<br />
1929:13)<br />
Sources <strong>of</strong> Information<br />
Oriental <strong>Economics</strong><br />
There are many oriental thinkers who had contributed in the<br />
theoretical <strong>and</strong> practical fields <strong>of</strong> <strong>Economics</strong> prior to Adam Smith.<br />
The existence <strong>of</strong> earlier sources is clearly indicated in the beginning <strong>of</strong><br />
<strong>Kautiliya</strong> Arthashastra.(<strong>Kautiliya</strong> Arthashastra, 2003, 1.1.1) 1 The<br />
Atharva-Veda which is one <strong>of</strong> the world’s oldest literatures reads that<br />
the Arthashastra is a branch <strong>of</strong> Atharva-Veda. 2 The second view is<br />
that the Arthashastra is a branch <strong>of</strong> Rig-Veda. (<strong>Brihaspati</strong>-sutra,<br />
1929:1) 3 According to <strong>Shukra</strong>-niti the tradition <strong>of</strong> the treatise goes to<br />
Brahma- the creator. (<strong>Shukra</strong>nitisar, 1.3) 4 The information on Oriental <strong>Economics</strong> is lying scattered in<br />
various places. Some <strong>of</strong> them are as follows-<br />
1. Vedas, Upanishads, Smritis <strong>and</strong> Puranas<br />
2. Ramayana <strong>and</strong> Mahabharata<br />
3. <strong>Brihaspati</strong>-sustra<br />
4. <strong>Shukra</strong>-niti<br />
5. <strong>Kautiliya</strong> Arthashastra<br />
6. Bouddha <strong>and</strong> Jain Scriptures<br />
Vedas, Upanishads, Smritis <strong>and</strong> Puranas<br />
Vedas are regarded as the most ancient document <strong>of</strong> human<br />
civilization.The meaning <strong>of</strong> Veda is knowledge. In the beginning this<br />
knowledge was transferred from one generation to another on oral<br />
In this study economic<br />
tradition. Therefore Veda's are also known as Shruti. In Rig-Veda<br />
thoughts <strong>of</strong> Kautilya, <strong>Shukra</strong> <strong>and</strong> <strong>Brihaspati</strong> have been comparatively<br />
surveyed with classical, neo-classical <strong>and</strong> modern economic theories.<br />
In its technical form the ancient Science <strong>of</strong> Polity first became<br />
economic udeas are scttered in different mantras. The discussions on<br />
price theory is found Rig-Veda. (Rig. 2010, 4.24.9) In Yajur-Veda the<br />
description <strong>of</strong> grain, pulses <strong>and</strong> vegetables is found. (Yaju., 2003, 18.12)<br />
In Atharva-Veda description <strong>of</strong> farming, use <strong>of</strong> manures, method <strong>of</strong> tilling<br />
known by the publication <strong>of</strong> the Kam<strong>and</strong>ak’s Nitisara with selections<br />
the field are given in various mantras. (Atharva., 2010, 3.17, 3.18)<br />
from the commentary (edited by Rajendra Lal Mitra <strong>and</strong> others in<br />
The next sources <strong>of</strong> ancient ideas are Upanishads. These are<br />
Bibliotheca Indica, 1861-1881). In 1908 a notable paper by Pr<strong>of</strong>.<br />
regular academic exercises in Vedic schools. The students <strong>and</strong> their<br />
1 2
teachers used to learn lessons. The pedagogy <strong>of</strong> learning is expressed<br />
in dialogues, observations, case studies etc. Most <strong>of</strong> the Upanishads initiate<br />
the lesson with some social or economic issues. (Bokare, 2009: 90)<br />
The most ancient among the Smritis were in prose, <strong>and</strong> are<br />
known as the Dharma-sutras. Only a few fragments <strong>of</strong> some <strong>of</strong> these<br />
works have yet been discovered. The Dharma-shastras appear to have<br />
been later redactions in verse <strong>of</strong> the earlier Dharmasutras. The most<br />
important <strong>of</strong> the Smriti works at present known are those attributed to<br />
Gautama, Apastamba, Vasishtha, Bodhayana, Vishnu,<br />
Manu,Yagyavalkya, <strong>and</strong> Narada. They all devote some <strong>of</strong> their chapters<br />
to discussions <strong>of</strong> political subjects like the duties <strong>of</strong> kings, public<br />
finance, civil <strong>and</strong> criminal laws, <strong>and</strong> judicial procedure. These chapters<br />
are <strong>of</strong> inestimable value to the student <strong>of</strong> ancient Political Economy.<br />
(Banerji, 1916 : 4) In Yagyavalkya-smriti economic topics on wage,<br />
rent, interest, partnership, ownership <strong>of</strong> property, <strong>and</strong> anti monopoly<br />
regulations are found. But Ideas <strong>of</strong> Political Economy in Manu-smriti5 are more mature than anyother <strong>of</strong> Smritis. After making a comparison<br />
between Manu-smrit <strong>and</strong> <strong>Kautiliya</strong> Arthashastra Gautam concluded that<br />
<strong>Kautiliya</strong> Arthashastra is only a revised version <strong>of</strong> Manu-smriti.<br />
(Gautam, 2009) Some economic ideas <strong>of</strong> Manu-smriti are as follows-<br />
• Divine Theory <strong>of</strong> state<br />
• Taxes to the king are his remuneration for keeping law <strong>and</strong> order<br />
• Taxes are fixed by rules<br />
• Beside cash taxes labour taxes were taken<br />
• The council <strong>of</strong> ministers shall have a minister for finance<br />
• Fixed percent <strong>of</strong> pr<strong>of</strong>it is allowed to the traders<br />
• Compound interest is not permissible<br />
The Puranas appear to be works which were originally<br />
composed for the purpose <strong>of</strong> giving instruction to the less advanced<br />
sections <strong>of</strong> the community in all matters concerning this world <strong>and</strong> the<br />
next. Their great value from the historical st<strong>and</strong>point lies in the fact<br />
that they contain a considerable amount <strong>of</strong> genuine historical tradition<br />
<strong>and</strong> preserve more or less correct lists <strong>of</strong> the various dynasties <strong>of</strong><br />
kings who ruled in Aryawarta from the earliest times until towards the<br />
close to the Hindu period in the history. (Banerji, ibid, 5) Agni Purana<br />
treats <strong>of</strong> Public Finance in considerable detail. Similarly Matsya Purana<br />
deals with Political Economy.<br />
Ramayana <strong>and</strong> Mahabharata<br />
The Ramayana <strong>and</strong> the Mahabharata are not historical works<br />
in the modern sense <strong>of</strong> the term ; but they give us a graphic <strong>and</strong> fairly<br />
accurate picture <strong>of</strong> the life <strong>of</strong> the Aryas. The stories found in these<br />
Epics are largely based on real occurrences, <strong>and</strong> although the main<br />
themes <strong>of</strong> the Epics are the wars <strong>of</strong> the heroes, both <strong>of</strong> these great<br />
works present us with glimpses <strong>of</strong> the Political Economy <strong>of</strong> early<br />
Hindu society. (Banerji, ibid, 3) According to William Monyir the date<br />
<strong>of</strong> Rmayana may be 300 BC but Kieth opines that the date is actually<br />
600 BC. The Political Economy has been described in detail in two<br />
chapters- Kiskindha-K<strong>and</strong> <strong>and</strong> Ayodhya-K<strong>and</strong>. The state in Ramayana<br />
has been described as a combination <strong>of</strong> seven organs- the king, the<br />
ministers, geographical area, capital city, force, <strong>and</strong> friends. Ramayana<br />
suggests that statesman should have a good knowledge <strong>of</strong> Arthashastra<br />
(a loose name <strong>of</strong> <strong>Economics</strong>).<br />
CV Vaidya opines that Mahbharata has three editions. The first<br />
edition <strong>of</strong> this book was Jaya <strong>and</strong> was presented by Vyas. The second<br />
edition <strong>of</strong> the book was Bharta Samhita <strong>and</strong> it was presented by Sauti.<br />
Finally Vaishampayana revised it in the present form <strong>of</strong> Mahabharata.<br />
(Vaidya, 1905, Chap 1-2) The number <strong>of</strong> slokas <strong>of</strong> the first edition<br />
3 4
was 8800 but at present it consists <strong>of</strong> 100 thous<strong>and</strong>s slokas distributed<br />
in 100 chapters.<br />
In the Mahabharata, a mythical account is given for the origin<br />
<strong>of</strong> the Science <strong>of</strong> Political Economy.According to the legend, Brahman<br />
composed by his own intelligence a treatise consisting <strong>of</strong> a hundred<br />
thous<strong>and</strong> slokas. Its name was Paitamaha Tantra. In it were treated the<br />
subjects <strong>of</strong> dharma- right conduct, artha- wealth, <strong>and</strong> kam- pleasure. A<br />
large portion <strong>of</strong> it was devoted to the Science <strong>of</strong> Governance, that is to<br />
say, the growth, conservation, prosperity <strong>and</strong> destruction <strong>of</strong> states. It<br />
was first studied by Shiva <strong>and</strong> abridged by him for the benefit <strong>of</strong> mankind.<br />
Further abridgments were made by Indra, <strong>Brihaspati</strong>, <strong>Shukra</strong>, <strong>and</strong> others<br />
respectively.(Banerji, 1969: 3n) From the view point <strong>of</strong> <strong>Economics</strong><br />
following discussions are useful (Bokare, 2009:91)-<br />
• The king is responsible to protect <strong>and</strong> promote livelihood<br />
<strong>of</strong> the citizens.<br />
• The state should build roads, drinking water facilities <strong>and</strong><br />
other social service activities.<br />
• Academic institutions should be sustained by charities<br />
by the government.<br />
• The state should promote market places.<br />
• If there is partnership in work, pr<strong>of</strong>it or loss should be equally<br />
shared. Liabilities also shared equally.<br />
• The collection <strong>of</strong> tax is necessary for the welfare <strong>of</strong> people.<br />
<strong>Brihaspati</strong>-sutra<br />
<strong>Brihaspati</strong> is also known as Guru, Vachaspati, <strong>and</strong> Angiras.<br />
The only historical source about the information <strong>of</strong> <strong>Brihaspati</strong> is Kautilya<br />
Arhashastra. For detail information about <strong>Brihaspati</strong> <strong>and</strong> his Artha-<br />
sutra we depend on the stories explained in Mahabhrata <strong>and</strong> in various,<br />
Puranas. Bhoja in his Yuktikalpataru (11 th century AC) while referring<br />
to the Niti literature says that <strong>Brihaspati</strong> <strong>and</strong> Ausanas are two reverend<br />
teachers 6 . Ashvaghosha in his Buddha Charita (about first century<br />
AC) has remarked about <strong>Brihaspati</strong>. (<strong>Brihaspati</strong>-sutra, 1929: 3) The<br />
well-known Kamasutras <strong>of</strong> Vatsyayana refers to <strong>Brihaspati</strong> as the<br />
compiler <strong>of</strong> Arthashastra. (ibid) 7 Bhasa refers to a Barhaspatya<br />
Arthashastra in his play named Pratima 8 . So we know that the<br />
Barhspatya Shastra claims a great antiquity in the history <strong>of</strong> Hindu<br />
literature 9 . (ibid) Three compilations are known in the names <strong>of</strong><br />
<strong>Brihaspati</strong>- <strong>Brihaspati</strong>-smriti, <strong>Brihaspati</strong>-samhita, <strong>and</strong> <strong>Brihaspati</strong>-sutra.<br />
The Smriti <strong>of</strong> <strong>Brihaspati</strong> was also in verses but that work is, however,<br />
lost now. The small collection <strong>of</strong> some slokas which is generally called<br />
the <strong>Brihaspati</strong>-smriti is available but it is a child’s play as compared<br />
with the Barhaspatya shastra referred to in the Mahabharata. Pr<strong>of</strong>.<br />
Julius Jolly collected fragments <strong>of</strong> <strong>Brihaspati</strong> Smriti from different law<br />
books <strong>and</strong> their commentaries but these fragments are also incomplete.<br />
(ibid: 7) The other treatise connected with the name <strong>of</strong> <strong>Brihaspati</strong> is<br />
the Barhaspatya Samhita. We find it <strong>of</strong>ten quoted in other different<br />
books 10 . It is in the form <strong>of</strong> a dialogue between Nahusha <strong>and</strong> <strong>Brihaspati</strong>.<br />
The work is in the mixed style <strong>of</strong> prose <strong>and</strong> verse. This Samhita also,<br />
as is apparent from the numerous quotations in the above mentioned<br />
work, bears no connection with the present sutras. (ibid: 9)<br />
Another work <strong>of</strong> <strong>Brihaspati</strong> is <strong>Brihaspati</strong>-sutra. The present<br />
Brihasaptai sutras even if they do, possess but a very remote connection<br />
with the Barhaspatya Arthashastra. These sutras may only here <strong>and</strong><br />
there contain a view <strong>of</strong> the old Barhaspatya School. As regards the<br />
date <strong>of</strong> this work, nothing can be said with certainty. This much<br />
however, is certain that the work is not anterior to the sixth or seventh<br />
century AC. (ibid: 9)<br />
5 6
Content <strong>of</strong> <strong>Brihaspati</strong>-sutra<br />
The present collection <strong>of</strong> <strong>Brihaspati</strong>-sutra is a small collection<br />
having 445 sutras only. The first chapter having 112 sutras deals with<br />
the personal conduct <strong>of</strong> the ruler. The 75 sutras <strong>of</strong> the second chapter<br />
deal with duties, principles <strong>and</strong> descriptions. The 148 sutras <strong>of</strong> third<br />
chapter deal with knowledge <strong>and</strong> descriptions <strong>of</strong> different cults, <strong>and</strong><br />
various countries in Aryavarta. The 51 sutras <strong>of</strong> fourth chapter deal<br />
with omens <strong>and</strong> counsels, <strong>and</strong> chapter five deals with different methods<br />
for a ruler or upayas to the rulers. The last chapter-chapter six is<br />
miscellaneous in character. Chapter division <strong>and</strong> number <strong>of</strong> sutras is<br />
given in table 1.1.<br />
Table 1.1. Chapter Divisions in <strong>Brihaspati</strong>-sutra<br />
Chapter Description Numbers<br />
One Personal conduct 112<br />
Two Duties <strong>and</strong> principles 75<br />
Three Vidya- Knowledge 148<br />
Four Omens <strong>and</strong> counsels 50<br />
Five Upaya 30<br />
Six Naya 30<br />
Total 445<br />
Source: Brihasapti-sutra, 1929<br />
<strong>Shukra</strong>-niti<br />
It is very hard to explain the historical facts <strong>and</strong> facet <strong>of</strong><br />
<strong>Shukra</strong>. The only fact is <strong>Shukra</strong>-niti. It is a full scale comprehensive<br />
book on Political Economy. The description <strong>of</strong> Mahabharata <strong>and</strong> other<br />
books provide information about <strong>Shukra</strong>. He is known as the teacher<br />
<strong>of</strong> Anti-Gods. His other names are- Bhargava, Usana, <strong>and</strong> Asur-Guru.<br />
According to the legend <strong>of</strong> Mahabharata the name <strong>Shukra</strong> <strong>and</strong> his<br />
highest place was given to him by Lord Shiva.<br />
The date <strong>of</strong> <strong>Shukra</strong>-niti is estimated to be 400-500 BC but its<br />
present form was fixed in 1700 AC. According to Mahabharata the<br />
numbers <strong>of</strong> slokas in <strong>Shukra</strong>-niti is 1000 but the author <strong>of</strong> <strong>Shukra</strong>-niti<br />
states himself that the total number <strong>of</strong> slokas are 2200. It is to note<br />
that present collections <strong>of</strong> <strong>Shukra</strong>-niti have more than 2500 slokas.<br />
Oppert’s collection is regarded as the most perfect than others. Nepalese<br />
translation <strong>of</strong> <strong>Shukra</strong>-niti is based on Oppert’s collection.<br />
Content <strong>of</strong> <strong>Shukra</strong>-niti<br />
1. The first chapter contains the theory <strong>of</strong> state, duties <strong>and</strong><br />
liabilities <strong>of</strong> a king, sovereignty, unity, indivisibility <strong>of</strong> state,<br />
seven organs <strong>of</strong> a state, gazette, decision making techniques<br />
town planning etc.<br />
2. Subordinate organs <strong>of</strong> state cabinet <strong>of</strong> ministers, laws <strong>of</strong><br />
administrations qualification <strong>of</strong> ministers, chief <strong>of</strong> army, tax<br />
collector, <strong>and</strong> treasurer.<br />
3. Civil laws, economic <strong>and</strong> social activity, <strong>and</strong> the best<br />
pr<strong>of</strong>essions for social life.<br />
4. Fourth chapter has seven units. First unit contains the<br />
description <strong>of</strong> friends <strong>of</strong> state, Second unit contains method<br />
to increase the government fund, its accounting. Third unit<br />
contains education system. Fourth <strong>and</strong> fifth contains social<br />
<strong>and</strong> legal system, <strong>and</strong> sixth unit contains security system whereas<br />
seventh units contains attack <strong>and</strong> treaty with other states.<br />
5. Fifth chapter contains the remaining policies <strong>of</strong> the state.<br />
In comparison to classical economists Smith <strong>and</strong> Ricardo,<br />
<strong>Shukra</strong> used the term Political Economy in his definition. From the<br />
7 8
view point <strong>of</strong> modern economics following subject matter is <strong>of</strong> utmost<br />
importance-<br />
1. Economic activity<br />
2. Price determination<br />
3. Tax collection, use <strong>and</strong> accounting<br />
4. Qualification <strong>of</strong> the treasurer<br />
5. Adulteration <strong>and</strong> remedial measures<br />
6. Business activities<br />
7. Banking activities<br />
Kautilya’s Arthashastra<br />
The most influencial <strong>of</strong> all is <strong>Kautiliya</strong> Arthashastra. It is one<br />
<strong>of</strong> the great books <strong>of</strong> political thought, ... on each reader it leaves its<br />
mark, a chill as when a dark cloud blocks a warm sun. (Boesche,<br />
2002:1) This treatise is an exposition on statecraft, economic policy<br />
<strong>and</strong> military strategy which identifies its author by the name Vishnugupta<br />
Chanakya, who is traditionally identifies with Kautilya or Kautalya (about<br />
400-300 BC), a renowned Pr<strong>of</strong>essor <strong>of</strong> Arthashastra at Taxila<br />
Univerisity. According to him the numbers <strong>of</strong> sutras is 6000 but present<br />
collections consist <strong>of</strong> 4800 sutras <strong>and</strong> 380 slokas. Therefore 10 percent<br />
<strong>of</strong> the matter is missing.<br />
The book is divided into 15 Departments or Books known as<br />
Adhikarana. The First Five Books deal with tantra, or the internal<br />
administration <strong>of</strong> the state, the next Eight Books define its relation with<br />
neighbouring states while the last Two Books are miscellaneous in<br />
character.<br />
There is controversy in the date <strong>and</strong> authorship <strong>of</strong> ancient<br />
treatises whether it is <strong>Kautiliya</strong> Arthashastra or <strong>Brihaspati</strong> Artha-sutrra<br />
9<br />
or <strong>Shukra</strong>-niti. Thomas R Trautmann <strong>and</strong> I W Mabbette agree that<br />
Arthashastra is a composition from no earlier than the second century<br />
AC, but based on earlier materials. Thomas Burrow goes even further<br />
<strong>and</strong> says that Chanakya <strong>and</strong> Kautilya are actually two different people.<br />
(Wikipedia, 2009) The controversy about the date <strong>of</strong> this work has<br />
revived by Pr<strong>of</strong>. Jolly. He has pronounced that the work to be a piece<br />
<strong>of</strong> forgery <strong>of</strong> about the third century AC. (Jayasawal, Appendix) Jolly’s<br />
conclusion is that the real author was a theoretician, no statesman but<br />
perhaps an <strong>of</strong>ficial in a state <strong>of</strong> medium size. According to Jolly, the<br />
ascription <strong>of</strong> the work to Kautilya or Chanakya was entirely due to the<br />
myths currently regarding that fabulous minister who was looked upon<br />
as the master <strong>and</strong> creator <strong>of</strong> the art <strong>of</strong> polity <strong>and</strong> as the author <strong>of</strong> all the<br />
floating wisdom on the subject <strong>of</strong> Niti, but Jayasawal has presented<br />
some evidences from the Arthashastra which are compatible only with<br />
the fourth century BC. (Jayasawal, 1978: Nehru, 1985: 46, Kautilyako<br />
Arthashastra, 1967: c)<br />
Although the original work is very old, it was obtained by<br />
Shyamashastry, the then librarian <strong>of</strong> Bh<strong>and</strong>arkar Oriental Library, in<br />
1905 by a Brahman <strong>of</strong> Mysore. He edited <strong>and</strong> published it in 1909 at<br />
first. Subsequently, the English translation <strong>of</strong> the Arthashastra by<br />
Shyamashastry was published in 1915. Second <strong>and</strong> third editions <strong>of</strong><br />
this translation were published in 1923 <strong>and</strong> 1927 respectively.<br />
Mahamahopadhyay T Ganapatashstri provided laudable service by<br />
translating the original text into Sanskrit in 1924-25. Kalyanev translated<br />
it into Russian language in 1959 <strong>and</strong> Vachaspati Gairola translated it in<br />
Hindi in 1962-63. R P Kangle edited the Sanskrit text, translated in<br />
English <strong>and</strong> wrote the commentary during 1960-65 in three volumes.<br />
Nepali Translation was presented by K R Aryal in 1967, <strong>and</strong> L N<br />
Rangrajan rearranged <strong>and</strong> edited it in 1992.<br />
10
In the very beginning <strong>of</strong> the treatise Kautilya pays respect to<br />
two <strong>of</strong> his teachers <strong>Shukra</strong> <strong>and</strong> <strong>Brihaspati</strong>. Kautilya quotes some 112<br />
scholars in the text. In 25 <strong>of</strong> these opinions are attributed to schools<br />
<strong>of</strong> the shastra, namely, the Barhaspatya (in six places), the Ausanas<br />
(in seven places), the Manavas (in five places) the Parasaras (in six<br />
places), <strong>and</strong> the Ambhiyas (in one). In 28 places the opinions are<br />
ascribed to individual teachers, Bhardwaj (seven times), Vishalaksha<br />
(seven times), Pisuna (five times), Kaunapadanta (four times), <strong>and</strong><br />
Bahudantiputra (once), in remaining 59 cases the opinions are attributed<br />
to Acharyas- the teachers. A term referring to most or all <strong>of</strong> these<br />
predecessors; twice we have the some used once, Apare- others.<br />
(<strong>Kautiliya</strong> Arthashastra- 3, 2003 : 42) A list <strong>of</strong> ancient scholars is<br />
given in the table. 1.2<br />
Table 1.2. Schools <strong>and</strong> Thinkers <strong>of</strong> Arthashastra<br />
Manava Barhaspatya Ausanas<br />
Bhardwaj-Drona Vaisalaksa Parasar<br />
Pisuna Kaunapadanta Vatvyadhi<br />
Bahudantiputra Vatsyayan Karnika Bhardwaj<br />
Charayana Ghotmukha Kinjalka<br />
Pisuna-Putra Ambhiyas Unknown<br />
Source: Jayasawal, 1978 : 4<br />
Besides these persons there are many other thinkers whose<br />
contribution has been given high importance in ancient times. For<br />
example, in Aswalayana Grihya sutra a name is found- Aditya, who<br />
was thought <strong>of</strong> a great scholar <strong>of</strong> his time. (Jayasawal, 1978:4)<br />
11<br />
Arthashastra after Kautilya<br />
Jayasawal opines that the tradition <strong>of</strong> Arthashastra continued<br />
after Kautilya <strong>and</strong> Kam<strong>and</strong>ak also, who was a statesman <strong>and</strong> a pupil <strong>of</strong><br />
Kautilya. In this tradition, he opines, the most valuable work is<br />
Nitivakyamrit <strong>of</strong> a Jain Scholar Somdev Suri. The date <strong>of</strong> the manuscript<br />
<strong>of</strong> this books is estimated by Jayasawal as 1463 in the reign <strong>of</strong> Sultan<br />
Bahalol Lodi. In this book 31 scholars have been cited all are related<br />
with the Arthashastra School. Out <strong>of</strong> 31 there is found the names <strong>of</strong><br />
20 authors whose names are not to be found in any other places.<br />
Probably they are all later than Kautilya <strong>and</strong> Kam<strong>and</strong>ak. (Jayasawal,<br />
1978: 8-14) Gairola supports this view <strong>of</strong> Jayasawal in his translation<br />
<strong>of</strong> Rajnitiratnakar. It is one <strong>of</strong> the important books written in the tradition<br />
<strong>of</strong> <strong>Kautiliya</strong> Arthashastra. The author <strong>of</strong> this book, Acharya<br />
Ch<strong>and</strong>eswor- was a minister in the state <strong>of</strong> Mithila in the times <strong>of</strong><br />
Harisimha Deva. In this treatise he has quoted 16 names in his book.<br />
Among them Kulluk Bhatta, Shrikar <strong>and</strong> Laxmidhar are new ones.<br />
(Rajnitiratnakar <strong>of</strong> Ch<strong>and</strong>eshwor, 1969: 20-25) According to<br />
Jayasawal <strong>and</strong> Gairola during Moghul <strong>and</strong> large part <strong>of</strong> the British rule<br />
the importance <strong>of</strong> this subject gradually diminished. (Jayasawal, Ibid;<br />
<strong>Kautiliya</strong> Arthashastram, 1960: 71-73)<br />
Boudha <strong>and</strong> Jaina Scriptures<br />
Boudha scriptures provide the detail information about political<br />
<strong>and</strong> economic conditions in ancient period. Lord Buddha’s discourses<br />
are collected in three Pitakas- Sutta, Abhidhamma <strong>and</strong> Vinaya. Jatak<br />
stories provide information about administration, trade, <strong>and</strong> pr<strong>of</strong>essions<br />
in ancient period.Vardhaman Mahabir is the founder Jainism. His<br />
thoughts are scattered in different scriptures known as Anga, Upanga,<br />
12
Painna, Mula Sutta, N<strong>and</strong>i Sutta <strong>and</strong> Laya Sutta. Jaina Scriptures clearly<br />
defined the difference between the Science <strong>of</strong> Governance <strong>and</strong> the<br />
Science <strong>of</strong> Religion. Boudha Samgha <strong>and</strong> Jaina Samgha both were<br />
granted the state protection. The economic <strong>and</strong> political condition<br />
described in Boudha <strong>and</strong> Jaina scriptures is very much similar to each<br />
other.<br />
Mainstream <strong>Economics</strong><br />
The English word economics has been derived from the Greek<br />
word Oikonomia meaning management <strong>of</strong> household administration.<br />
This word was used by Greek philosopher Aristotle (384-323 BC) at<br />
first. Other Greek thinkers are Xenophone (430-355 BC) <strong>and</strong> Plato<br />
(428-348 BC) who were the disciples <strong>of</strong> Socrates. Adam Smith's book<br />
Wealth <strong>of</strong> Nations (1776) is the first book <strong>of</strong> modern economics. He<br />
borrowed his ideas from Mercantilists <strong>and</strong> Physiocrats.Classical<br />
economists Ricardo, Malthus, J B Say, <strong>and</strong> J S Mill <strong>and</strong> Neo-classical<br />
economist Marshall followed his ideas. After Robbins, modern<br />
discussions on economic theories were started. Marxian stream <strong>of</strong><br />
economics is known as Socialism. Keynesian stream is known as<br />
Macroeconomics. However, the stream <strong>of</strong> Adam Smith, Alfred<br />
Marshall, <strong>and</strong> J M Keynes is known as the main stream economics.<br />
Notes<br />
1 k[lyJ<strong>of</strong> nfe] kfng] <strong>of</strong>jGToy{zf:qfl0f k"jf{rfo{} M k|:yflktflg k|foz:tflg<br />
;+x[To}sldbdy{zf:q+ s[td\ ..<br />
(This treatise is a compendium <strong>of</strong> almost Arthashastras composed by<br />
ancient teachers on the acquisition <strong>and</strong> protection <strong>of</strong> territory.) <strong>Kautiliya</strong><br />
Arthashastra-1, 2003, 1.1.1<br />
2 tq CUj]b<strong>of</strong>y{zf:qd'kj]bM ..===<br />
(That is the branch <strong>of</strong> Rig-Veda is Arthashastra.) Atharva. 49.3<br />
3 j]bfgfd'kj]bfZrTjf/f] ejlGt .====cyj{j]b:o cy{zf:qd\ .<br />
(Four are the branches <strong>of</strong> Vedas. Arthashastra is <strong>of</strong> the Atharva-Veda.) ibid, ch. 4<br />
4 :joDe'e{ujfgNnf]sflxtfy{ ;+u|x]0f j} ====.<br />
(God Swayambhu composed it for the welfare <strong>of</strong> the people.) <strong>Shukra</strong>- niti 1.3<br />
5 The date <strong>of</strong> Manu-smriti is estimated by the scholars to be 600 BC or<br />
more. The commentary <strong>of</strong> Manu-smriti by Medhatithi has been estimated<br />
by Maxmuller as 1 AC.<br />
6 gLlta{ [x:kltk|f{ ]Qmf ty}jf}zg;Lk/f .<br />
pe<strong>of</strong>]/lj?4fq lg?K<strong>of</strong> gLlt?Qdf ..<br />
(The best policies have been composed by the two- <strong>Brihaspati</strong> <strong>and</strong><br />
<strong>Shukra</strong> from two opposite sides.)Yuktikalpataru cited in <strong>Brihaspati</strong> -<br />
sutra, 1921:2<br />
7 a[x:kltZ˜yf{lwsfl/sd\ .<br />
(The author <strong>of</strong> Arthashastra is <strong>Brihaspati</strong>.) Kam-sutra, 1.7 cited in<br />
<strong>Brihaspati</strong>-sutra, 1929: 2<br />
8 /fj0f– fj0f– sfZokuf]qf]˜l:d ;f+uf]kf+uj]bdwLo], dfgjLo+ wd{zf:q+, dfx]Zj/+ <strong>of</strong>]uzf:q+,<br />
afx{:kTody{zf:q+, d]wfltlyG<strong>of</strong>{ozf:q+, k|fr]t;] >f4sNk+ r .<br />
(Rawana says- I have studied Veda, Manu’s Dharma-Shastra,<br />
Maheshwor’s Yogashatra, Barhaspatya’s Arthashastra, Medhatithi’s<br />
Nyayashastra, Prachetas’s Shradh-Kalpa.) Pratima Natak. 79 cited in<br />
<strong>Brihaspati</strong>-sutra, ibid<br />
9Some <strong>of</strong> the mantras that describe the relationship between <strong>Brihaspati</strong><br />
<strong>and</strong> Arthashastras are as followsafx{:kTo]<br />
r zf:q] j} Znf]sf ljlgotfM k"/f ..===<br />
(For the support <strong>of</strong> your argument the Science <strong>of</strong> <strong>Brihaspati</strong> provides<br />
logics...) Mahbharata Shanti Parva, 2003, 56.36<br />
a[x:kt]d{t+ /fhGgwLt+ ;sn+ Tj<strong>of</strong> .<br />
ty}jf}zg;+ zf:q+ lj1ft+ t] g/f]Qd ..<br />
(O, the best among kings, you have studied views <strong>of</strong> <strong>Brihaspati</strong> <strong>and</strong> <strong>of</strong><br />
<strong>Shukra</strong>…) ibid, 122.11<br />
10 In Gaja Lakshana Prakarana or in Bir Charitram.<strong>Brihaspati</strong>-sutra, 1929:9<br />
13 14
CHAPTER TWO<br />
DEFINITIONS AND METHODS OF ORIENTAL<br />
ECONOMICS<br />
Introduction<br />
Adam Smith, the father <strong>of</strong> modern economics named his book<br />
as Wealth <strong>of</strong> Nations. In the 18th <strong>and</strong> 19th century the content <strong>of</strong> this<br />
book was given thename <strong>of</strong> Political Economy. Different scholars tried<br />
to use different technical titles to denote the subject matter <strong>of</strong><br />
<strong>Economics</strong>. 1 (Seth, 1971: 1) Now a day <strong>Economics</strong> is a broad name<br />
<strong>of</strong> the subject matter which denotes, price theory, income theory,<br />
government finanance <strong>and</strong> economic growth. The scope <strong>of</strong> this subject<br />
is growing faster, therefore, the tools <strong>of</strong> economic analysis are being<br />
applied throughout society, not only in business <strong>and</strong> finance but also in<br />
crime, education, the family, health, law, politics, religion, social<br />
institution, <strong>and</strong> war. (Wikipedia, 2009) This new trend <strong>of</strong> economics<br />
also support the wide subject matter <strong>of</strong> <strong>Kautiliya</strong> Arthashastra.<br />
In this chapter we shall analyze the different uses <strong>of</strong> the word<br />
Arthashastra (a parallel word to economics). At the same time we shall<br />
compare the definitions <strong>of</strong> Kautilya <strong>and</strong> <strong>Shukra</strong> with the definitions <strong>of</strong><br />
Marshall's <strong>and</strong> Robbins's definitions <strong>of</strong> <strong>Economics</strong>. At the end <strong>of</strong> the<br />
chapter we shall examine the methodology <strong>of</strong> oriental economics.<br />
15<br />
Different uses <strong>of</strong> the Word in the Past<br />
In ancient times Arthashastra <strong>and</strong> D<strong>and</strong>a-niti were used<br />
interchangeably. Therefore, <strong>Brihaspati</strong> calls this subject as Arthashastra<br />
but another teacher <strong>Shukra</strong> prefer to call it D<strong>and</strong>aniti.<br />
(Mudrarakshas : 1, cited by Agarwal, 1997:7) In Mahabharata this<br />
subject was known as Rajdharmanushasan or Science <strong>of</strong> Political Ethic.<br />
(Mahabharata Shanti Parva, 2003, 12.58) In Amarkosh, other words<br />
for Arthashastra are the Philosophy, the Science <strong>of</strong> Law <strong>and</strong> Order,<br />
<strong>and</strong> the Science <strong>of</strong> Logic2 . Although, the literal meaning <strong>of</strong> Arthashastra<br />
is the Science <strong>of</strong> Wealth but more <strong>of</strong>ten rendered as Science <strong>of</strong> Politics<br />
by the analyst.<br />
Different authors have translated the Sanskrit word Arthashastra in<br />
different ways. A few examples are listed below-<br />
• A treatise to help king in the acquisition <strong>and</strong> protection <strong>of</strong> the<br />
earth. (<strong>Kautiliya</strong> Arthshastra-3, 2003: 3)<br />
• A treatise on polity. (Basham: 51, cited by Boesche, 2003: 1-27 )<br />
• A science <strong>of</strong> material gain. (Kosambi: 14, cited by Boesche, ibid)<br />
• Universal laws on politics, economics, diplomacy, <strong>and</strong> war.<br />
(Zimmer: 36, cited by Boesche, ibid)<br />
• A science <strong>of</strong> political economy. (Boesche, 2003: 27)<br />
• The code <strong>of</strong> common wealth. (Jayasawal, 1978: 5)<br />
• The science <strong>of</strong> polity. (Kautilya's Arthashastra,1967, 15.1)<br />
• The science <strong>of</strong> wealth <strong>and</strong> welfare. (Rangrajan, 1992: 100)<br />
The comment <strong>of</strong> Sen <strong>and</strong> Basu is interesting- While the Sanskrit<br />
translation <strong>of</strong> the word <strong>Economics</strong> is Arthashastra, the English translation<br />
<strong>of</strong> Arthashastra cannot be <strong>Economics</strong>, as it contains concepts which<br />
go beyond the scope <strong>of</strong> economics as understood by western economic<br />
thinking. (Sen <strong>and</strong> Basu, 2006: vii)<br />
16
Kautilya's Definition-<br />
The definition <strong>of</strong> Arthashastra given by Kautilya is as followsdg'i<strong>of</strong>0ff+<br />
j[lQ/y{M. dg'iojtL e"ldl/Toy{M . t:<strong>of</strong>M nfekfngf]kfoM<br />
zf:qdy{zf:qldlt .<br />
Manusyanam vrittirarthah. Manusyawati bhumirityarthah.<br />
Tasya labhapalanaopayashastram Arthashastramiti.<br />
<strong>Kautiliya</strong> Arthashastra-1, 2003: 15.1.180<br />
Different translations <strong>of</strong> the this definition are given below-<br />
Shyamashastry- The subsistence <strong>of</strong> mankind is termed Arthawealth;<br />
the earth which contains mankind is also termed Artha- wealth;<br />
that science which treats <strong>of</strong> the means <strong>of</strong> acquiring <strong>and</strong> maintaining<br />
the earth is the Arthashastra- Science <strong>of</strong> Polity. (Kautilya's<br />
Arthashastra, ibid)<br />
Rangrajan- The source <strong>of</strong> the livelihood <strong>of</strong> men is Artha<br />
(wealth), that is to say, the territory (<strong>and</strong> the inhabitants following<br />
various pr<strong>of</strong>essions) is the wealth (<strong>of</strong> a nation). The science by which<br />
territory is acquired <strong>and</strong> maintained is Arthashastra- the Science <strong>of</strong><br />
Wealth <strong>and</strong> Welfare. (Rangrajan, ibid)<br />
SK Srivastava- Arthashastra is the science that deals with<br />
the acquisition <strong>and</strong> growth <strong>of</strong> the wealth <strong>of</strong> the state. (Srivastava,<br />
1981: 574)<br />
The translations above are focused in the following subject<br />
matter-<br />
1.Human pr<strong>of</strong>ession is economic activity.<br />
2.L<strong>and</strong> use for agriculture <strong>and</strong> settlements is the source <strong>of</strong><br />
income for individual as well as for state.<br />
3.<strong>Economics</strong> is the study which treats the methods <strong>of</strong> getting<br />
return from these sources <strong>and</strong> concerns itself with the increase<br />
<strong>of</strong> sources.<br />
17<br />
<strong>Shukra</strong>'s Definition-<br />
The definition <strong>of</strong> Arthashastra given by <strong>Shukra</strong> is as follows-<br />
>'lt:d[lt clj/f]w]g /fhj[Qflb zf;gd\ .<br />
;'o'ST<strong>of</strong> cyf{h{g+ oq x\oy{zf:qd\ tb'Rot] ..<br />
Shruti smriti avirodhen rajvrittadi shasnam.<br />
Suyuktyartharjanam yatra hyarthashastram taduchyate.<br />
<strong>Shukra</strong>-niti 4.3.37.<br />
Arthashastra is the science which examines the actions <strong>and</strong><br />
administrations <strong>of</strong> state, in accordance with the dictates <strong>of</strong> revelation<br />
(Veda) <strong>and</strong> <strong>of</strong> laws (Smriti) as well as the means <strong>of</strong> appropriate livelihood.<br />
This definition focuses itself on the following points-<br />
1. Economic activity should not contrast tradition,<br />
belief <strong>and</strong> laws <strong>of</strong> society.<br />
2. <strong>Economics</strong> is also related with political administration.<br />
3. The earnings <strong>of</strong> wealth should be to get the optimum level<br />
<strong>of</strong> returns.<br />
Thus according to Katuilya, Arthashastra is a study <strong>of</strong> material<br />
well being <strong>and</strong> according to <strong>Shukra</strong>- Arthashastra is the study <strong>of</strong><br />
economic <strong>and</strong> political behavior <strong>of</strong> human beings within the boundaries<br />
<strong>of</strong> Shruti <strong>and</strong> Smriti.<br />
Definition <strong>of</strong> Marshall <strong>and</strong> Robbins<br />
Although there are many definitions (many more than any other<br />
science according to economists Barbara Wootten) <strong>of</strong> <strong>Economics</strong> but<br />
the leading definitions are two. These are as follows-<br />
Marshall's Definition- Political Economy or <strong>Economics</strong>, is<br />
a study <strong>of</strong> mankind in the ordinary business <strong>of</strong> life, it examines that<br />
part <strong>of</strong> individual <strong>and</strong> social action which is most closely connected<br />
with the attainment <strong>and</strong> with the use <strong>of</strong> the material requisites <strong>of</strong> well<br />
being. (Marshall, 1890: 1)<br />
18
The main points <strong>of</strong> Marhsall's definition are as follows-<br />
1. <strong>Economics</strong> is the study <strong>of</strong> individual <strong>and</strong> social action.<br />
2. Ordinary business is human pr<strong>of</strong>ession.<br />
3. Closely connected with material requisites <strong>of</strong> well being.<br />
Robbins' Definition- <strong>Economics</strong> is the science which studies<br />
human behavior as a relationship between ends <strong>and</strong> scarce means,<br />
which have alternative uses. (Robbins, 1932: 16)<br />
The main points <strong>of</strong> Robbins' definition are as follows-<br />
1. <strong>Economics</strong> is the study <strong>of</strong> human (individual <strong>and</strong> social)<br />
behaviour.<br />
2. It is related with scarce means <strong>and</strong> wants.<br />
3. It concentrates itself to the use <strong>of</strong> scarce means.<br />
Table 2.1. Comparison <strong>of</strong> the Definitions<br />
Head Kautilya <strong>Shukra</strong> Marshall Robbins<br />
Economic Human Part <strong>of</strong> Ordinary Wants-means<br />
activity pr<strong>of</strong>ession tradition business relation<br />
Relation Closely Related Not clear Not<br />
with state related mentioned<br />
Focus Material Optimum Material Economizing<br />
prosperity production welfare resources<br />
Economic Mentioned Implicit Not clear Ignored<br />
growth<br />
Comparison <strong>of</strong> the Definitions<br />
The comparison <strong>of</strong> oriental <strong>and</strong> occidental definitions <strong>of</strong><br />
economics is presented in the table 2.1. Oriental definitions <strong>of</strong><br />
economics are production oriented. Therefore they stress on economic<br />
growth. Definitions <strong>of</strong> Marshall <strong>and</strong> Robbins are consumption oriented,<br />
19<br />
therefore they are silent about economic growth. All the definitions<br />
are same in the sense that they give emphasis on economic activity in<br />
social life.<br />
Basic Terms <strong>of</strong> Oriental <strong>Economics</strong> <strong>and</strong> its Limitations<br />
Every economic terminology, at present use, has a long<br />
historical background. Factors <strong>of</strong> production (now known as inputs)<br />
were assigned technical names after a very long time since the origin<br />
<strong>of</strong> the subject. Capital was accepted as an indispensable factor <strong>of</strong><br />
production by Jevons at first. Organization/entrepreneur was regarded<br />
another important factor by Marshall. He also tried to separate these<br />
two factors according to their functions.<br />
Robbins was the first person who used the word scarcity in a<br />
new economic sense. Ragnar Frisch used many terms <strong>of</strong> Physical<br />
Sciences in <strong>Economics</strong> with a new perspective. The concept <strong>of</strong><br />
equilibrium <strong>of</strong> dem<strong>and</strong> <strong>and</strong> supply opened new doors to the use <strong>of</strong><br />
equations in <strong>Economics</strong>. The recent concept <strong>of</strong> marginal approach<br />
took several years to be developed in terms <strong>of</strong> derivative (Barla, 1997:<br />
36-38). Now a day derivatives <strong>and</strong> functions are the common tools <strong>of</strong><br />
optimization theories in economics. The concept <strong>of</strong> depression that<br />
was introduced in 1930 as lack <strong>of</strong> effective dem<strong>and</strong> by Keynes, was<br />
redefined as lack <strong>of</strong> liquidity by modern economists in 2007. Therefore<br />
every technical term <strong>and</strong> concept, which is very common to the student<br />
<strong>of</strong> economics today, has its long, unique <strong>and</strong> interesting historical<br />
background.<br />
Terminology <strong>of</strong> Oriental <strong>Economics</strong> also has its interesting<br />
<strong>and</strong> a long historical background. The term Artha3 used in Arthashastra<br />
has 10 meanings in Sanskrit. All the meanings do not matxch with the<br />
20
subject matter <strong>of</strong> Econmics. Some other terminologies used by Kautilya<br />
<strong>and</strong> his contemporary economists later became obsolete. Some words<br />
changed their meanings <strong>and</strong> started to be used in a different sense<br />
according to the change <strong>of</strong> socio-political situations. Therefore we<br />
cannot say exactly what their proper meaning was at Kautilya period.<br />
According to Shyamashastry, the text consists <strong>of</strong> some obsolete words<br />
<strong>and</strong> some words violate the rules <strong>of</strong> Panini, the great Sanskrit<br />
grammarian. (Sen <strong>and</strong> Basu, 2003: 10)<br />
Another point that is to be regarded is that the socio-economic<br />
conditions <strong>of</strong> ancient times were quite different in comparison to modern<br />
times. Due to progress in science <strong>and</strong> technology we are using new<br />
<strong>and</strong> more technical words in <strong>Economics</strong>. Therefore their discussions<br />
are general in nature.<br />
Methodology <strong>of</strong> Oriental <strong>Economics</strong><br />
The 15th part <strong>of</strong> the book- Tantrayukti, in a single chapter<br />
illustrates the various stylistic devices used to elucidate a scientific<br />
subject along with the definition <strong>of</strong> Arthashastra. Tantra means a science<br />
<strong>and</strong> yukti means methods. Thus these methods are related with methods<br />
<strong>of</strong> Oriental <strong>Economics</strong>. In this chapter Kautilya explains about the<br />
mythology that is used to complete his thesis.<br />
The medical books used these scientific methods to find<br />
conclusion in the past. The Susrutsamhita- a medical book by Susrut<br />
describes closely allied 32 tantryuktis.The Charakasamhita- another<br />
medical book by Charak enumerates 34 tantrayuktis the two additional<br />
seem to be pratyuchar (repetition), <strong>and</strong> sambhara (possibility).<br />
Tantrayukti was compiled possibly in sixth century BC to systematize<br />
debates in learned assemblies. It is distinctively stated in the Susrutsamhita<br />
(<strong>Kautiliya</strong> Arthashastra-2, 2003: 312n). The word<br />
tantrayukti has been translated as plan <strong>of</strong> the book by Shyamashastry,<br />
methods <strong>of</strong> science by Kangle, <strong>and</strong> methodology by Rangrajan<br />
(Shyamashastry 1967, 15.1, <strong>Kautiliya</strong> Arthashastra-3, 2003: 312,<br />
Rangrajan, 1992: 100).<br />
In the 15th book Kautilya has described the following methods<br />
to verify his thesis or reject earlier theories-<br />
1. The book or the department <strong>of</strong> the subject- adhikararana, is<br />
a part <strong>of</strong> the total thesis. (<strong>Kautiliya</strong> Arthasastra-1, 2003, 1.1.1)<br />
According to Kangle, the object with respect to which a statement is<br />
made is the topic. For instance- this single (treatise on the) Science <strong>of</strong><br />
Politics is composed mostly by bringing together (the teachings <strong>of</strong>) as<br />
many treatises on the science <strong>of</strong> Politics as have been composed by the<br />
ancient teachers for the acquisition <strong>and</strong> protection <strong>of</strong> the earth. (ibid)<br />
2. A brief description <strong>of</strong> the matter contained in a book is its<br />
content, as, the end <strong>of</strong> learning; association with the aged, control <strong>of</strong><br />
the organs <strong>of</strong> sense, the senses, appointment <strong>of</strong> ministers <strong>and</strong> so on.<br />
(ibid, 1.1.3)<br />
3. Similar facts- yoga, pointing out similar comparable facts<br />
by the researcher is yoga. (ibid, 1.4.16) The arrangement <strong>of</strong> a sentence<br />
is employment (<strong>of</strong> a sentence), for example, the world consisting <strong>of</strong><br />
the four castes <strong>and</strong> the four divisions <strong>of</strong> life <strong>and</strong> the like.<br />
4. Denotative meaning, that which has its limit in the word is<br />
the meaning <strong>of</strong> the word- padartha. (ibid, 2.9.21) For example, mulahar<br />
is the word. He who consumes in unjust ways the property, inherited<br />
from the father <strong>and</strong> the gr<strong>and</strong>father is mulahar in the meaning.<br />
5. The purport <strong>of</strong> a reason, a reason proving a thing is the<br />
reason for (establishing) a thing is called hetvartha. For example, for<br />
charity <strong>and</strong> enjoyment <strong>of</strong> life depend upon wealth. (ibid, 1.7.7)<br />
21 22
6. Expression <strong>of</strong> fact in brief, mention is uddesa, for<br />
example, control over the senses is motivated by training in the<br />
sciences. (ibid, 1.6.1)<br />
7. Explanation <strong>of</strong> a fact, word by word <strong>and</strong> in a clear manner<br />
in detail is nirdesh. For example, absence <strong>of</strong> discrepancy in perception<br />
<strong>of</strong> sound, touch, colour, flavour, <strong>and</strong> scent by means <strong>of</strong> the ear, the<br />
skin, the eyes, the tongue, <strong>and</strong> the nose, is what is meant by restrain <strong>of</strong><br />
organs <strong>of</strong> senses. (ibid, 1.6.2)<br />
8. An advice or guidance such as one should behave in this<br />
manner is updesa. For example, he should enjoy sensual pleasures<br />
without contravening his spiritual good <strong>and</strong> material well being.<br />
(ibid, 1.7.9)<br />
9. When a rule dwelt upon in connection with a question is<br />
said to be a reference or quotation is apadesa. (ibid, 1.15.47-50)<br />
10.Setting forth (a thing) with what is already said (application)<br />
is atidesa. For example, what is said <strong>of</strong> a debt not repaid holds good<br />
with failure to make good a promise gift. (ibid, 1.16.1)<br />
11. Setting forth (a thing) with what is going to be said is<br />
pradesa. For example, by making use <strong>of</strong> such strategic means as<br />
conciliation, bribery, dissention, <strong>and</strong> coercion, as we shall explain in<br />
connection with calamities. (ibid, 7.14.11)<br />
12. Setting forth an unknown fact with help <strong>of</strong> known is<br />
analogy. For example, he should protect those <strong>of</strong> his subjects who<br />
have passed the period <strong>of</strong> remission <strong>of</strong> taxes. (ibid, 2.1.18)<br />
13. What naturally follows from a statement <strong>of</strong> facts, though<br />
not spoken <strong>of</strong> in plain terms, is implication or connotation, arthopatti.<br />
(ibid, 5.4.1)<br />
23<br />
14. A fact with reasons on both sides in doubt or no conclusion<br />
is samsaya. It occurs when the statement <strong>of</strong> a reason is equally<br />
applicable to two cases <strong>of</strong> circumstances. (ibid, 7.5.19)<br />
15. An information common to another topic or to what has<br />
already been specified in connection with another is (similar) situation,<br />
presanga. (ibid, 1.11.10)<br />
16. The inference <strong>of</strong> a reverse statement from a positive<br />
statement is contrary or rejected fact, viparyaya. (ibid, 1.16.12)<br />
17. That by which a sentence is completed is completion.<br />
That portion <strong>of</strong> a sentence which is omitted, though necessary to<br />
convey a complete sense, is ellipsis, vakyasesha. (ibid, 8.1.9)<br />
18. When the opinion <strong>of</strong> another person is stated but not refuted,<br />
it is acceptance <strong>of</strong> that opinion- anumat. For example, Wings, front,<br />
<strong>and</strong> reserve, is the form <strong>of</strong> an array <strong>of</strong> the army according to the<br />
school <strong>of</strong> Usanaa. (ibid, 10.6.1)<br />
19. The description <strong>of</strong> a specialty is emphasizing or<br />
explanation, vyakhya. (ibid, 8.3.64)<br />
20. Stating the derivative sense <strong>of</strong> a word. Deriving the<br />
meaning <strong>of</strong> a word through its components is derived fact, nirvachan.<br />
(ibid, 8.1.4)<br />
21. Exemplifying by means <strong>of</strong> an example is illustration. The<br />
mentioning <strong>of</strong> a fact to illustrate a statement is example,<br />
nidarsana. (ibid, 7.3.3)<br />
22. Taking away from a role <strong>of</strong> universal application or removal<br />
<strong>of</strong> an undesired implication from a statement is exception, apavarga.<br />
(ibid, 9.2.6)<br />
23. Statement which is not used by others as inference in<br />
which they are used by the author is his own technical term or own<br />
inference, svasangya. (ibid, 6.2.13-15)<br />
24
24. A given statement that is to be rejected is prima facie view,<br />
purva-paksha. (ibid, 8.1.7)<br />
25. A statement giving the final view on that is the correct<br />
view, uttar-paksha. (ibid, 8.1.17-18)<br />
26. What is applicable everywhere is invariable rule or that<br />
which is universal in its application is conclusion, ekant. (ibid, 1.19.5)<br />
27. Drawing attention to a later chapter is reference to a<br />
subsequent portion or future statement- anagatavekshana. (ibid,<br />
2.13.28)<br />
28. The statement that it has been already spoken before is<br />
reference to a previous portion,atikrantavekshana. (ibid, 6.1.7)<br />
29. Thus <strong>and</strong> not otherwise is comm<strong>and</strong>, niyoga. For example:<br />
Hence he should be taught the laws <strong>of</strong> righteousness <strong>and</strong> wealth, but<br />
not unrighteousness <strong>and</strong> non-wealth. (ibid, 1.17.33)<br />
30. Either in this way or that is an alternative, vikalpa. (ibid,<br />
3.5.10)<br />
31. Both with this <strong>and</strong> that way are results compounding<br />
together, samuchchaya. (ibid, 3.7.13)<br />
32. That which is to be determined after consideration is<br />
determinable fact, uhya. (ibid,3.16.5)<br />
He has presented examples for each <strong>of</strong> the methods.<br />
Swasangya method has been explained by Kautilya as follows, 'The<br />
school <strong>of</strong> Manu says that a king should make his assembly <strong>of</strong> ministers<br />
with twelve members; the school <strong>of</strong> <strong>Brihaspati</strong> says that it should consist<br />
<strong>of</strong> sixteen members; the school <strong>of</strong> Usans says it should contain twenty<br />
members; but Kautilya holds the view that it should contain as many<br />
members as the need <strong>of</strong> the country requires'.<br />
25<br />
Conclusion<br />
The definitions <strong>of</strong> economics given by Kautilya <strong>and</strong> <strong>Shukra</strong><br />
are production oriented whereas definitions <strong>of</strong> Marshall <strong>and</strong> Robbins<br />
are consumption oriented.<br />
The Tantrayukti Chapter <strong>of</strong> <strong>Kautiliya</strong> Arthashastra explains<br />
methodological steps used to complete a thesis in ancient times at<br />
Taxila University. Although these methods involved 30-36 steps for<br />
testing a hypothesis but Kautilya has used 32 methods to complete his<br />
treatise.<br />
Notes<br />
1 Examples <strong>of</strong> different names used in the past by western scholars are<br />
given below-<br />
Catallactics (Introductory Lecture on Political Economy, 1831) by Arch<br />
Bishop R Whatley,<br />
Plutology (Plutology or The Theory <strong>of</strong> Efforts to Satisfy Wants, 1863)<br />
by William Edward Hearn<br />
Chrematistics (Chrematistics or the Study <strong>of</strong> Wealth) by Ingram<br />
Political Economy (Principles <strong>of</strong> Political Economy) by J S Mill<br />
<strong>Economics</strong> (Principles <strong>of</strong> <strong>Economics</strong>, 1890) by Alfred Marshall<br />
2 cfGjLlIfsL, b08gLlt:ts{ljBfy{zf:q<strong>of</strong>]M.<br />
(Synonyms <strong>of</strong> Arthshastra are Anviksiki- the Philosophy, D<strong>and</strong>anitithe<br />
Science <strong>of</strong> Law <strong>and</strong> Order, <strong>and</strong> Tarksastra- the Science <strong>of</strong> Logic).<br />
Amarkosh (?), 320<br />
3 The Sanskrit word Artha bears differennt synonyms which are as<br />
followsb|Jo+<br />
ljQ+ :jkft]o+ l/Syd[Sy+ wg+ j;' lx/0o+ + b|lj0f+ B'Dgdy{/}ljejf˜lk .<br />
Money, finance, property, prosperity, wealth, means, material goods,<br />
gold, assets, worth, meaning, power, energy . Ibid, 2586<br />
26
Intorduction<br />
The core subject <strong>of</strong> <strong>Kautiliya</strong> Arthshastra, <strong>Shukra</strong>-niti <strong>and</strong><br />
<strong>Brihaspati</strong>-sutra is Varta- <strong>Economics</strong>. Which st<strong>and</strong>s for the three pillars<br />
<strong>of</strong> state prosperity- agriculture, animal farming <strong>and</strong> commerce. Among<br />
these three pillars they have given high priority to agriculture. In this<br />
chapter we shall examine the policies <strong>of</strong> the agriculture development,<br />
practices <strong>of</strong> animal farming <strong>and</strong> policies <strong>of</strong> forest conservation applied<br />
by <strong>Shukra</strong> <strong>and</strong> Kautlya.<br />
Varta- National Economy<br />
CHAPTER THREE<br />
AGRICULTURE AND ANIMAL FARMING<br />
The common word for the economy in ancient times was<br />
Varta. The word varta is derived from vriti or livelihood (<strong>Kautiliya</strong><br />
Arthashastra-3, 2003: 167). But according to Jayasawal vriti is<br />
explained by the following manusyawati. It has therefore to be taken<br />
as vritivartanam. Thus the word Vriti is derived from Vartan- meaning<br />
existence. He opines that Palan has the sense <strong>of</strong> growth not merely<br />
maintenance. (Jayasawal, 1978: 5n) The word palana which is<br />
employed in classical literature to denote the duty <strong>of</strong> the king combines<br />
two elements-seeing to the growth <strong>and</strong> protection in general. The second<br />
27<br />
is a corollary from the first which alone is found in Vedic formula.<br />
Hence policy was directed to keep up <strong>and</strong> develop the varta or national<br />
Economy. In fact it came first in the division <strong>of</strong> the ruler’s duty; <strong>and</strong><br />
this position is quite in conformity with the coronation declaration-<br />
This state, to thee (is given) for agriculture, for well being, for<br />
prosperity; <strong>and</strong> for growth. 1 (Shatapath, 5.2, Yaju., 9.22, cited by<br />
Panthi, 2008:103)<br />
Varta or the National Economy, has been described in the<br />
following words by <strong>Brihaspati</strong>, <strong>Shukra</strong> <strong>and</strong> Kautilyaa.<br />
krisigoraksabanijyani...<br />
s[lifuf]/Ifjfl0fH<strong>of</strong>lg 2 (<strong>Brihaspati</strong>-sutra, 1929, 2.4)<br />
b. Kusdaikrisivanijyam gorakshabartyochyate..<br />
s';Lbs[lifjfl0fHo+ uf]/Iff jft{<strong>of</strong>]Rot] 3 ===(<strong>Shukra</strong>nitisar, 2008, 1.156)<br />
c. Arthanartho vartayam…<br />
cyf{gyf]{ jftf{<strong>of</strong>d\ 4 === (<strong>Kautiliya</strong> Arthashastra-1, 1.2.6)<br />
There are various English translations <strong>of</strong> the word Varta. For<br />
example, Kangle translates it as <strong>Economics</strong> <strong>and</strong> State economy<br />
(<strong>Kautiliya</strong> Arthashastra-2, 2003, 1.2.1 <strong>and</strong> <strong>Kautiliya</strong><br />
Arthashastra 3, 2003: 106), L R Smith translates it as K-M state<br />
(Smith, 2009: 6), Jayasawal translates it as National Economy<br />
(Jayasawal, 1978: 328-29), Wolpert <strong>and</strong> Basham translate it as Socialist<br />
Monarchical Economy, (Boesche, 2006: 67), <strong>and</strong> Rangrajan translates<br />
it as Kautilya Economy (Rangrajan, 1992: 73).<br />
Importance <strong>of</strong> Varta<br />
Kautilya believes that the governance <strong>and</strong> freedom <strong>of</strong> the<br />
country depends on economy- varta. It is by means <strong>of</strong> treasury <strong>and</strong><br />
the army obtained solely through varta that the king is able to hold under<br />
28
the control, both his subjects <strong>and</strong> his enemy.’(Jayasawal, 1972: 327)<br />
Since Varta- the economy supplies grain, cattle, money, <strong>and</strong> various<br />
kinds <strong>of</strong> products to the state. It also supplies labor force, necessary<br />
for production in agriculture <strong>and</strong> commercial sector. From this it may<br />
be surmised that labourers engaged in the various economic fields<br />
could be recruited for similar state enterprises. Thus, the labor force<br />
was also national wealth according to Kautilya. This provides the insight<br />
<strong>of</strong> Kautilya on the modern non-material wealth concept.<br />
The state is sustained by the revenues it collects form the<br />
subjects. These follow different economic activity from which they<br />
make a living <strong>and</strong> pay taxes to the state. Three principal economic<br />
activities are recognized as providing men with the means <strong>of</strong> livelihood,<br />
namely krisi- agriculture, goraksha or pashupalya- animal farming <strong>and</strong><br />
Banijya- commerce. We can call it K-G-B sector. In the beginning<br />
National Economy was three sector, later on, money lending <strong>and</strong><br />
artisanship were also brought <strong>and</strong> it became four sector.<br />
(<strong>Shukra</strong>nitisar, 2008, 1.156)<br />
Like all the activities in the state varta too was rooted<br />
(janapadmula) in the country (<strong>Kautiliya</strong> Arthashastra-2, 2003,<br />
8.1.29). The ideal state is described at length is in Book 6, Chapter 1,<br />
Sutra 8. Among other things it is stated that it should be easy to defend,<br />
should provide easy means <strong>of</strong> livelihood, such as arable l<strong>and</strong>, mines,<br />
forest, pastures, trade-routes, <strong>and</strong> so on, <strong>and</strong> should be inhabited by<br />
hard working farmers <strong>and</strong> men mostly <strong>of</strong> the lower varnas. Apart from<br />
considered <strong>of</strong> defense the emphasis is on facility for the pursuit <strong>of</strong><br />
varta. But <strong>of</strong> course a ruler has to satisfy with such territory as may<br />
have fallen to his lot. A choice is however possible when new settlements<br />
are planned or new conquests attempted. In such a case he is advised<br />
29<br />
to choose l<strong>and</strong> which abound in water, yields crops without much<br />
rain, is suitable for grain crops <strong>and</strong> so on what is predominantly<br />
good agriculture l<strong>and</strong>. (<strong>Kautiliya</strong> Arthashastra-3, 2003:167)<br />
Rural Development<br />
Kautilya believed in scientific farming. The state <strong>of</strong>ficer-incharge<br />
<strong>of</strong> agriculture was designated as Sitadhayksha- The<br />
Superintendent or Head <strong>of</strong> Agriculture. Literally sita st<strong>and</strong>s for plough.<br />
The Superintendent <strong>of</strong> Agriculture should be qualified in farm technology,<br />
have good underst<strong>and</strong>ing <strong>of</strong> soil characteristics <strong>and</strong> qualities, plants<br />
<strong>and</strong> trees, flowers <strong>and</strong> fruits <strong>and</strong> different crops.<br />
According to Kautilya- the Superintendent <strong>of</strong> Agriculture,<br />
should have a good knowledge <strong>of</strong> Krisitantra- the Science <strong>of</strong> Agriculture,<br />
Sulvasastra- Geology, <strong>and</strong> Botany. (<strong>Kautiliya</strong> Arthashastra-2, 2003,<br />
2.24.1) These references clear that there were developed sciences on<br />
agriculture, forestry, <strong>and</strong> mines. Parasar <strong>and</strong> others explained the<br />
Science <strong>of</strong> Grain, <strong>and</strong> Agniveshya developed the Science <strong>of</strong> Herbs.<br />
The Shulvashastra was related with the Science <strong>of</strong> Mines. (Kautilyako<br />
Arthashastra, 1967, 2.24)<br />
Kautilya allows The Superintendent <strong>of</strong> Agriculture to take<br />
assistance <strong>of</strong> experts if he did not have the knowledge <strong>of</strong> all these<br />
fields. (ibd) This description clears one more thing that the state used<br />
to employ the services <strong>of</strong> experts in various sectors <strong>of</strong> production.<br />
The duty <strong>of</strong> The Superintendent <strong>of</strong> Agriculture was to collect in the<br />
proper seasons the seeds <strong>of</strong> all kinds <strong>of</strong> grains, flowers, fruits,<br />
vegetables, bulbous root, roots, creeper fruits <strong>and</strong> cotton.He was also<br />
responsible for providing good quality seeds; get the fields ploughed<br />
by workers employed, slaves, <strong>and</strong> prisoners. (ibid) Since in the K-M<br />
30
economy, the government used to produce grain <strong>and</strong> other agriculture<br />
products. The agriculture production was considered a major part <strong>of</strong><br />
national income. Therefore The Superintendent <strong>of</strong> Agriculture used to<br />
employ many labourers at the time <strong>of</strong> cropping <strong>and</strong> harvesting. (Lallan<br />
Prasad, 2009: 245) If the labour supply was insufficient to crop or<br />
harvest, the prisoners <strong>and</strong> slaves were also employed. According to<br />
Kautilya, 'He should cause them to be sown in l<strong>and</strong>s suitable for each<br />
which has been ploughed many times, through serfs, labourers <strong>and</strong><br />
persons paying <strong>of</strong>f their fines by personal labour<br />
(d<strong>and</strong>apratikartri)'.(Kautilya’s Arthashastra,1967, 2.24) Kautilya<br />
says further, 'He should cause <strong>of</strong> delay in (the work <strong>of</strong>) these on account<br />
<strong>of</strong> ploughing machines, implements, <strong>and</strong> bullocks, <strong>and</strong> on account <strong>of</strong><br />
(the work <strong>of</strong>) artisans, such as smiths, carpenters, basket makers,<br />
rope-makers, snake-catchers, <strong>and</strong> others’. (Lallan Prasad, ibid)<br />
Thus, The Superintendent <strong>of</strong> Agriculture was not only<br />
responsible for farming but at the same time he was responsible to<br />
have good connection with blacksmiths, carpenters, rope-makers <strong>and</strong><br />
mechanics etc., who are helpful in farming by manufacturing farm<br />
equipments. He was to arrange sowing <strong>of</strong> different crops in different<br />
seasons. The names <strong>of</strong> seeds to be sown are listed along with appropriate<br />
seasons. (ibid)<br />
L<strong>and</strong> Tenure System<br />
It is quite clear that all unoccupied l<strong>and</strong> is supposed to belong<br />
to the king, that is, to the state. It is stated that l<strong>and</strong> which is ready for<br />
agriculture should be given to those who are willing to pay taxes; but<br />
the grants are to be made for life only, implying that the farmers in this<br />
case are not full owners. It is also added that if the grantees fail to till<br />
the fields, these may be taken back from them <strong>and</strong> given to others or<br />
31<br />
the state may get them tilled by state servants <strong>and</strong> traders. L<strong>and</strong> which<br />
is not already arable is to be allowed to be brought under cultivation by<br />
whosoever chooses to do so; in this case the l<strong>and</strong> is not to be taken<br />
away from him. (<strong>Kautiliya</strong> Arthashastra-2, 2.1.9) This farmer too<br />
must be supposed to be tenant on state l<strong>and</strong>. The state is to help settlers<br />
with seeds, cattle, <strong>and</strong> even cash so that the l<strong>and</strong> may be reclaimed.<br />
These however, are loans to recovered at the tenants’ conveniences .<br />
Other concessions <strong>and</strong> remissions in taxes are also recommended at the<br />
time <strong>of</strong> the first settlement. (<strong>Kautiliya</strong> Arthsastra-2, 2003, 2.1.13-18)<br />
It may be assumed that though villages in new settlements are<br />
to enjoy certain privileges <strong>and</strong> concessions in the initial stages, they<br />
would be expected to be treated in course <strong>of</strong> time in the same way as<br />
the other older villages in the same state. Many <strong>of</strong> the rules in the latter<br />
part <strong>of</strong> this chapter sutra 25 onwards appear to be intended for all<br />
villages join the state, not for those in new settlements only.<br />
A question that has exercised the minds <strong>of</strong> scholars for long is<br />
whether all l<strong>and</strong> belongs to the state or whether there is also private<br />
ownership in l<strong>and</strong>. It seems that opinions were divided on this question<br />
in ancient times. So far as the present work is concerned there be little<br />
doubt that it recognizes private ownership in l<strong>and</strong>, though it presupposes<br />
at the same time the existence <strong>of</strong> state owned or crown l<strong>and</strong>s. (<strong>Kautiliya</strong><br />
Arthashastra-3, 2003: 169)<br />
The view <strong>of</strong> Megasthenes, the Greek ambassador to<br />
Ch<strong>and</strong>ragupta’s court, is different. He says that all l<strong>and</strong>s are owned by<br />
the king. (Boesche, 2006: 678) Modern scholars have struggled <strong>and</strong><br />
disagreed over the question <strong>of</strong> whether Megasthenes was wrong in<br />
contending that the king owned all <strong>of</strong> the l<strong>and</strong>. The K-M economy was<br />
so large that it is practically difficult to have a state control over the<br />
total arable l<strong>and</strong>s. The other l<strong>and</strong>s which were not under state<br />
32
supervision were clearly to be supposed to belong to private owners.<br />
There are clear indications in Arthashastra about private ownership <strong>of</strong><br />
l<strong>and</strong>. The owner <strong>of</strong> the field is distinguished from the tenant.(<strong>Kautiliya</strong><br />
Arthashastra-2, 2003, 2.1.17 <strong>and</strong> 3.1.10) In connection with the<br />
disputes regarding boundaries between two fields it is stated that if<br />
neither party can prove its claim, the disputed portion goes to the king;<br />
similarly l<strong>and</strong>, the owner <strong>of</strong> which cannot traced, is also to go to the<br />
state. (Chamola, 2009: 25-26)<br />
According to Boesche, Kautilya sometimes gives the<br />
impression that the crown owned all l<strong>and</strong>s in the country. But the<br />
distinction that is made between a tenant <strong>and</strong> a l<strong>and</strong>lord <strong>and</strong> references<br />
<strong>of</strong> farm l<strong>and</strong> sell <strong>and</strong> purchase given in the <strong>Kautiliya</strong> Arthashastra makes<br />
it clear that there was private l<strong>and</strong> ownership system in ancient times.<br />
Therefore following conclusions may be drawn about l<strong>and</strong> ownership<br />
in Kautilya economy (Boesche, 2002: 68)-<br />
1. There was a considerable amount <strong>of</strong> crown l<strong>and</strong> or at least<br />
controlled l<strong>and</strong>.<br />
2. Most farmers have the taxpaying l<strong>and</strong>s.<br />
3. Crown l<strong>and</strong> was not owned by individual farmers because<br />
the state could seize the l<strong>and</strong> if farmers were not productive.<br />
4. Kautilya clearly thought in terms <strong>of</strong> incentives, therefore to<br />
encourage production he thought it fair to vary tax rate<br />
according to the fertility <strong>of</strong> l<strong>and</strong>.<br />
An important state activity frequently referred in Arthashastra<br />
is about settlement <strong>of</strong> unoccupied l<strong>and</strong>. This is not transformation <strong>of</strong><br />
pasture l<strong>and</strong> into agricultural fields, but the occupation <strong>and</strong> settlement<br />
for the first tie <strong>of</strong> new virgin territory. Mention has also been made <strong>of</strong><br />
the relative merits <strong>of</strong> different types <strong>of</strong> l<strong>and</strong> that may be selected for<br />
33<br />
reclamation <strong>and</strong> settlement. The king was considered owner <strong>of</strong> all l<strong>and</strong><br />
<strong>and</strong> water in the country. Farmers were to pay for irrigating the fields.<br />
Those having own wells were supposed to pay higher than those<br />
bringing water from a distance. (Chamola, ibid, 25)<br />
When new settlements were planned, people from crowded<br />
villages <strong>and</strong> outside were allotted these l<strong>and</strong>s. A village should normally<br />
had 500 people, majority <strong>of</strong> whom should be lower varna farmers.<br />
The distance between two villages should not be more than 3-6<br />
kilometers so that people can protect themselves from outside invasions<br />
by coming together. The village boundaries were demarcated by rivers,<br />
hills, forests, thorny buses, bridges <strong>and</strong> banyan trees etc. A city in the<br />
midst <strong>of</strong> 800 villages a town for 400 <strong>and</strong> a sub town for 200 villages<br />
were built. Ten villages used to constitute a big village (mahagram)<br />
fort were built for protection <strong>of</strong> janapadas. Saints, teachers, priests<br />
were allotted l<strong>and</strong> free <strong>of</strong> cost so were the people employed for security,<br />
record keeping, looking after cows, physicians <strong>and</strong> trainers <strong>of</strong> horses<br />
etc. the l<strong>and</strong> so allotted could not be sold to others. Fertile l<strong>and</strong> was<br />
allotted for farming to the family. According to Kautilya, the state …<br />
should grant l<strong>and</strong>s to priests, preceptors, chaplains, <strong>and</strong> Brahmins<br />
learned in the Vedas as gifts to Brahmins, exempt from fines <strong>and</strong> taxes<br />
with inheritance passing on to corresponding heirs, <strong>and</strong> to heads <strong>of</strong><br />
department, accountants <strong>and</strong> others, <strong>and</strong> to gopas, sthanikas, elephant<br />
trainers, physicians, horse trainers <strong>and</strong> courtiers, l<strong>and</strong> without the right<br />
<strong>of</strong> sale or mortgage. (<strong>Kautiliya</strong> Arthashastra-2, 2003, 2.1.7)<br />
Wages for Farm-workers<br />
Farmers <strong>and</strong> farm workers were paid 25 percent to 50 percent<br />
<strong>of</strong> the farm products. In case <strong>of</strong> crops destroyed due to natural<br />
calamities, no share in crop was asked by the state.The minimum<br />
34
wage in <strong>Kautiliya</strong> Arthashastra is given as 60 pana annual. The pana in<br />
Katuilya has the same place as <strong>of</strong> rupee in present economy. According<br />
to Rangrajan, this wage was supposed to be sufficient to get one prastha<br />
(approximately 4 kgs.) grain daily. (Rangrajan, 1992: 110) This was<br />
considered a sufficient diet for four times daily for an Aryan. (<strong>Kautiliya</strong><br />
Arthashastra-2, 2006: 2.15.43) For the dependents <strong>of</strong> workers 15<br />
pana annual was paid separately. In festivals extra money (with leave)<br />
was given to workers <strong>and</strong> their families. (Rangrajan, ibid)<br />
Requirement <strong>of</strong> Rain<br />
Arthashastra describes types <strong>of</strong> rains, rain forecasting, <strong>and</strong><br />
measurement <strong>of</strong> rain, timings <strong>and</strong> intensity <strong>of</strong> rain in different parts <strong>of</strong><br />
the country. Kautilya believed that the rise <strong>and</strong> set <strong>of</strong> some stars <strong>and</strong><br />
planets the rainfall influences. Therefore Kautilya has suggested to<br />
keep in mind these planets while sowing the seeds.<br />
Kautilya has described different types <strong>of</strong> soil <strong>and</strong> water<br />
necessary for the harvest according to the feature <strong>of</strong> the soil, distance<br />
from rivers <strong>and</strong> ponds, situation <strong>of</strong> l<strong>and</strong>- highl<strong>and</strong> or lowl<strong>and</strong>. According<br />
to Kautilya 16 drona is the amount <strong>of</strong> rain in dry l<strong>and</strong>s, one <strong>and</strong> half<br />
times that in water l<strong>and</strong>s, where sowings are in conformity with the<br />
nature <strong>of</strong> the region, 13 dronas <strong>and</strong> a half in the Asmak, 23 dronas in<br />
Table 3.1.The Requirement <strong>of</strong> Rain<br />
Kinds <strong>of</strong> l<strong>and</strong> Requirements Transformation in<br />
inches<br />
Not irrigated l<strong>and</strong> 16 drona 25<br />
Wet l<strong>and</strong> 24 drona 37 ½<br />
Asmak l<strong>and</strong> 13 ½ drona 21<br />
Avanti, Malwas,<br />
Source: Rangrajan, 1992: 249<br />
the Avantis, unlimited in the snowy other regions regions, <strong>and</strong> unlimited<br />
as to time in l<strong>and</strong>s where sowings are made with the help <strong>of</strong> canals.<br />
(<strong>Kautiliya</strong> Arthashastra-2, 2003, 2.24.7) The requirement <strong>of</strong> rain<br />
<strong>and</strong> its conversion in inches is given in th table 3.1. When one-third <strong>of</strong><br />
the requisite quantity <strong>of</strong> rain falls both during the commencement <strong>and</strong><br />
closing months <strong>of</strong> the rainy season <strong>and</strong> two thirds in the middle, then<br />
the rainfall is considered very even. (Kautilya’s Arthashastra, 1967, 2.24)<br />
Crops<br />
Kautilya suggests The Superintendent <strong>of</strong> Agriculture to sow<br />
the seeds according to the rainfall. Kautilya describes three types <strong>of</strong><br />
crops according to rainfallm these are as follows-<br />
1. Summer crops<br />
2. Wet crops<br />
3. Winter crops<br />
According to the amount <strong>of</strong> water availability for the work,<br />
The Superintendent <strong>of</strong> Agriculture should decide on wet crops, winter<br />
crops, or summer crops. The superintendent shall grow wet, winter<br />
crops, or summer crops according to supply <strong>of</strong> workmen <strong>and</strong> worker.<br />
(ibid, 2.24.24) Kautilya gives direction to the Superintendent to keep<br />
in mind not only the season <strong>and</strong> irrigation facility for a crop but also<br />
work force needed to sow <strong>and</strong> to collect the grain. At the same time he<br />
suggests to have regular relations with carpenters <strong>and</strong> iron smiths who<br />
help directly or indirectly in the work <strong>of</strong> production. On the basis <strong>of</strong><br />
production Kautilya has divided the crops in three parts, these are as follows-<br />
1. Highest return crops<br />
2. Intermediate return crops<br />
3. Lowest return crops<br />
35 36
He opines that Shali (winter season paddy) <strong>and</strong> other paddy<br />
breeds provide the maximum return, vegetables’ return is intermediate<br />
in nature, <strong>and</strong> sugar-cane provides the least return. For sugarcanes are<br />
fraught with many dangers <strong>and</strong> require much expenditure. Thus paddy<br />
farming was considered to be least expensive <strong>and</strong> farming <strong>of</strong> sugarcane<br />
most expensive. Here Kautilya compares the agriculture production<br />
with the cost for sowing <strong>and</strong> the return provided by them. This analysis<br />
provides the information that ancient economists used, though implicit,<br />
cost benefit analysis <strong>and</strong> cost recovery analysis in agriculture<br />
production.<br />
What should be sown near canals, rivers <strong>and</strong> other sources <strong>of</strong><br />
water <strong>and</strong> what should be sown on the l<strong>and</strong> away from these sources<br />
were also specified on the basis <strong>of</strong> Science <strong>of</strong> Agriculture. He says,<br />
'Vegetables should be grown near rivers, canals, wells etc'. Different<br />
herbal plants were grown on different places according to suitability<br />
<strong>of</strong> different types <strong>of</strong> l<strong>and</strong>.<br />
According to Kautilya, l<strong>and</strong>s that are near the banks <strong>of</strong> rivers<br />
<strong>and</strong> ponds are suitable for growing pumpkin, gourd <strong>and</strong> other same<br />
species <strong>of</strong> creeper plants. He suggests that l<strong>and</strong>s that are frequently<br />
over flown by water for long are beneficial for pepper, grapes, <strong>and</strong><br />
sugarcane. According to him, vegetables <strong>and</strong> root crops should be<br />
sown near wells <strong>and</strong> low grounds because these places are useful for<br />
green crops. For the maximum utilization <strong>of</strong> farm l<strong>and</strong>s he again<br />
suggests that marginal spaces between any two rows <strong>of</strong> crops are<br />
suitable for the plantation <strong>of</strong> perfumed plants, <strong>and</strong> medical herbs like<br />
usira grass, hribera, pindaluka <strong>and</strong> other same species. He clearly<br />
states that The Superintendent <strong>of</strong> Agriculture should grow<br />
recommended plants on dry l<strong>and</strong>s <strong>and</strong> wet l<strong>and</strong>s to get maximum<br />
agriculture production.(ibid)<br />
37<br />
Preparation for seed bed has been discussed in <strong>Kautiliya</strong><br />
Arthashastra in detail. He suggests to put seeds for paddy farms in wet<br />
climate for seven moon-lit nights <strong>and</strong> then for seven days in sun-light.<br />
Pulses should be kept for three days <strong>and</strong> nights or five days.<br />
(ibid, 2.24.24)<br />
Kautilya has given some valuable suggestion for the treatment<br />
<strong>of</strong> seeds to keep away from crop diseases. He suggests getting good<br />
harvest sugarcane should be smeared at the cut with honey, ghee <strong>and</strong><br />
pig’s fat, <strong>and</strong> mixed with cow dung in the stalks before sowing. He<br />
opines that smearing with honey <strong>and</strong> ghee in the case <strong>of</strong> bulbous roots,<br />
smearing with cow-dung in the case <strong>of</strong> stone like seeds, <strong>and</strong> in the<br />
case <strong>of</strong> trees, burning in the pit <strong>and</strong> fulfillment <strong>of</strong> the longing with<br />
cow-bones <strong>and</strong> cow dung at the proper time will yield better <strong>and</strong> more<br />
yield. (ibid)<br />
It is a well known fact that whatever the manual labour be,<br />
agriculture production is affected by the nature. Therefore, good crops<br />
are possible only when nature is suitable. Whatever the efforts <strong>of</strong><br />
farmers be, if nature is against him, the crops will suffer. Therefore,<br />
prayer <strong>of</strong> nature was performed before cropping. Kautilya suggested<br />
the farmer that, the first sowing <strong>of</strong> all kinds <strong>of</strong> seeds, he should sow<br />
the first h<strong>and</strong>ful (after it is) immersed in water containing gold <strong>and</strong><br />
should recite a mantra. This beautiful mantra is given in Arthashastra<br />
as follows-<br />
Prajapataye Kasyapayadevaya namah sada,<br />
Sita me radhyatam devi bijesu ch dhaneu ch5 .<br />
(Kautilya’s Arthashastra,1967, 2.24)<br />
(We salute to Prajapita, Kasyapa <strong>and</strong> God <strong>of</strong> rains. May Goddess<br />
Sita bless not only the seeds to grow but also to grow our wealth.)<br />
Obviously, without the support <strong>of</strong> nature good harvest is not<br />
possible. Nepalese farmers are still using this customry function in<br />
38
cropping <strong>and</strong> harvesting. In modern times the close relationship <strong>of</strong><br />
environment, natural resource <strong>and</strong> its uses in rural areas has been<br />
analyzed by Nobel prize winner Economist Elinor Ostrom.<br />
The Superintendent <strong>of</strong> Agricutltire was also responsible to<br />
provide food <strong>and</strong> salary for workers engaged to farming, dairying,<br />
wood work etc. Fruits <strong>and</strong> grains fallen automatically could be picked<br />
up by saints <strong>and</strong> needy without charges. The storage <strong>of</strong> grain after<br />
harvesting was to be done in a manner that it could not be blown away<br />
by wind <strong>and</strong> damaged by fire.<br />
L<strong>and</strong> records were kept by the relevant <strong>of</strong>ficer appointed by<br />
the state. Farm l<strong>and</strong>s were classified into fertile <strong>and</strong> barren, useful for<br />
plantation paddy cultivation fruit orchards <strong>and</strong> sugarcane growing.In<br />
brief, rotation <strong>of</strong> crops, intensive <strong>and</strong> extensive farming use <strong>of</strong> fertilizers,<br />
crop diseases <strong>and</strong> their eradication, irrigation by rivers <strong>and</strong> tanks, laws<br />
<strong>of</strong> water distribution, seed selection, evils <strong>of</strong> fragmentation <strong>of</strong> l<strong>and</strong><br />
holdings etc. has been discussed by Kautilya in scientefic way.<br />
The agriculture development has been taken as the<br />
responsibility <strong>of</strong> state. Necessary facilities were provided to the farmers<br />
in the forms <strong>of</strong> seeds, irrigation, bullocks <strong>and</strong> other agriculture inputs.<br />
For the remedies <strong>of</strong> bad season (draught <strong>and</strong> flood), Kautilya suggested<br />
the natural methods weather forecasting.<br />
The state <strong>and</strong> the community were responsible for the<br />
development <strong>of</strong> agriculture for which waste agriculture l<strong>and</strong>s were to<br />
be cultivated, <strong>and</strong> jungle l<strong>and</strong>s were to be cleared. The l<strong>and</strong>s which<br />
were neglected by absentee l<strong>and</strong>lords were to be taken away <strong>and</strong> given<br />
to those who could cultivate them with greater advantages. When l<strong>and</strong><br />
values were assessed, fertility was a major factor to be taken into<br />
account. Fair prices <strong>of</strong> agricultural products were fixed by the state to<br />
save cultivators from the clutches <strong>of</strong> traders.<br />
39<br />
Animal Farming<br />
The second pillar <strong>of</strong> the national econmy in ancient times was<br />
animal farming. The state was the owner <strong>of</strong> large herds <strong>of</strong> cattle <strong>and</strong><br />
other animals, with The Superintendent <strong>of</strong> Cattle in charge. It needs<br />
hardly be added that cattle are owned privately. In other words, animal<br />
farming was state level production as well as private production.This<br />
becomes clear from the reference to cattle entering royal herds in<br />
times <strong>of</strong> danger, when a fee <strong>of</strong> one tenth <strong>of</strong> their produce was charged<br />
for the protection given. (<strong>Kautiliya</strong> Arthashastra-3, 2003:175) That<br />
is also shown by the punishment prescribed for owners <strong>of</strong> cattle as<br />
distinguished from herdsmen, when damage is caused to crops by<br />
cattle.<br />
Although animal farming is done for milk, for riding, for<br />
carrying luggage, for chariots, for meat, for leathers, feathers <strong>and</strong><br />
other products but mainly it was cattle farming. Cattle were <strong>of</strong><br />
importance <strong>of</strong> two reasons. The males were necessary for draught<br />
purposes in agriculture <strong>and</strong> transport whereas the females supplied<br />
milk, which with its products was a valuable source <strong>of</strong> food. The<br />
6<br />
hides too were useful for the manufacture <strong>of</strong> leather goods. The text<br />
refers meat, fresh <strong>and</strong> dried, as an item <strong>of</strong> food. Amrkosh <strong>and</strong> <strong>Shukra</strong>niti<br />
provides various items <strong>of</strong> milk. But it nowhere creates the impression<br />
that animal herds were to be reared for their meat. The production <strong>of</strong><br />
meat is presented in brief in the contexts <strong>of</strong> hotels <strong>and</strong> lodge.<br />
Two ways in which herds may be got tended are mentioned.<br />
According to what is called the vetnopagrahika system, a herd <strong>of</strong> one<br />
hundred milch-cows is given for tending to a group <strong>of</strong> cowherds <strong>and</strong><br />
their assistants each <strong>of</strong> whom is paid a wage in cash, the entire produce<br />
<strong>of</strong> the herd is to be h<strong>and</strong>ed over to the state. According to the<br />
karpratikara system a herd <strong>of</strong> 100 cows <strong>of</strong> all ages but containing<br />
40
only 20 milch cows is given to one cowherd who pays to the state a<br />
fixed amount <strong>of</strong> ghee per year. (<strong>Kautiliya</strong> Arthashastra-2, 2003,<br />
2.29.4-5) The cowherds are held entirely responsible for the care <strong>and</strong><br />
protection <strong>of</strong> the cattle in their charge. Very detailed rules are laid down<br />
about this as also about the proper time for milking cows <strong>and</strong><br />
buffaloes, the quantum <strong>of</strong> fodder for them <strong>and</strong> so on. (<strong>Kautiliya</strong><br />
Arthashastra-3, 2003: 176)<br />
Classification<br />
When The Superintendent <strong>of</strong> Cattle used to classify cattle as<br />
calves, steers, tamable ones, draught oxen, bulls that were to trained<br />
to yoke, bulls kept <strong>of</strong> crossing cows, cattle that were fit only for the<br />
supply <strong>of</strong> flesh, buffaloes <strong>and</strong> draught buffaloes, female calves, female<br />
steer, heifer, pregnant, milch cattle, barren cattle…either cows or<br />
buffaloes, calves that were a month or two old as well as those which<br />
are still younger <strong>and</strong> when as he ought to be br<strong>and</strong>s them all inclusive<br />
<strong>of</strong> their calves <strong>of</strong> one or two months old along with those stray cattle<br />
which had remained unclaimed in the herds for a month or two <strong>and</strong><br />
when he registered the br<strong>and</strong>ed marks, natural marks, colour <strong>and</strong> the<br />
distance from the horn to another <strong>of</strong> each <strong>of</strong> the cattle, that system<br />
was known as class <strong>of</strong> herds. (Kautilyako Arthashastra, 1967, 2.29)<br />
Quality <strong>of</strong> Milk<br />
<strong>Kautiliya</strong> Arthashastra provides an interesting information <strong>and</strong><br />
measures <strong>of</strong> the quality milk in ancient times. Kautilya says that the<br />
quality <strong>of</strong> milk is influenced by fodder <strong>and</strong> the place where cattle are<br />
kept.The measurement <strong>of</strong> quality milk is given in the following words,<br />
41<br />
'The quantity <strong>of</strong> fat in one drona (approximately 64 liters) <strong>of</strong> milk is<br />
one prastha (approximately 4 kgs.). The fat in buffalo is one fifth<br />
times greater than that <strong>of</strong> cow. Thus there would be 62.5 grams fat in<br />
one liter <strong>of</strong> cow-milk. In buffalo milk the quantity <strong>of</strong> fat would be 75.0<br />
grams.The present day quality <strong>of</strong> fat on an average is 40-50 grams.<br />
(Gewali, 2011 b:74)<br />
Fodder<br />
The fodder for horses has been described in following words<br />
for bulls which are provided with nose rings, <strong>and</strong> which equal horses<br />
in speed <strong>and</strong> in carrying loads, half a bhar 6 (approximately 35 kgms) <strong>of</strong><br />
meadows grass twice the above quantity <strong>of</strong> ordinary grass, one tula<br />
(approximately 3.5 kgms) <strong>of</strong> oil cakes, 10 adhakas (approximately 16<br />
kgms) <strong>of</strong> bran, five palas (200 gms) <strong>of</strong> salt, one kuduba (one liters) <strong>of</strong><br />
oil for rubbing over the nose, one prastha <strong>of</strong> drink, one tula <strong>of</strong> flesh,<br />
one adhaka <strong>of</strong> curis, one drona <strong>of</strong> barley or <strong>of</strong> cooked masha, one<br />
drona <strong>of</strong> milk, or half an Adhaka <strong>of</strong> liquor, one prastha <strong>of</strong> oil or<br />
ghee 10 palas <strong>of</strong> sugar or jaggery, one pala <strong>of</strong> the fruit <strong>of</strong> ginger<br />
may be suitable. (Kautilyako Arthashastra, 1967, 2.9.46, 2.29)<br />
Types <strong>of</strong> Forests<br />
Quality has described various methods to develop forests. The<br />
objectives to develop forest are as follows:<br />
1. To get forest produce<br />
2. To preserve wild animals<br />
3. To preserve game animals<br />
4. Tor Asrams <strong>and</strong> Vedic performing<br />
42
Kautilya describes about forests in chapter 17 <strong>and</strong> 18 <strong>of</strong> the<br />
second book. While making new settlements Katuilya gives much<br />
importance for the preservation <strong>of</strong> different types <strong>of</strong> forest by<br />
forestation. He has developed different types <strong>of</strong> forests with new<br />
settlement in the country that are given in the table. Kautilya has managed<br />
all these l<strong>and</strong>s to keep tax free. From the point <strong>of</strong> view <strong>of</strong> wild animals<br />
<strong>and</strong> forest production Kautilya has managed various types <strong>of</strong> forests.<br />
Kautilya has suggested to plant trees in uncultivable <strong>and</strong> pasture l<strong>and</strong>s.<br />
He divides these forest as shown in table 3.2.<br />
Table 3.2. Types <strong>of</strong> Forests<br />
Name Particulars<br />
Gochar pasture<br />
Brahmaranya forest for religious learning<br />
Somaranya soma plantation<br />
Tapovan forest for the performance<br />
Mrigvana Animal forest<br />
Source: Kautilyako Arthashastra, 1967, 2.17<br />
He suggests, Brahmans shall be provided with forests for soma<br />
plantation, for religious learning, <strong>and</strong> for the performance <strong>of</strong> penance,<br />
such forests being rendered safe from the dangers from animate or<br />
inanimate objects, <strong>and</strong> being named after the tribal name- gotra <strong>of</strong> the<br />
Brahmins resident therein. (Kautilyako Arthashastra, 1967, 2.18)<br />
A forest as extensive as the above, provided with only one<br />
entrance rendered inaccessible by the construction <strong>of</strong> ditches all round,<br />
with plantations <strong>of</strong> delicious fruit trees, bushes, bowers, <strong>and</strong> thorn<br />
less trees, with an expansive lake <strong>of</strong> water full <strong>of</strong> harmless animals,<br />
43<br />
<strong>and</strong> with tigers, vyala, beasts <strong>of</strong> prey- mrigayuka, male <strong>and</strong> female<br />
elephants, young elephants, <strong>and</strong> bisons all deprived <strong>of</strong> their claws <strong>and</strong><br />
teeth shall be formed for the king’s sports. (ibid) On the extreme limit<br />
<strong>of</strong> the country or in any other suitable locality, another game-forest<br />
with game-beasts; open to all, shall also be made. In view <strong>of</strong> procuring<br />
all kinds <strong>of</strong> forest-produce described elsewhere, one or several forests<br />
shall be especially reserved.<br />
Kautilya also gives equal emphasis for economic forest for<br />
forest produce.’ Manufacturies to prepare commodities from forest<br />
produce shall also be set up’. (ibid) He calls it dravya-vana- forest <strong>of</strong><br />
wealth. According to him, ‘Wild tracts shall be separated from timberforests.<br />
In the extreme limit <strong>of</strong> the country, elephant forests, separated<br />
from wild tracts, shall be formed.’ (ibid) Different types <strong>of</strong> reserved<br />
forest managed in <strong>Kautiliya</strong> Arthashastra is presented in table 3.3.<br />
Table 3.3. Reserved Forest<br />
Forest Use<br />
Dravya vana economic forest<br />
Abhayvan wild life reserves<br />
Mrigvana animal forest<br />
Atithimrigvan guest animal forest<br />
Hastivan elephant forest<br />
Source: Kautilyako Arthashastra, 1967, 2.17<br />
It is to note that Brihasapati is <strong>of</strong> the view that all the economic<br />
system whether agriculture, or protection <strong>of</strong> cows, or commerce <strong>and</strong><br />
trade all depend on stable political system. Primary requisite for<br />
sustainable economic system is a firm <strong>and</strong> centralized economic<br />
system. (Mahabharata, Shanti Parva, 2003, 68.10-12) if the central<br />
power <strong>of</strong> a country is weak, the public will suffer like a crowd <strong>of</strong><br />
44
fishes in a very small pond or the flocks <strong>of</strong> birds in a reserved forest.<br />
(ibid, 68.8-10) Not only agriculture but business, education, ritual<br />
<strong>of</strong>ferings all depend on strong political system. (ibid, 68. 23-27)<br />
The Superintendent <strong>of</strong> Forests with his retinue <strong>of</strong> forest guards<br />
shall not only maintain the upkeep <strong>of</strong> the forests, but also acquaint<br />
himself with all passages for entrance into, or exit from such <strong>of</strong> them<br />
as are mountainous or boggy or contain rivers or lakes. Kautilya can<br />
be said as the propounder <strong>of</strong> reserve forest because he has suggested<br />
to preserve wild animals. He has managed fines <strong>and</strong> punishments to<br />
the person who violates the laws <strong>and</strong> kills the animals.<br />
Conclusion<br />
The system <strong>of</strong> agriculture, animal farming <strong>and</strong> forest resource<br />
in ancient times can be summarized as follows-<br />
1. The economy described in these treatises is three sector economy.<br />
The main three pillars <strong>of</strong> economy were- agriculture, cattle farming,<br />
<strong>and</strong> commerce.<br />
2. The main source <strong>of</strong> government revenue were arable l<strong>and</strong>,<br />
economic forest, <strong>and</strong> animal husb<strong>and</strong>ry.<br />
3. The ownership <strong>of</strong> l<strong>and</strong> was <strong>of</strong> three types- Government owned,<br />
farmer owned, <strong>and</strong> tax free l<strong>and</strong> given to high ranked people <strong>of</strong><br />
the country.<br />
4. The government farming was done by the Superintendent <strong>of</strong><br />
Agriculture. Services <strong>of</strong> technicians were taken if necessary.<br />
5. Agriculture labourers were given wages according to their<br />
st<strong>and</strong>ard <strong>of</strong> living.<br />
6. Kautilya has given the concept <strong>of</strong> economic forest <strong>and</strong> reserve<br />
forest.<br />
7. The status <strong>of</strong> farmers was legally high.<br />
45<br />
Notes<br />
1 Oo+ t] /f6\ === oGtfl; odgf] w| |jf]˜l; ' j?0fM . s[io} Tjf If]dfo Tjf /o\o} Tjf<br />
kf]iffo Tjf . Shatapath, 5.2, Yaju., 9.2, cited by Panthi, 2008.<br />
2<br />
Agriculture, cattle-rearing, <strong>and</strong> trade <strong>and</strong> commerce (are the bases <strong>of</strong><br />
economy). Agriculture, cattle culture <strong>and</strong> commerce <strong>and</strong> trade comprise<br />
the (science <strong>of</strong>) varta. (Success in that leads through Exchequer <strong>and</strong><br />
Army to the control <strong>of</strong> one’s own state as well as one’s enemies.)<br />
<strong>Brihaspati</strong>-sutra, 1929, 2.4<br />
3 Receiving interest, doing farming, rearing cows, commercial activities<br />
comprises the varta- economy. (He, who knows the science <strong>of</strong> varta,<br />
has no fear for livelihood.) <strong>Shukra</strong>nitisara, 2008, 1.15<br />
4 In <strong>Economics</strong> lies Politics as well as the reverse <strong>of</strong> Politics.<strong>Kautiliya</strong><br />
Arthashastra-1, 1.2.6<br />
5 k|hfkto] sfZokfo b]jfo r gdM ;bf . ;Ltf d] CWotf+ b]jL aLh]if' r<br />
wg]if' r . Kautilya’s Arthashastra, 2.2<br />
6<br />
1 bhar = 20 tula =2000 pala = 70 kgs.<br />
1 drona= 4 adhak= 16 prastha=64 kuduba (1 kudub = app. 1 kg)<br />
This conversion is based on Nepalese traslation <strong>and</strong> Rangrajan's<br />
book.<br />
46
Inroduction<br />
Trade <strong>and</strong> commerce was the third important pillar <strong>of</strong> ancient<br />
economy. According to Kautilya, public prosperity (Pracharsmridhi),<br />
reward for good conduct (Charitranugraha), capture <strong>of</strong> thieves<br />
dispensing with (the service <strong>of</strong> too many) government servants,<br />
abundance <strong>of</strong> harvest, prosperity <strong>of</strong> commerce, absence <strong>of</strong> troubles<br />
<strong>and</strong> calamities (Upasargapramoshah), diminution <strong>of</strong> remission <strong>of</strong> taxes,<br />
<strong>and</strong> income in gold (Hirarnaayam) are all conducive to financial<br />
prosperity. (Kautilya’s Arthashastra,1967, 8.2)<br />
In this chapter we shall examine the state’s role to promote<br />
trade <strong>and</strong> commerce for the economic prosperity as described by<br />
Kautilya <strong>and</strong> <strong>Shukra</strong>. At the same time we shall analyze their policies<br />
<strong>of</strong> trader’s security <strong>and</strong> consumer’s protection.<br />
Economic Prosperity<br />
CHAPTER FOUR<br />
TRADE AND COMMERCE<br />
Economic prosperity has been regarded as the equally<br />
indispensable element <strong>of</strong> life by all the thinkers. Not only Kautilya but<br />
<strong>Shukra</strong> <strong>and</strong> Brihasapti also have given much importance to economic<br />
47<br />
resource. They say that the first 25 years <strong>of</strong> life should be devoted to<br />
study books <strong>and</strong> exercise sports <strong>and</strong> then acquisition <strong>of</strong> wealth should<br />
be started. But at the same time they suggest that regular rites should<br />
not be neglected when the time is devoted to earn money.<br />
Brihaspti gives greatest importance to economic prosperity<br />
by saying that the person, who is prosperous, has friends, righteousness,<br />
knowledge, merit,prowess <strong>and</strong> intelligence. (<strong>Brihaspati</strong>-sutra,1929<br />
6.6). He says.' As an elephant is caught by other elephant similarly<br />
wealth is acquired by wealth'. (ibid, 6.9)<br />
He gives emphasis to possess advantages because sovereignty<br />
belongs to the person (ruler) who possesses the advantages <strong>of</strong><br />
knowledge, wealth, <strong>and</strong> friends. (ibid, 2.1-3) To earn public wealth<br />
ancinet scholars have suggested to develop the three sectors <strong>of</strong> the<br />
economy- agriculture, cattle farming, <strong>and</strong> commerce. (<strong>Brihaspati</strong>sutra,<br />
1929, 2.4, <strong>Shukra</strong>nitisar, 2008, 1.156, <strong>Kautiliya</strong><br />
Arthashastra, 2003, 1.4.1)<br />
Role <strong>of</strong> State in the Development <strong>of</strong> Trade <strong>and</strong> Commerce<br />
Ancient thinkers were <strong>of</strong> the view that state should perform<br />
for the economic prosperity <strong>of</strong> the general public. This will strengthen<br />
the central authority. The political unity without economic prosperity<br />
is meaningless <strong>and</strong> will not keep for long. For this Kautilya has suggested<br />
the state to build rest houses <strong>and</strong> store houses for the caravans <strong>of</strong><br />
traders for whom police escorts were recommended.<br />
There was free trade in those days in the country. Tolls, duties<br />
<strong>and</strong> customs were realized for revenue purposes <strong>and</strong> not to control<br />
foreign trade. The state was also advised to undertake the manufacture<br />
<strong>of</strong> those commodities for which a monopoly was desirable <strong>and</strong> to sell<br />
them through departmental agencies. It should be remembered in this<br />
48
connection that state had framed trade regulations which show that<br />
commerce was in developed stage in ancient times. Internal trade was<br />
divided in three parts- retail, whole <strong>and</strong> state trade. Regarding peoples<br />
welfare the foreign trade was also in practice.<br />
The state had an important role to play in industrial development<br />
in ancient times. Some industries, like mining, armaments, shipping,<br />
etc., were state monopoly in <strong>Shukra</strong>-niti <strong>and</strong> <strong>Kautiliya</strong> economy.<br />
Akaradhyaksa (The Superintendent <strong>of</strong> Mines) was responsible for<br />
appointments, selection <strong>of</strong> mining equipments, examining old <strong>and</strong> new<br />
mines, <strong>and</strong> operations <strong>and</strong> preservations <strong>of</strong> mines in <strong>Kautiliya</strong> economy.<br />
Kautilya provides the qualities <strong>of</strong> l<strong>and</strong>s where gold, silver, copper <strong>and</strong><br />
other mines could be found. According to him the quality <strong>of</strong> minerals<br />
underground could be ascertained by soil characteristics. He also<br />
suggest techniques to s<strong>of</strong>ten or harden a metal, purify it by using<br />
liquids prepared out <strong>of</strong> natural products, like plants, milk, oil, honey,<br />
urine etc.<br />
Lakshnadhyaksa (Mint Master) was responsible for setting<br />
up factories to manufacture <strong>and</strong> sell iron <strong>and</strong> steel copper <strong>and</strong> other<br />
metals. He looked after manufacturing coins for the state, the mints <strong>of</strong><br />
the metals for coins were specified. Silver <strong>and</strong> copper were major<br />
ingredients. Coins could not be manufactured by any other person,<br />
except the state <strong>of</strong>ficer. (<strong>Kautiliya</strong> Arthashastram, 2009, 2.13)<br />
Mining <strong>of</strong> precious metals was also a state monopoly. The<br />
Superintendent <strong>of</strong> Mines was appointed to arrange for mining, cutting,<br />
polishing, etc. <strong>of</strong> diamond. Sources were identified from where diamond<br />
could be obtained <strong>and</strong> shapes sizes <strong>and</strong> quality <strong>of</strong> diamonds were<br />
described. Manufacturing storing <strong>and</strong> selling <strong>of</strong> salt was looked after<br />
by Lavanadhyaksa (The Superintendent <strong>of</strong> Salts). Imported salt was<br />
heavily taxed. If there was enough salt domestically available importers<br />
49<br />
were penalized to compensate the state. Since salt industry was one <strong>of</strong><br />
the important sector therefore production, sale <strong>and</strong> purchase has been<br />
described in detail. For selling price <strong>of</strong> salt Kautilya used following<br />
method (Kautilyako Arthashastra, 1967, 2.12)-<br />
Salt price = cost price + 5 percent transaction tax + quarantine fee<br />
Business Management<br />
For the best management following conditions are explained<br />
by modern entrepreneurs. Kautilya <strong>and</strong> <strong>Shukra</strong> have stipulated these<br />
conditions clearly in their treatises. These conditions are as follows<br />
(Joshi, 2006 :181)-<br />
1. Have confidence in <strong>and</strong> devotion to work<br />
2. Get fully absorbed in the task entrusted<br />
3. Production must be the primary aim<br />
4. Drawing up a plan <strong>of</strong> working to avoid obstruction in the<br />
smooth running <strong>of</strong> the enterprise<br />
5. Proper arrangement should be the eternal watchword<br />
6. Create awareness about the enterprise in the total population<br />
<strong>of</strong> the country<br />
7. Aiming at success in the international competitive business world<br />
Explaining the qualities <strong>of</strong> an entrepreneur, Kautilya states,<br />
'Since it is proper to ask for advice, the desire to seek obedience is<br />
Susrusa. When advice is tendered, naturally one has to listen to it <strong>and</strong><br />
underst<strong>and</strong> what one has listened to. Underst<strong>and</strong>ing what one has<br />
listened to is grasping- Grahana,. Not forgetting such awareness is<br />
preservation or Dhyana. Trying to derive proper underst<strong>and</strong>ing <strong>of</strong> the<br />
subjects which one has preserved is knowledge- Vigyan. Things, which<br />
are not explained by words but underst<strong>and</strong>ing such things by other<br />
means, is known as inference- Uhya. Rejecting that which is<br />
50
meaningless is Apaha. Proper underst<strong>and</strong>ing <strong>of</strong> things is known as<br />
Tattwabhinivesh. A proper underst<strong>and</strong>ing <strong>of</strong> all these points <strong>of</strong> merit<br />
will make one an efficient entrepreneur. Maintaining proper practice<br />
during one’s study time is known as polite conduct- Vinaya. This Vinaya<br />
is the Be all <strong>and</strong> End all <strong>of</strong> all entrepreneurs. With the help <strong>of</strong><br />
this quality one can get rid <strong>of</strong> all his deficiencies'. (Joshi, ibid)<br />
The structure <strong>of</strong> business organization as estimated by Rangrajan is<br />
given in the fig. 4.1.<br />
Thread Industry<br />
Fig. 4.1. Business Organization<br />
Superintendent<br />
(uttaradhyaksha)<br />
Clerk Coin inspector Accountant Store-keeper<br />
(Lekhak) (Rupadarshak) (Samkhyayaka) (Nivigraha)<br />
Source: Rangranjan, 1992 : 363<br />
Taxtile industry was managed by the state <strong>of</strong>ficer called<br />
Sutradhyaksha (The Superintendent <strong>of</strong> Threads). Cotton <strong>and</strong> woolen<br />
threads, clothes, ropes, army dresses ad garments were manufactured<br />
under his supervision by qualified <strong>and</strong> experienced workers. Services<br />
<strong>of</strong> widows h<strong>and</strong>icapped monks, old aged prostitutes, <strong>and</strong> devadasis<br />
could be utilized for preparing threads. Centers for preparing threads<br />
<strong>and</strong> weaving clothes were set up, where training facilities were also<br />
available. Ladies working in these centers were protected from sexual<br />
harassment <strong>of</strong> any type. If the The Superintendent <strong>of</strong> Threads looked<br />
at the face <strong>of</strong> a woman <strong>and</strong> talked something other than her work he<br />
51<br />
was liable to be punished. Stealing anything from the factory was treated<br />
as an <strong>of</strong>fense. The employee found stealing could even loose her fingers.<br />
Production <strong>of</strong> Liquors<br />
For the production <strong>and</strong> control <strong>of</strong> wines a separate department<br />
is formed by Kautilya- Suradhyaksa (The Controller <strong>of</strong> Liquors).<br />
According to Kautilya, the Controller <strong>of</strong> Liquors should cause trade in<br />
wines <strong>and</strong> ferments to be carried on in the fort, the country or the<br />
camp, through persons dealing in wines <strong>and</strong> ferments, being born to<br />
that work, either in one place or in many places or according to<br />
(convenience for) purchase <strong>and</strong> sale. (<strong>Kautiliya</strong> Arthashastra-2,<br />
2003, 2.23.1) Special drinks were prepared for the king <strong>and</strong> nobles.<br />
Manufacturing wines without state permission was punishable <strong>and</strong><br />
taxable. (Chamola, ibid) Six types <strong>of</strong> liquors were identified <strong>and</strong> the<br />
process <strong>of</strong> manufacturing <strong>and</strong> control <strong>of</strong> quality is also described in<br />
Arthashastra. The names <strong>of</strong> described liquors are- Medak, Prasanna,<br />
Asava, Arista, Maireya, <strong>and</strong> Madhu. Grape wine was called Madhu. In<br />
Bhagwat Puran the reference <strong>of</strong> liquor Maireya has been described as<br />
most hard drink, which was popular among Yadavas. Different qualities<br />
were sold by the controller <strong>of</strong> liquors directly through bars <strong>and</strong> depots<br />
set up by him <strong>and</strong> also through experienced traders born into business<br />
family dealing into these products. Drinking at places <strong>and</strong> time which<br />
may harm society was prohibited. Wealth acquired or sold by persons<br />
under influence <strong>of</strong> drink could be seized. The Controller <strong>of</strong> Liquors<br />
should set up bars with pleasant atmosphere inside by providing<br />
fragrance, flowers, <strong>and</strong> other items <strong>of</strong> luxury. The visitors in bars<br />
were closely watched. Spies could keep eye on foreigners <strong>and</strong> also<br />
undesirable elements in the bar. Drinks were allowed in public on special<br />
occasions only otherwise the drinking in open places was strictly prohibited.<br />
52
Regulation <strong>of</strong> Trade <strong>and</strong> Protection <strong>of</strong> Consumers<br />
Trade <strong>and</strong> commerce were regulated in public interest.<br />
Panyadhyaksa (The Superintendent <strong>of</strong> Commerce), who was state<br />
<strong>of</strong>ficer, appointed to promote <strong>and</strong> regulate trade had to control prices<br />
<strong>and</strong> pr<strong>of</strong>it so that common man was not hurt. Commodities which<br />
were freely available <strong>and</strong> essential for day-to-day use were allowed to<br />
be freely traded. Consumers were protected against cornering <strong>and</strong><br />
hoarding <strong>of</strong> goods. Traders found cheating or deceiving consumers<br />
were heavily punished. Market hours were regulated. Weighs <strong>and</strong><br />
measures were st<strong>and</strong>ardized. Wages were prescribed for different types<br />
<strong>of</strong> jobs. Good workers given incentives while those not performing<br />
well were penalized. (Kautilya's Arthashastra, 1967, 2.26)<br />
International Trade<br />
Kautilya advocated the promotion <strong>of</strong> international trade <strong>and</strong><br />
commerce. Imported goods were allowed to be sold in the market<br />
through distribution centers under control <strong>of</strong> the Superintendent <strong>of</strong><br />
Market. The margin <strong>of</strong> pr<strong>of</strong>it was kept reasonable as it was thought<br />
that high margins would be determined to the people. Foreign traders<br />
we rot to be harassed. In case <strong>of</strong> a dispute between a local <strong>and</strong> a<br />
foreign businessman, it was not advisable for the later to go to court.<br />
Mutual settlements were preferred.<br />
The Superintendent <strong>of</strong> Commerce was required to protect the<br />
interest <strong>of</strong> businessman going abroad to sell the goods produced in the<br />
country. In case <strong>of</strong> emergency he was supposed to help them. Most<br />
<strong>of</strong> the trade during those days was through roadways. Waterwaysrivers<br />
<strong>and</strong> seas was second important transportation. Traders were<br />
supposed to have fair knowledge <strong>of</strong> the routes <strong>and</strong> the people with<br />
53<br />
whom they had to deal in foreign markets.(Ibid) Export <strong>of</strong> the items<br />
banned was punishable with fine <strong>and</strong> seizure <strong>of</strong> goods. Such items<br />
include selected armaments, chariots, precious metals, food grains,<br />
<strong>and</strong> livestock. Foreign goods useful to the country were allowed without<br />
any restrictions. But the entry <strong>of</strong> goods harmful to people was strictly<br />
prohibited. (<strong>Shukra</strong>nitisar, 2008, 1.128) The traders required to<br />
disclose full identity <strong>of</strong> goods at the entry gate. Customs certification<br />
was a must. Spies were appointed to collect details about the goods<br />
entering into the borders. Concealment <strong>of</strong> facts was reported by them.<br />
If traders failed to pay the duty asked for goods were seized. Customs duty<br />
on important goods was called pravesya. One fifth <strong>of</strong> the value <strong>of</strong> the<br />
products was charged as pravesya.(<strong>Kautiliya</strong> Arthashastram, 2009, 2.22)<br />
Transportation<br />
Development <strong>of</strong> transport was state responsibility. Road<br />
transport developement was responsibiity <strong>of</strong> village heads, mayors <strong>and</strong><br />
The Superintedent <strong>of</strong> New settlements. Different types <strong>of</strong> roads <strong>and</strong><br />
their width as recomended by <strong>Shukra</strong> <strong>and</strong> Kautilya is presented in the<br />
table 4.1.<br />
Table 4.1. Road width in <strong>Kautiliya</strong> Arthashastra <strong>and</strong> <strong>Shukra</strong>-niti<br />
Road <strong>Shukra</strong>-niti <strong>Kautiliya</strong> Arthashastra<br />
High way 45 ft. 48 ft<br />
Link road 30 ft. 48 ft.<br />
City road 22 ½ ft. 24 ft.<br />
City-village link road 15 ft. 13 ½ ft.<br />
Source: (a) <strong>Shukra</strong>nitisar, 2008,1.262-64<br />
(b) Kautilya's Arthashastra, 1967, 2.4<br />
54
Well managed water transportation system is found in <strong>Kautiliya</strong><br />
Arthashastra.Navadhyaksa (The Superintendent <strong>of</strong> Water<br />
Transportation) was appointed to plan, develop, supervise <strong>and</strong> control<br />
transport through rivers, lakes, sea etc. He had to collect taxes from<br />
the owners <strong>of</strong> boats <strong>and</strong> ships from the traders <strong>and</strong> passangers. The<br />
superintendent was supposed to help sailors caught in storm or other<br />
calamities like a father. Entry into ports was regulated <strong>and</strong> taxed. Monks<br />
<strong>and</strong> saints, children <strong>and</strong> old aged were except from paying to cross the<br />
river on boats run by the state. Carrying goods on boats without paying<br />
fare due was punishable, so was taking explosives, weapons <strong>and</strong> other<br />
doubtful objects. Road blockade <strong>and</strong> disturbance by any means was<br />
serious <strong>of</strong>fense <strong>and</strong> therefore was punishable.<br />
Mines<br />
One <strong>of</strong> the important sources <strong>of</strong> government revenue, as stated<br />
by Kautilya <strong>and</strong> <strong>Shukra</strong>, is mines <strong>and</strong> mineral products. The importance<br />
<strong>of</strong> mines is stressed in the statement that the treasury depends on<br />
mines, that the army is sustained by treasury <strong>and</strong> that the earth is<br />
conquered by member <strong>of</strong> the treasury <strong>and</strong> the army. The starting <strong>of</strong><br />
new mines <strong>and</strong> the renewal <strong>of</strong> old discarded one was thus an important<br />
state activity under the charge <strong>of</strong> The Superintendent <strong>of</strong> Mines.<br />
(Kautilyako Arthashastra, 1967, 2.12) He has to be an expert in<br />
Geology <strong>and</strong> Metallurgy. He is to make a survey <strong>of</strong> all regions where<br />
mineral deposits are likely to be found <strong>and</strong> start new mines <strong>and</strong> renovate<br />
old ones.(Sharma, 2001: 67-70) All mines were considered clearly<br />
state property but all <strong>of</strong> them were to be worked directly by the state.<br />
In fact, it is stated that a mine costly in its working should be leased to<br />
for a fixed share <strong>of</strong> the output, or for a fixed rent, <strong>and</strong> that only a light<br />
mine should be worked by the state directly. So far as salt mines are<br />
55<br />
concerned, these seen to be all intended to be leased out for a share or<br />
on hire.(<strong>Shukra</strong>nitisar, 2008, 4.2.116)<br />
Table 4.2. Revenues from Mine<br />
Headings Details<br />
Mulya value<br />
Bhag share<br />
Vyaji<br />
Parigh<br />
sort <strong>of</strong> sales tax<br />
the exact nature is not clear but appears to be<br />
a kind <strong>of</strong> protective duty<br />
Atyaya duty in the case for example <strong>of</strong> imported salt or<br />
excise duty<br />
Shulk compensation for transfer <strong>of</strong> state rights <strong>of</strong> sale<br />
to private individual<br />
D<strong>and</strong>a fines to be determined in proportion to the<br />
gravity <strong>of</strong> crimes<br />
Roop coinage fee- which appears to be a charge for<br />
manufacture in 8 percent <strong>of</strong> the price<br />
Khani metals<br />
Dhatu panya mineral products<br />
Source: <strong>Kautiliya</strong> Arthashastra-2, 2003, 2.12.35-36.<br />
Twelve types <strong>of</strong> minerals <strong>and</strong> products made to them were<br />
under control <strong>of</strong> The Superintendent <strong>of</strong> Mines presented. There is a<br />
list <strong>of</strong> twelve sources <strong>of</strong> income which is said to be derived from the<br />
mines 1 . These are presented in the table 4.2. He had to make substantial<br />
contribution to the same treasury which must row to develop armed<br />
forces to acquire new l<strong>and</strong>s <strong>and</strong> kingdoms.<br />
Gold <strong>and</strong> silver ornaments were produced in manufacturing<br />
units called Akshashala (The Department <strong>of</strong> Gold <strong>and</strong> Silver Products),<br />
specially built for it, where trained <strong>and</strong> experienced goldsmiths were<br />
employed. Five types <strong>of</strong> Gold were identified with their color <strong>and</strong><br />
characteristics. Process <strong>of</strong> refining gold <strong>and</strong> the liquids to be used for<br />
the purpose are described in Arthashastra. The purity <strong>of</strong> gold could be<br />
56
judged through the process prescribed. Unauthorized entry into<br />
Akshashala was punishable. All worker were checked thoroughly while<br />
entering <strong>and</strong> leaving the factory. Any body found stealing gold was<br />
severely punished.(<strong>Kautiliya</strong> Arthashastram, ibid)<br />
Armaments were manufactured in the factories set up by the<br />
state. Te <strong>of</strong>ficer-in-charge <strong>of</strong> armors was responsible for state. The<br />
<strong>of</strong>ficer in charge <strong>of</strong> armours was responsible for manufacturing <strong>and</strong><br />
safe custody <strong>of</strong> all types <strong>of</strong> weapons list <strong>of</strong> the equipments <strong>and</strong><br />
instruments to be stored at one place is given. This is to facilitate the<br />
use <strong>of</strong> these items without losing time to search. Manufacturing process<br />
<strong>and</strong> details about raw materials are also described. (ibid) Kautilya<br />
gives much importance to mines by saying that the revenue obtained<br />
from mines is the basis <strong>of</strong> territory <strong>and</strong> army organization. Therefore<br />
treasury is the ornament <strong>of</strong> a country. 2 In the words <strong>of</strong> Kautilya- The<br />
treasury has its source in the mines; from the treasury the army comes<br />
into being. With treasury <strong>and</strong> the army the earth is obtained with the<br />
treasury ornament. (<strong>Kautiliya</strong> Arthashastra-2, 2003, 2.12.36)<br />
Physical Features used for Mineral Identification<br />
<strong>Kautiliya</strong> Arthashastra deals with examination <strong>of</strong> the precious<br />
articles to be received into the treasury in detail. The Superintendent <strong>of</strong><br />
Treasury is entrusted with the responsibility <strong>of</strong> receiving jewels, articles<br />
<strong>of</strong> high value, articles <strong>of</strong> small value, forest produce etc. The said<br />
<strong>of</strong>ficial is also required to preside over the bureau <strong>of</strong> experts in various<br />
lines <strong>and</strong> hence is expected to be well versed in the qualitative characters<br />
trading techniques assessment valuation etc. <strong>of</strong> the materials to be<br />
taken in the treasury as the wealth <strong>of</strong> the ruler. The sutras 2-5, 28-42<br />
<strong>and</strong> sutras 17 <strong>of</strong> chapter 12 <strong>of</strong> second book elucidate the characters,<br />
properties sources identification purity acceptability <strong>and</strong> values <strong>of</strong> the<br />
57<br />
gems- mainly pearl, diamond, ruby, beryl, sapphire <strong>and</strong> coral <strong>and</strong> semi<br />
precious stones. Sutras 7-27 are devoted to the description <strong>of</strong> different<br />
types <strong>of</strong> strong made up <strong>of</strong> pearl <strong>and</strong> <strong>of</strong>ten studded with gems. Nuber<br />
<strong>of</strong> enumerative sutras are presented in the table 4.3.<br />
Table 4.3. Enumerative Sutras Related with Metallurgy<br />
Process <strong>and</strong> Method Enumerative Sutras<br />
Concentration Book 2 chapter 12 sutra 2,3<br />
Book 2 chapter 12 sutra 20 - 24<br />
Pyrometallurgy Book 2 chapter 12 sutra 5, 6 <strong>and</strong> 11<br />
Book 2 chapter 1,2, 7,9,10,13,49<br />
Hydrometallurgy Book 2 chapter 12 sutra 8-11<br />
Refining Book 2 chapter 12 sutra 8 9 10 11<br />
Alloys <strong>and</strong> Book 2 chapter 12 sutra 23, 24<br />
metal working Book 2 chapter 13 sutra 4, 5 25-27, 37<br />
Book 2 chapter 14 sutra 17, 20-43<br />
Source: Sharma, 2000 : 70-71<br />
The above introduction about various gems has been classified<br />
with respect to the following parameters.<br />
1.Identification <strong>of</strong> minerals/gems based on colour, luster, shape<br />
<strong>and</strong> hardness<br />
2.Defects which reduce the value <strong>of</strong> gems<br />
3.Source-origin <strong>and</strong> place <strong>of</strong> occurrence<br />
Prospecting, Mining <strong>and</strong> Metallurgy<br />
Mining industry belongs to three fundamental stepsprospecting,<br />
mining <strong>and</strong> metallurgy. All steps have been expalined in<br />
<strong>Kautiliya</strong> Arthashastra. In the treatise use <strong>of</strong> metals is seen mostly in<br />
crafts <strong>of</strong> ornament making mining coins, weapons (Book 2 chapter<br />
19). With other minerals the shilajit (bitumen) also has been described<br />
58
with its medical importance in Arthshastra.The word Shilajit means<br />
the sweat <strong>of</strong> the rock. Therefore this mineral is also known as Dhunga<br />
ko pasina in Nepal. This mineral is mainly found throughout the lower,<br />
central, <strong>and</strong> upper mountainous region <strong>of</strong> Nepal. (Sharma, 2001: 70)<br />
Nepalese Product<br />
Katuilya has described about different valuable goods <strong>of</strong> low<br />
price <strong>and</strong> high price under the title- Examination <strong>of</strong> Precious Articles<br />
received in the treasury. He has praised the Nepalese woolen clothes<br />
in the following words4- Suddham suddharaktam chavikam, khachitam vanchitam<br />
kh<strong>and</strong>asamghttyam tantuvichhinnam ch.<br />
Kambalah kauchapakh kulmitika saumitika turagastaranam<br />
varnakam talichhakam voravanah paristomah samntabhadrakam<br />
chavikam. Pichhilamardramiva ch sukshamam mridum ch<br />
shreshtham.<br />
Astaprautisamghatya krishna bhingisi varsavarnam apsaraka iti<br />
Nepalakam3 .(<strong>Kautiliya</strong> Arthashastra, 2003, 2.11.97-100)<br />
Woolen cloth is white, all red <strong>and</strong> part red, with threads laid in<br />
with the needle variegated in weaving with pieces joined together <strong>and</strong><br />
with broke <strong>of</strong>f threads. The blanket, the Kauchalaka, the kalaminika,<br />
the sautnitika, the horses saddle cloth, the colored blanket, the tallichka,<br />
the armour, the paristroma nad samantabhadra are (varietes <strong>of</strong>) woolen<br />
clothes. Slippery <strong>and</strong> wet as it were fine <strong>and</strong> s<strong>of</strong>t is best. After describing<br />
various br<strong>and</strong>s <strong>and</strong> designs Kautilya says, the black bhingisi, made ourt<br />
<strong>of</strong> collection <strong>of</strong> eight woven str<strong>and</strong>s (<strong>and</strong>) the apasaraka, which keeps<br />
<strong>of</strong>f rain,- that is (woolen cloth) from Nepal. (ibid, 2.11.97-100)<br />
59<br />
Nepalese Places<br />
The <strong>Brihaspati</strong>-sutra mentions various geographical places<br />
<strong>and</strong> their distances. It seems that these places were famous for religious<br />
tourism in ancient period. Geographical names cited in <strong>Brihaspati</strong> sutra<br />
are Himvanta, Salgram, Shaiva, Shivakshetra. Kirata region also has<br />
been written there. Perhaps it indicates Kirata kingdom in Kathm<strong>and</strong>u<br />
Valley. The description is as follows-<br />
Conclusion<br />
• North <strong>of</strong> it is Nepal. 5 (<strong>Brihaspati</strong>-sutra,1926, 3.70)<br />
• Nepal one hundred <strong>and</strong> four. 6 (ibid, 3.87)<br />
• The Kirata, Sauvira, Chola, <strong>and</strong> P<strong>and</strong>ya countries, situated on<br />
north <strong>and</strong> south are <strong>of</strong> one hundred increased by sixty. 7 (ibid, 3.120)<br />
• Badarika, Shalgrama, Purushottama, Dvaraka, Bilvacala,<br />
Ananta, Simha, Shriranga. 8<br />
• Eight the Shaiva. 9 (ibid, 3.121)<br />
• Avimuktaka (Benaras), Ganga-dvara, Shiva- kshetra, Rameyamuna<br />
(?), Shiva-sarasvati, Maya (Hardwar), Shardula, <strong>and</strong><br />
Gaja-kshetras. 10 (ibid, 3.123)<br />
The analysis above can be summarized as follows-<br />
1.Kautilya, Brihasapti <strong>and</strong> <strong>Shukra</strong> have given high importance<br />
to nation’s economic prosperity.<br />
2.<strong>Kautiliya</strong> Arthashastra explains the best management in<br />
business enterprises owned by the government.<br />
3.Kautilya Arthashastra <strong>and</strong> <strong>Shukra</strong>niti clearly explain for market<br />
development <strong>and</strong> regulation.<br />
4.Traders were given government security.<br />
5.For consumer’s security <strong>and</strong> price stability The<br />
60
Notes<br />
Superintendent <strong>of</strong> Market was responsible.<br />
6.Nepalese woolen clothes <strong>and</strong> bitumen were famous in<br />
Magadha.<br />
1 <strong>Kautiliya</strong> Arthashastra, 2003, 2.12.35-36.<br />
2 ibid, 2.12.36<br />
3 z'4+ z'4/Qm+kIF/Qm+ rfljsd\, vlrt+ jfglrq+ v08;+3fTo+ tGt'ljlR5Gg+ r .<br />
sDanM sf}rksM s'nldltsf, ;f}ldltsf, t'/uf:t/0f+ j0f{s+ tlnR5s+ jf]/jf0fM<br />
kl/:tf]dM ;dGteb|s+ rfljsd\ . lklR5ndfb{ |ldj r ;'Id+ d[b' r >]i7d\ .<br />
ci6k|f}lt;+3fT<strong>of</strong> s[i0ff lelª\u;L jif{jf/0fd ck;f/s Olt g}kfnsd\ . ibid,<br />
2.11.97-100<br />
4 In Matsya Purana 22.86 the following description <strong>of</strong> Nepalese woolen<br />
mat is found-<br />
dW<strong>of</strong>x\g+ v8\ukfq+r tyf g}kfnsDanM .<br />
/f}Ko+bef{l:tnf ufjf]bf}xt[ZrZtfdx:t[tM ..<br />
(It says that eight things are necessary for holy <strong>of</strong>ferings-)1. madhyanhaafternoon,<br />
2. kahdgapatra- khag, 3. Nepalkambal- Nepalese woolen<br />
mat, 4. Raupyam - silver pot, 5. darbha- kush, 6. tila- sesama seed, 7.gawocow,<br />
8. dauhitra- gr<strong>and</strong>son (daughter's son) <strong>of</strong> deceased<br />
5 tqf]Q/] lxdjfg\ .. <strong>Brihaspati</strong>-sutra, 1929, 3.70<br />
Note- On the north- this cannot mean on the north <strong>of</strong> Meru or <strong>of</strong><br />
Jambu dvipa, which would be contrary to the ordinary view; it must,<br />
therefore, mean starting with the north <strong>of</strong> Aryawarta. (ibid: 20 )<br />
6 g]kfn+ rt'Mztd\ .. ibid, 3.87<br />
7 ls/ft;f}jL/rf]nkf08\<strong>of</strong> pQ/] blIf0f] l:ytfM ztft\ k/+ ifli6dfqfM .. ibid, 3.104<br />
8 abl/sf;fnu|fdk'?if]Qdåf/sflanjfrnfgGtl;+x >L/ª\ufM .. ibid, 3.120<br />
9 ci6f] z}jfM .. ibid, 3.121<br />
10 cljd'QmQuª\ufåf/lzjIf]q/fd]od'gflzj;/:jtLdf<strong>of</strong>zfb' {nuhIf]qfM.. ibid, 3. 123<br />
61
Introduction<br />
CHAPTER FIVE<br />
PRICING POLICY<br />
Price as theory is central part <strong>of</strong> modern economics. The<br />
supplementary part is the price policy. Theory <strong>of</strong> price is the main<br />
subject matter <strong>of</strong> microeconomics. Although theory <strong>of</strong> price is not the<br />
direct subject matter <strong>of</strong> macroeconomics but it is implicit in its income<br />
theory. Since the level <strong>of</strong> national income is determined by the total<br />
value <strong>of</strong> output <strong>and</strong> total value is caculated on the basis <strong>of</strong> the market<br />
price <strong>of</strong> the commodity, therefore the price is the foundation <strong>of</strong> income<br />
theory. In short the core subject <strong>of</strong> economics is theory <strong>of</strong> price. In<br />
this chapter we shall compare briefly the theory <strong>of</strong> pricing developed<br />
by Kautilya <strong>and</strong> <strong>Shukra</strong> with the classical <strong>and</strong> neo-classical theories.<br />
Foundations <strong>of</strong> Theory <strong>of</strong> Value<br />
The primary foundations <strong>of</strong> the theory <strong>of</strong> value are as follows-<br />
1. Well defined weights <strong>and</strong> measures <strong>of</strong> commodity<br />
2. Well defined wage rate <strong>of</strong> labor<br />
3. Transaction <strong>of</strong> capital on the basis <strong>of</strong> interest rate<br />
62<br />
If these foundations are not clearly defined then price <strong>of</strong> a<br />
commodity can not be determined in the society. Plato's economic<br />
ideas reveal that he was unable to distinguish between value <strong>and</strong> price.<br />
Aristotle was <strong>of</strong> the view that the price <strong>of</strong> a commodity was<br />
determined by the cost <strong>of</strong> labour used in the production. Adam Smith<br />
followed this concept. Cantillian put the modern foundation <strong>of</strong> price<br />
by saying that the commodity which is scarce prices high.Karl Menger<br />
<strong>and</strong> Austrian economists developed utility theory <strong>of</strong> pricing on this<br />
foundation.<br />
Therefore, there were two opinions for the theory <strong>of</strong> price.<br />
one was known as cost <strong>of</strong> production theory <strong>and</strong> other was known as<br />
utility theory. Pr<strong>of</strong>. Marshall conbined these oppsite views <strong>and</strong> presented<br />
the dem<strong>and</strong> <strong>and</strong> supply theory <strong>of</strong> price determination. Friedman explains<br />
this contribution as follows, ' A very old puzzle in economics is the<br />
relation between price, value to the consumer <strong>and</strong> cost <strong>of</strong> production.<br />
It is tempting to say that the price <strong>of</strong> a good is determined by its value<br />
to the user. Why, after all would anyone buy a good for more or sell it<br />
for less? But if this is so why are diamonds, which are relatively<br />
unimportant (most <strong>of</strong> us could told get along quite well if they did not<br />
exist), worth so much more per pound than water, which is essential<br />
for life? If the answer is that diamonds are rare <strong>and</strong> that it is rarity<br />
rather than usefulness that determines price, I reply that signatures <strong>of</strong><br />
mine written in yellow ink are even rarer than original autographs <strong>of</strong><br />
Abraham Lincoln but bring a (much) lower price'.<br />
'Perhaps it is cost <strong>of</strong> production that determines price. When<br />
I was very young I used to amuse myself by shooting stalks <strong>of</strong> grass<br />
with a BB gun. That is a costly way <strong>of</strong> mowing the lawn, even<br />
considering that the cost per hour <strong>of</strong> a nine year-old’s time is not very<br />
63
high. I think it unlikely that anyone would pay a correspondingly high<br />
price to have his lawn mowed in that fashion'.<br />
'This puzzle – the relation between value to the consumer,<br />
cost <strong>of</strong> production, <strong>and</strong> price- was solved a little over 100 years ago.<br />
The answer is that price equals both cost <strong>of</strong> production <strong>and</strong> value to<br />
the user, both <strong>of</strong> which must therefore be equal to each other'.<br />
(Friedman,1990, Section 3, Chapter 2)<br />
Price Theory in Wealth <strong>of</strong> Nations<br />
Initial theories <strong>of</strong> value were based on labor theory. Adam<br />
Smith used the word value in two senses. Sometimes he used this<br />
word to denote utility <strong>and</strong> sometimes to denote market price. According<br />
to him, 'The one may be called value in use the other value in exchange.<br />
The things which have the greatest value in use have frequently little<br />
or no value in exchange, <strong>and</strong> on the contrary those which have the<br />
greatest value in use have frequently little or no value in use. Nothing is<br />
more useful than water but it will purchase scarce anything scarce<br />
anything can be had in exchange for it, a diamond on the contrary has<br />
scarce any value in use but a very greatest quantity <strong>of</strong> other goods<br />
may frequently be had in exchange for it'. (Wealth <strong>of</strong> Nations, Book<br />
1, Chapter IV) Value in exchange is the relative proportion with<br />
which the commodity is exchanged for another commodity (in other<br />
words, its price in the case <strong>of</strong> money). According to Smith, labour is<br />
the real measure <strong>of</strong> the exchangeable value <strong>of</strong> all commodities. (ibid,<br />
Book 1, Chapter V)<br />
He argued, 'The real price <strong>of</strong> everything, what everything really<br />
costs to the man who wants to acquire it, is the toil <strong>and</strong> trouble <strong>of</strong><br />
acquiring it.' (ibid) Smith further stresses in the following words,<br />
64<br />
'However even a person drinking water from a good stream at his<br />
doorstep must spend labour to gain this value, at least if this action is<br />
relevant to economics'.<br />
'In the example <strong>of</strong> person going to a stream at his doorstep, if<br />
this is a pleasant activity, it is not labor. If it is not pleasant it could be<br />
relevant to economics....' (ibid)<br />
Price Theory in Manu-smriti<br />
Price theory/policy has been explained in Manu-smriti clearly.<br />
Manu’s suggestions for price policy is given as follows-<br />
1.Compare the value <strong>of</strong> commodities purchased <strong>and</strong><br />
commodities sold, estimate its loss <strong>of</strong> value <strong>and</strong> then determine the<br />
price <strong>of</strong> that commodity.<br />
2.The price should be determined in such a way that both side<br />
buyer <strong>and</strong> seller should be satisfied. After every five nights or in each<br />
fortnight prices should be revised regularly. 1 (Manu-smriti, 8.410-11)<br />
Manu further says that the policy making for price<br />
determination should be done by a market expert- Arghavit. Thus, in<br />
the times <strong>of</strong> Manu market experts were appointed as economic advisers<br />
<strong>of</strong> the state.<br />
Price Theory in <strong>Shukra</strong>-niti<br />
In <strong>Shukra</strong>-niti foundations <strong>of</strong> modern cost concepts are found.<br />
The concepts <strong>of</strong> real cost, alternative cost <strong>and</strong> money cost have been<br />
explained clearly. <strong>Shukra</strong> states that the sacrifices, expenses, <strong>and</strong> causes<br />
used to produce a commodity is its cost. 2 (<strong>Shukra</strong>-niti, 2000, 2.146)<br />
One can find that this concept is similar to the real cost concept given<br />
by Marshall. Similarly, <strong>Shukra</strong> defines the total cost <strong>of</strong> production as<br />
the summation <strong>of</strong> the following-<br />
65
1. All the expenses in the process <strong>of</strong> production,<br />
2. All the materials used to produce, <strong>and</strong><br />
3. All the efforts involved.<br />
Thus the ratio <strong>of</strong> the metal prices are as follows-<br />
1 Gold = 16 Silver = 1280 Copper = 7680 Iron5 In <strong>Shukra</strong>-niti prices <strong>of</strong> some commodities have been listed in<br />
terms <strong>of</strong> alternative cost. These are listed in the table 5.1. (<strong>Shukra</strong>-niti<br />
4.2.71-129)<br />
1 camel = 9 buffalos = 18 goats<br />
Table 5.1. Alternative Prices<br />
Cattle Alternative price<br />
1 buffalo 2 goats<br />
1 goats 2 sheep<br />
1 camel 2 buffaloes<br />
Source: <strong>Shukra</strong>-niti 4.2.71-129<br />
Not only the alternative price but also the market price <strong>of</strong><br />
cattles is given. According to <strong>Shukra</strong>, the selling price <strong>of</strong> one young<br />
sheep is one Pala3 , one horse is 500 Nisk4 <strong>and</strong> one elephant is 2000<br />
Nisk. This schedule <strong>of</strong> market price reveal that there was a well defined<br />
price theory or price policy in <strong>Shukra</strong> economy.<br />
Price is determined by the expenditure incurred to produce<br />
the article. This is the cost <strong>of</strong> production theory <strong>of</strong> prices. The price<br />
depends upon the abundance or scarcity <strong>of</strong> the articles in the economy.<br />
This is the supply side <strong>of</strong> price theory in economics. Further, price is<br />
determined by the intensity <strong>of</strong> desire to have the commodity. This is<br />
the dem<strong>and</strong> side <strong>of</strong> the theory <strong>of</strong> price. This guidance has been defined<br />
by the teacher <strong>Shukra</strong> 2400 or more years before Adam Smith.<br />
66<br />
Price theory is the anchor <strong>of</strong> economics. We have now<br />
developed equilibrium price as the concept, when the supply <strong>and</strong> dem<strong>and</strong><br />
are equal. The great teacher <strong>Shukra</strong> has stated that the market<br />
prices move upward only because <strong>of</strong> the wicked policies <strong>of</strong> the<br />
king. (Bokare, 2009: 80)<br />
Price Theory/Policy in <strong>Kautiliya</strong> Arthashastra<br />
In the <strong>Kautiliya</strong> economy The Superintendent <strong>of</strong> Commerce<br />
was entrusted with the task <strong>of</strong> enforcing the pricing policy. The prices<br />
<strong>of</strong> different commodities were to be fixed by him. He however did not<br />
fix prices arbitrarily. In fact, a uniform rule was followed throughout<br />
the country to determine the just price <strong>of</strong> each commodity. To quote<br />
from <strong>Kautiliya</strong> Arthashastra, 'The Superintendent <strong>of</strong> Commerce should<br />
be conversant with the differences in the prices <strong>of</strong> commodities <strong>of</strong><br />
high value <strong>and</strong> <strong>of</strong> low value <strong>and</strong> the popularity, or unpopularity <strong>of</strong><br />
goods <strong>of</strong> various kinds, whether produced on l<strong>and</strong>, or in water <strong>and</strong><br />
whether they have arrived along l<strong>and</strong> routes, or water routes, also<br />
(should know about) suitable times for resorting to dispersal, or<br />
concentration purchase or sale'. (<strong>Kautiliya</strong> Arthsastra-2, 2003:<br />
2.16.1) 'And that commodity which may be plentiful, he should collect<br />
in one place <strong>and</strong> raise the price (ibid: 2.16.2) or, when the price is<br />
reached he should fix another price'.<br />
According to him, The Superintendent <strong>of</strong> Commerce should<br />
establish in one place trade in state commodities that are produced in<br />
his own country, in many places in those produced in foreign l<strong>and</strong>s.<br />
And he should cause both to be sold so as to favour the subjects. And<br />
he should avoid even a big pr<strong>of</strong>it that would be injunctions to the<br />
subjects. He should not create a restriction as to time or the evil <strong>of</strong> a<br />
67
glut in the market in the case <strong>of</strong> commodities constantly in dem<strong>and</strong>.<br />
(ibid: 2.16.3-8) The merch<strong>and</strong>ise which is widely distributed shall be<br />
centralized <strong>and</strong> its price enhanced. When the enhanced rate becomes<br />
popular, another rate shall be declared.The merch<strong>and</strong>ise <strong>of</strong> state which<br />
is <strong>of</strong> local manufacture shall be centralized; imported merch<strong>and</strong>ise shall<br />
Table 5.2. Elements <strong>of</strong> Price Determination<br />
Dem<strong>and</strong> side Supply side<br />
Popularity Cost <strong>of</strong> production in l<strong>and</strong> or<br />
water<br />
or Transportation costs<br />
unpopularity Suitable time for sale<br />
<strong>of</strong> goods Nature <strong>of</strong> good- perishable or<br />
durable<br />
Source: <strong>Kautiliya</strong> Arthshastra-2, 2003: 2.16.1<br />
be distributed in several markets for sale. Both <strong>of</strong> merch<strong>and</strong>ise shall be<br />
favoirably sold to people.<br />
The elements <strong>of</strong> commodity pricing as described by Kautilya<br />
is presented in the table 5.2. Time element here means the season <strong>of</strong><br />
high dem<strong>and</strong> or low dem<strong>and</strong>. In a next place (<strong>Kautiliya</strong> Arthshastra-<br />
2, 2003, 4.2.36) Kautilya expresses his views on price determination<br />
as follows, 'In the case <strong>of</strong> commodities distant in place <strong>and</strong> time,<br />
however, the superintendent <strong>of</strong> commerce <strong>and</strong> trade, market expert in<br />
fixing prices shall fix the price after calculation the investment, the<br />
production <strong>of</strong> goods, duty, interest, rent <strong>and</strong> other expense'. 6<br />
Thus the cost <strong>of</strong> a commodity includes,<br />
1. Investment <strong>and</strong> interest rate <strong>of</strong> capital<br />
2. Expenses on raw materials<br />
3. Taxes payable to government<br />
4. Time to produce a commodity<br />
68<br />
5. Rent<br />
6. Pr<strong>of</strong>it margin<br />
7. Other expenses<br />
The concept <strong>of</strong> price determination in <strong>Kautiliya</strong> Arthashastra<br />
is a concept <strong>of</strong> Just Price <strong>and</strong> not simply a price for price determination.<br />
For just price Kautilya says, 'The Superintendent <strong>of</strong> Markets should<br />
set up the pledging or sale <strong>of</strong> old wares which are furnished with<br />
pro<strong>of</strong> <strong>of</strong> ownership in the market place. And he should inspect the<br />
weighs <strong>and</strong> measures because <strong>of</strong> likely fraud in the st<strong>and</strong>ard <strong>of</strong> weighs<br />
<strong>and</strong> measures'. (<strong>Kautiliya</strong> Arthshastra-2, 4.2.1)<br />
In ancient times the concept <strong>of</strong> just price was a real world<br />
phenomenon <strong>and</strong> sprang directly from the ancient Hindu concepts <strong>of</strong><br />
balance. Kautilya also did not add anything new to this basic concept<br />
but simply worked out the detail. According to Arthashastra, prices<br />
are to be so determined as to strike a balance between the interests <strong>of</strong><br />
the buyers <strong>and</strong> that <strong>of</strong> the sellers. To fulfill this objective, the following<br />
guidelines were recommended- (Basu, 2006: 202-219)<br />
1. Goods were to be sold at places specified by the state <strong>and</strong><br />
prices had to be aounced (for approval by the state <strong>and</strong> knowledge <strong>of</strong><br />
the buyers) by the businessmen. They (the merchants shall make a<br />
report <strong>of</strong> those who sell merch<strong>and</strong>ise in forbidden place or time. The<br />
merch<strong>and</strong>ise being placed near the flag <strong>of</strong> the toll house the merch<strong>and</strong>ise<br />
being placed near the flag <strong>of</strong> the toll house the merchants shall declare<br />
its quantity <strong>and</strong> price. (Kautilya's Arthashastra,1967, 2.21)<br />
2. Goods had to bear <strong>of</strong>ficial seal <strong>and</strong> properly weighed<br />
measured <strong>and</strong> numbered. Violation <strong>of</strong> this rule was subject to<br />
punishment. Those whose merch<strong>and</strong>ise has not been stamped with seal<br />
mark shall pay twice the amount <strong>of</strong> toll. Hence commodities shall be sold<br />
only after they are precisely weighted measured or numbered. (ibid)<br />
69
3. The state use to discourage enhancement <strong>of</strong> price by bidding.<br />
When purchasers happen to bid for it the enhanced amount <strong>of</strong> the<br />
price together with the toll on the merch<strong>and</strong>ise shall be paid into the<br />
king’s treasury. (ibid)<br />
Kautilya also provided detailed guidelines for determination <strong>of</strong><br />
various components <strong>of</strong> price. Guidelines for wage determination are<br />
scattered in 3.13 <strong>and</strong> 14, 4.2 <strong>and</strong> 5.3 <strong>of</strong> the book. The basic principles<br />
was that wages should be so determined by contract between the<br />
employer <strong>and</strong> the employee which once settled would be binding on<br />
both the parties that the employer is not cheated <strong>and</strong> at the same time<br />
the employee is not exploited.There were also specific guidelines for<br />
ascertaining transport, storage <strong>and</strong> other associated expenses. Rigid<br />
<strong>and</strong> simplified rules were prescribed for determining tolls <strong>and</strong> taxes on<br />
all the commodities. In <strong>Kautiliya</strong> Arthashastra <strong>and</strong> <strong>Shukra</strong>-niti the<br />
following foundation <strong>of</strong> price determination has been taken-<br />
Price = average cost <strong>of</strong> production + tolls <strong>and</strong> taxes + transport<br />
<strong>and</strong> associated costs + pr<strong>of</strong>it margin<br />
Where average cost <strong>of</strong> production = cost <strong>of</strong> raw materials +<br />
wages + interest<br />
Thus according to <strong>Shukra</strong> <strong>and</strong> Katuilya,<br />
Price = value <strong>of</strong> the commodity<br />
Where price denotes market price <strong>and</strong> value denotes normal<br />
price. The normal price, according to Kautilya <strong>and</strong> <strong>Shukra</strong>, is average<br />
cost <strong>of</strong> production.<br />
Availability <strong>and</strong> Non-availability Effect<br />
According to <strong>Shukra</strong> there is always price fluctuation (around<br />
normal price). The causes, according to him, are as follows-<br />
70<br />
1. If the commodity is scarce its price rises.<br />
2. If the supply <strong>of</strong> the commodity is sufficient the price falls.<br />
3. According to the goal <strong>of</strong> seller price may be high or low.<br />
4. According to the quality <strong>of</strong> a commodity price may be high or<br />
low.<br />
Kautilya has used two different words for normal price <strong>and</strong><br />
market price. He uses Mulya (Value) for normal price <strong>and</strong> Arghya (Price )<br />
for market rate. The concept <strong>of</strong> high <strong>and</strong> low price as described in<br />
<strong>Shukra</strong>-niti is slightly different from that <strong>of</strong> Marshallian price theory.<br />
Marshallian price is determined at the point where dem<strong>and</strong> <strong>and</strong> supply<br />
are equal. <strong>Shukra</strong> uses two terms for the explanation <strong>of</strong> price<br />
determination- mulya or value <strong>and</strong> argha or price. According to <strong>Shukra</strong><br />
price is determined at the point where value equals the price. He was<br />
aware <strong>of</strong> availability effect <strong>and</strong> non-availability effect in the price. In<br />
non-availability condition price will be high in comparison to value but<br />
in availability condition price will be low in comparison to value. The<br />
effect <strong>of</strong> avalability <strong>and</strong> non-availbility is explained in table 5.3.<br />
Table 5.3. Availability <strong>and</strong> Non-availbility Effect in <strong>Shukra</strong>-niti<br />
Price Relation Cost Tendency<br />
Price equals value no tendency to change<br />
Price greater than value falls<br />
Price smaller than value rises<br />
Source: <strong>Shukra</strong>-niti, 2000, 2.146<br />
Fig. 5.1 explains the equilibrium when value <strong>and</strong> price are<br />
equal. Fig. 5.2 explains the availability effect. In this situation, Market<br />
Price = Normal price - availability effect or Market price < Normal<br />
price. Fig.5.3 explains the non-availability or scarcity effect. In this<br />
71
situation, Market Price = Normal price + non-availability effect or<br />
Market price > Normal price.<br />
Value/Price<br />
Value/Price<br />
Value/Price<br />
Fig.5.1. Equilibrium in the Market<br />
Value=Price<br />
o Dem<strong>and</strong><br />
Fig.5.2. Availability Effect<br />
Value<br />
Price<br />
o Dem<strong>and</strong><br />
Fig.5.3.Non-Availability Effect<br />
Price<br />
Value<br />
o Dem<strong>and</strong><br />
This theory is similar to cost <strong>of</strong> production theory propunded<br />
by classicists. Universaliness <strong>of</strong> this theory is beyond doubt but it is<br />
unfortunate that this reference is not included in the text-books in the<br />
universities to be read by the scholars. It is also has been neglected in<br />
the history <strong>of</strong> economic thought.<br />
72<br />
Limitations <strong>of</strong> Marshallian Price Theory<br />
Although Marshallian theory <strong>of</strong> price is considered the most<br />
satisfactory price theory. But the limitations <strong>of</strong> this are as follows-<br />
1. According to dem<strong>and</strong> <strong>and</strong> supply theory a consumer tries<br />
to purchase goods in minimum price. But this assumption may be<br />
criticized on two grwoundsa)<br />
It is not possible to purchase a commodity in low price<br />
than its cost <strong>of</strong> production in normal situation.<br />
b) It will be unjust to a seller if any consumer gets the<br />
commodity in less than cost price.<br />
2. A producer can charge high price than its cost price but<br />
this will be unjust to consumer.<br />
Factor Pricing in <strong>Kautiliya</strong> Arthashastra <strong>and</strong> <strong>Shukra</strong>-niti<br />
In Neo-classical Theory <strong>of</strong> Distribution Euler's Theorem 7 is<br />
applied. According to this theory if factors are paid according to their<br />
contribution, total production is exhausted. The Factor Price that is<br />
determined by Kautilya, <strong>Shukra</strong> <strong>and</strong> Manu theoretically <strong>and</strong> practically<br />
can be compared with the Neo-classical Theory <strong>of</strong> Distribution.<br />
They have fixed the rent 16.67 percent <strong>of</strong> the produce on an<br />
average.They are <strong>of</strong> the view that interest rates were to be rigidly<br />
fixed by the state (considering the degree <strong>of</strong> risk involved) so as to<br />
prevent usury <strong>and</strong> exploitation <strong>of</strong> the weak borrowers. Maximum<br />
limitation <strong>of</strong> total payment was fixed as the double <strong>of</strong> the principle<br />
amount. Kautilya has fixed interest rates on the basis <strong>of</strong> risks as follows,<br />
'Five Panas per month percent is commercial interest, 10 Panas per<br />
month percent prevails among forest, 20 Panas per month percent<br />
prevails among sea traders. Persons exceeding or causing to exceed<br />
the above rate <strong>of</strong> interest shall be punished'.<br />
73
Pr<strong>of</strong>it rates were also to be rigidly fixed by the state so as to<br />
avoid uncertainty <strong>and</strong> to prevent traders from pr<strong>of</strong>iteering. The<br />
Superintendent <strong>of</strong> Commerce was to fix a pr<strong>of</strong>it <strong>of</strong> 5 percent over <strong>and</strong><br />
above the fixed price <strong>of</strong> local commodities <strong>and</strong> 10 percent on foreign<br />
produce. Merchants who enhance the price or raise pr<strong>of</strong>it even to the<br />
extent <strong>of</strong> half a Pana more than the above in the sale or purchase <strong>of</strong><br />
commodities shall be punished. (Kautilya's Arthashastra, 1967, 4.2)<br />
Kautilya directs to The Superintendent <strong>of</strong> Commerce to control traders<br />
by taking large pr<strong>of</strong>its because it can harm the consumers. In short,<br />
according to Kautilya <strong>and</strong> <strong>Shukra</strong> shares <strong>of</strong> l<strong>and</strong>, labour, capital <strong>and</strong><br />
entrepreneur are 16.67 percent, 58.33 percent, 15.00 percent, <strong>and</strong><br />
10.00 percent respectively. They were <strong>of</strong> the view that 16.67 percent<br />
regular saving should be gone to state treasury. The table 5.4. presents<br />
the share <strong>of</strong> different factors <strong>of</strong> production fixed by Kautilya <strong>and</strong> <strong>Shukra</strong>.<br />
Table 5.4. Shares <strong>of</strong> Factors <strong>of</strong> Production<br />
Factors <strong>Kautiliya</strong> Arthashastra <strong>Shukra</strong>-niti<br />
L<strong>and</strong> 16.67 percent 16.67 percent<br />
Capital 15.00 percent …<br />
Entrepreneur 10.00 percent …<br />
Labour 58.33 percent …<br />
L<strong>and</strong>, Capital, Entrepreneur … 66.67 percent<br />
Saving … 16.67 percent<br />
Source: Gewali, 2011 b : 139<br />
Conclusion<br />
The analysis above can be summarized as follows-<br />
1. Cost <strong>of</strong> production was the basis <strong>of</strong> long run price determination.<br />
2. In short run market price <strong>and</strong> value <strong>of</strong> the commodity may be<br />
different. The difference depends on availability <strong>and</strong> non-availability<br />
effect.<br />
74<br />
3. The share <strong>of</strong> l<strong>and</strong>, labour, capital <strong>and</strong> entrepreneur in the national<br />
income was considered 16.67, 58.33, 15, <strong>and</strong> 10 percent. 16.67<br />
percent <strong>of</strong> National income was considered the subject <strong>of</strong> national<br />
saving.<br />
Notes<br />
1 cfud+ lgu{d+ :yfg+ tyf j[l4If<strong>of</strong>j'ef} .<br />
ljrfo{ ;j{k0<strong>of</strong>gf+ sf/o]Tqmoljqm<strong>of</strong>} ..<br />
k+r/fq] k+r/fq] kIf] kIf] cyjf ut] .<br />
s'jL{t r}if+ k|ToIfdwd{ ;+:yfkg+ g[kM ..<br />
(Compare the value <strong>of</strong> commodities purchased <strong>and</strong> commodities sold,<br />
estimate its loss <strong>of</strong> value <strong>and</strong> then determine the price. The price should<br />
be determined in such a way that both side buyer <strong>and</strong> seller should be<br />
satisfied. After every five nights or in each fortnight prices should be<br />
revised regularly.) Manu-smriti, 1991, 8.410-02)<br />
2 sf/0fflb ;df<strong>of</strong>]ufTkbfy{:t' ej]b\e'lj .<br />
o]g Joo]g ;+l;4:tb\Joo:t:o d"Nosd .. <strong>Shukra</strong>-niti, 2000. 2.146<br />
3 One Pala = 10 dharana <strong>and</strong> one dharana = 10 seeds <strong>of</strong> bean<br />
4 Nisk = Gold coins in Vedic period<br />
5 The price <strong>of</strong> per 10 grams <strong>of</strong> gold is Rs. 32000 <strong>and</strong> silver was Rs. 620<br />
on an average for the year 2010 in Kathm<strong>and</strong>u. Thus the present<br />
proportion <strong>of</strong> these two metals is 1 gold : 52 silver. Gewali, 2011 b: 120<br />
6 k|If]k+ k0olgiklQ+ z'Ns+j[l4djqmod\ .<br />
Jo<strong>of</strong>gG<strong>of</strong>+Zr ;+V<strong>of</strong>o :yfko]b3{d3{ljt\ .. <strong>Kautiliya</strong> Arthashastra, 2003, 4.2.36<br />
7 Euler's Theorem is a mathematical concept expressed in terms <strong>of</strong><br />
derivative. If l<strong>and</strong>, labour <strong>and</strong> capital are paid according to<br />
their contribution the total production will be exhuasted, or<br />
u = f d + f d + f d , where f , f <strong>and</strong> f are marginal productions (shares)<br />
x x y y z z x y z<br />
<strong>of</strong> l<strong>and</strong>, labour <strong>and</strong> captial; d , d <strong>and</strong> d are change in respective factors<br />
x y z<br />
<strong>and</strong> u is total derivative.<br />
75
Introduction<br />
CHAPTER SIX<br />
GOVERNMENT FINANACE<br />
The government finance has been discussed by Kautilya,<br />
<strong>Shukra</strong> <strong>and</strong> Brihasapti in detail. According to Kautilya his treatise<br />
presents basic principles for mobilizing resources from the earth1- natural resources, agriculture, trade <strong>and</strong> commerce etc., which are<br />
related with people. The meaning <strong>of</strong> word palan in the <strong>Kautiliya</strong><br />
definition is related with manusyawati that denotes the l<strong>and</strong> with people<br />
should be developed by taking returns- labha from that earth. The<br />
return is obtained by mobilizing natural resources <strong>and</strong> manpower.<br />
Kautilya uses the word kosa-d<strong>and</strong>a frequently that refers peace <strong>and</strong><br />
order <strong>and</strong> the government income go parallel to each other. In this<br />
background the science <strong>of</strong> government finance as visualized by Kautilya<br />
deals with resource mobilization <strong>and</strong> resource use for the purpose <strong>of</strong><br />
the smooth functioning <strong>of</strong> the state. (Panchmukhi, 2006: 260) In<br />
<strong>Shukra</strong>'s definition the word Political Economy has been used clearly.<br />
In this chapter we shall evaluate the primciples <strong>and</strong> practices<br />
<strong>of</strong> government finance in <strong>Kautiliya</strong> Arthashastra <strong>and</strong> <strong>Shukra</strong>-niti. The<br />
76<br />
relevancy <strong>of</strong> their theorues shall also be analyzed. Measures to raise<br />
government fund applied by Kautilya <strong>and</strong> <strong>Shukra</strong> also should be<br />
compared with classical <strong>and</strong> modern views <strong>of</strong> government finance.<br />
Treasury<br />
It becomes clear after the study <strong>of</strong> <strong>Kautiliya</strong> Arthashastra,<br />
<strong>Shukra</strong>-niti <strong>and</strong> <strong>Brihaspati</strong>-sutra that they had paid supreme importance<br />
for a rich treasury- the kosa. In ancient times the word treasury has<br />
been used in two senses. In narrow sense treasury means wealth,<br />
fund, <strong>and</strong> income <strong>and</strong> in wider sense treasury means the economy or<br />
the economic prosperity <strong>of</strong> the country. The narrow meaning has been<br />
clearly defined by <strong>Shukra</strong> in the following words- the collection <strong>of</strong><br />
same article or thing is kosa <strong>and</strong> the kosa is <strong>of</strong> different types. (<strong>Shukra</strong>niti,<br />
4.2.1.1) The definition given by <strong>Shukra</strong> is similar to the modern<br />
word bank. We use commercial bank, book bank, or blood bank in<br />
this sense. In wider sense the kosa is used to denote the efficiency <strong>of</strong><br />
national economy, for example the income generation capacity <strong>of</strong><br />
agriculture, animal husb<strong>and</strong>ry, trade, <strong>and</strong> mines in the country. Modern<br />
economists also agree with the concept that one important function <strong>of</strong><br />
state is to acquire public goods <strong>and</strong> to develop agriculture, animal<br />
husb<strong>and</strong>ry <strong>and</strong> commerce.<br />
Sources <strong>of</strong> Revenue<br />
In Mahabharata five sources <strong>of</strong> government revenue have been<br />
traced. These are- mine, salt, grain market, water route <strong>and</strong> elephant<br />
forest. In <strong>Shukra</strong>-niti the classification <strong>of</strong> revenue sources is as follows-<br />
1. Tax<br />
2. Fee<br />
3. Labour tax<br />
77
4. Other sources<br />
In <strong>Kautiliya</strong> Arthashastra Samhartri- The Commissioner <strong>of</strong><br />
Revenue was responsible for the protection <strong>of</strong> government revenues.<br />
In Upanisad times the Samahrtri was known as Bhagduh. (Jayasawal,<br />
1978: 193) Kautilya suggests the Commissioner <strong>of</strong> Revenue to collect<br />
revenue from these seven sources.<br />
The main sources <strong>of</strong> government revenue in <strong>Kautiliya</strong><br />
Arthashastra are expalined as below-<br />
1. Income from State Agriculture- Government raised revenue<br />
both by direct cultivation <strong>and</strong> by leasing out l<strong>and</strong> to tenants.<br />
The crops grown on these l<strong>and</strong>s constituted a major part <strong>of</strong><br />
the revenue <strong>and</strong> were accounted for separately. net revenue to<br />
state was equal to value <strong>of</strong> production less expenditure on<br />
seeds, labour etc. On leased l<strong>and</strong> state’s share was three fourth<br />
to four fifith if lessee provided only labour, <strong>and</strong> half if lessee<br />
provided seeds <strong>and</strong> implements as well as labour.<br />
2. Revenue from Mining- Kautilya gives much importance to<br />
mining because there are 12 sources <strong>of</strong> revenue in the mining.<br />
(<strong>Kautiliya</strong> Arthashastra-2, 4.2.1.1)<br />
3. Revenue from Animal Farming- Animal farming was another<br />
source <strong>of</strong> revnue to the state.<br />
4. Income from Manufacturing Industry-Textiles, salts<br />
5. Leisure Activity<br />
6. Taxes, from Country-side- Rastra <strong>and</strong> from the city<br />
7. Trade Routes<br />
8. Service Charges<br />
9. Miscellaneous Revenues- Irrigation works or Setu, forest<br />
produce or Vana<br />
10. Fines- Sahas d<strong>and</strong>a <strong>and</strong> other fines<br />
78<br />
Rangrajan had tried to identify all the sources <strong>of</strong> income in<br />
<strong>Kautiliya</strong> Arthashastra. (Rangrajan, 1992: 256) According to him<br />
sources <strong>of</strong> income are scattered throughout the book. These sources are-<br />
1. Income from Crown Property<br />
a. Direct cultivation<br />
b. Leased cultivation<br />
2. Revenue from Mining <strong>and</strong> Metallurgy<br />
a. Mines owned by state<br />
b. Leased mines<br />
3. Revenue from Animal Farming<br />
4. Revenue from Irrigation Works<br />
5. Revenue from Forests<br />
6. Income from State-controlled Activities<br />
a. Manufacturing industry- textile<br />
b. Manufacturing industry- salt<br />
c. Manufacturing/leisure industry- alcoholic liquor<br />
d. Leisure activity- courtesans, prostitutes <strong>and</strong><br />
entertainers<br />
e. Leisure activity- betting <strong>and</strong> gambling<br />
7. Taxes- In cash <strong>and</strong> in kind<br />
a. Custom duty- (i) Import duty, (ii) Export duty<br />
b.Transaction tax<br />
c. Share <strong>of</strong> production- sixth share<br />
d.Tax in cash<br />
e. Taxes in kind- pratikar<br />
i. Labour tax<br />
ii. Supply <strong>of</strong> soldiers- ayudhiya<br />
f. Countervailing duties<br />
g. Roadcess<br />
79
h. Monopoly tax<br />
i. Royalty<br />
j. Taxes paid in kind by villages- p<strong>and</strong>a kara<br />
k. Army maintenance tax<br />
l. Surcharge<br />
Revenue collector in village level used to deposit income<br />
regularly to central <strong>of</strong>ficer known as Samahrtri.<br />
A comparison <strong>of</strong> revenue sources <strong>and</strong> rate <strong>of</strong> taxes is presented<br />
in the table 6.1.<br />
Items <strong>of</strong> Expenditure<br />
The items <strong>of</strong> expenditure are also mentioned clearly. These are<br />
expenditures on worship <strong>of</strong> gods <strong>and</strong> for charity <strong>and</strong> for gifts, royal<br />
kitchen, the employment <strong>of</strong> envoys, the magazines the armory, the<br />
warehouse, the store for forest produce, factories, laborers, maintenance<br />
<strong>of</strong> infantry, horses, chariots <strong>and</strong> elephants, herds <strong>of</strong> cattle, enclosures<br />
for beasts, deer, birds <strong>and</strong> wild animals, <strong>and</strong> stores <strong>of</strong> fuels <strong>and</strong> grasses.<br />
Government expenditure was divided in following main topics-<br />
1. Consumption expenditure<br />
2. Assets expenditure<br />
3. Deposit expenditure<br />
4. Exchange expenditure<br />
Kautilya suggests to divide the income account in three parts-<br />
1. Current<br />
2. Last balance<br />
3. Anyajatah- received from external source<br />
80<br />
Table 6.1. Revenue Sources in <strong>Shukra</strong>-niti <strong>and</strong> <strong>Kautiliya</strong> Arthashastra<br />
Revenue source <strong>Shukra</strong>-niti <strong>Kautiliya</strong> Arthashastra<br />
L<strong>and</strong> revenue 17-50 percent <strong>of</strong> 17-33 percent <strong>of</strong><br />
net produce net produce<br />
Trade 2 percent 20 percent<br />
Mines 50 percent Determined by the<br />
<strong>of</strong> pr<strong>of</strong>it Superintendent<br />
Salt 50 percent 5 percent from native<br />
<strong>of</strong> pr<strong>of</strong>it <strong>and</strong> 17 percent from<br />
foreign trader<br />
Animal herds 13 percent 10 percent<br />
Metals 16-33 percent 2-3 percent<br />
<strong>of</strong> pr<strong>of</strong>it<br />
Bankers 3 percent 3 percent<br />
<strong>of</strong> pr<strong>of</strong>it <strong>of</strong> pr<strong>of</strong>it<br />
S<strong>and</strong>al <strong>and</strong> velvet … 10-15 percent<br />
Animal produce 6 percent 16-23 percent<br />
Beverige … 3 percent<br />
Retailer <strong>of</strong> grains,<br />
ghee, <strong>and</strong> other<br />
consumption goods … 20 percent<br />
Skill workers 2 days labour 5 percent<br />
per month<br />
Contractors … 10 percent<br />
Recreation tax … 10 percent<br />
Gate toll … 20 percent <strong>of</strong> custom duty<br />
Gambling … 5 percent on winning<br />
Shepherd,flesh, hide 13 percent 16 percent<br />
Fruits, bamboo, grass … 20-25 percent<br />
Earthen pots, stones … 5 percent<br />
food, green grocer<br />
Source: (a) <strong>Shukra</strong>nitisar, 2007, 4.2.116-129<br />
(b) Rajendran, 2006: 259-60<br />
What is received day by day is termed as current.Whatever<br />
has been brought forward from year before last, whatever is in the<br />
h<strong>and</strong>s <strong>of</strong> others, <strong>and</strong> whatever has changed h<strong>and</strong>s is termed last balance.<br />
81
For different jobs working days also have been fixed. Thirty<br />
two make a month for the army. For maintenance <strong>of</strong> horses the number<br />
<strong>of</strong> days is 35 <strong>and</strong> 40 days for maintenance <strong>of</strong> elephants. The system <strong>of</strong><br />
working days expresses a unique system <strong>of</strong> remuneration distribution<br />
in <strong>Kautiliya</strong> Economy which does not match in the present context.<br />
This payment system is explained in the table 6.2.<br />
The corpus <strong>of</strong> expenditures in K-M Economy has been<br />
described as follows (<strong>Kautiliya</strong> Arthashastra-2, 2003, 2.6.11)-<br />
1. Expenditures on worship <strong>of</strong> gods <strong>and</strong> for charity<br />
2. Gifts for benedictions received<br />
3. The royal palace<br />
4. The kitchen- Mahanas<br />
5. The employment <strong>of</strong> envoys (Embassies)<br />
6. The magazine<br />
7. The armory<br />
8. The ware house<br />
9. The store for the forest produces<br />
10. Factories<br />
11. Laborers<br />
Table 6.2. Working Days<br />
Job Working day<br />
Government servant 32<br />
Horse maintenance 35<br />
Elephants maintenance 40<br />
Source: Kautilyako Arthashastra, 1967, 2.20<br />
82<br />
12. Maintenances <strong>of</strong> foot soldiers<br />
13. Horses<br />
14. Chariots <strong>and</strong> elephants<br />
15. Herds <strong>of</strong> cattle<br />
16. Enclosures for beasts, deer, birds <strong>and</strong> wild animals<br />
17. Stores <strong>of</strong> fuel <strong>and</strong> grass<br />
Classification <strong>of</strong> Expenditure<br />
According to the Arthashastra what comes in from day to day<br />
is current income. What belongs to the preceding year or what is<br />
transferred from another sphere <strong>of</strong> activity is outst<strong>and</strong>ing income. What<br />
is lost or forgotten, fines imposed on employees, extra income,<br />
compensation for loss, gifts, property <strong>of</strong> a person involved in riot,<br />
prosperity <strong>of</strong> an issueless person <strong>and</strong> treasure trove is income derived<br />
from other sources.<br />
Expenditure has been put under four heads,<br />
1. What is spent from day to day is current expenditure<br />
2. Receipts after a fortnight, a month or a year<br />
3. That arising to <strong>of</strong> current, <strong>and</strong><br />
4. Expenditure arising out <strong>of</strong> gain<br />
Fiscal Year <strong>and</strong> Possible Accounting System<br />
It is interesting to note that number <strong>of</strong> days in <strong>Kautiliya</strong>n fiscal<br />
year is less than 360 days. He says although one year has 30 fortnights<br />
but the total 354 number <strong>of</strong> days <strong>and</strong> nights constitute the year <strong>of</strong><br />
work. Why the working days are only 354, he clears in the following<br />
83
words, 'Fifteen days <strong>and</strong> nights make a fortnight. That in which the<br />
moon waxes is bright (fortnight). That in which the moon wanes is<br />
the dark. Two fortnights make a month. Thirty days <strong>and</strong> nights make<br />
a works month. A half day less makes a lunar month. Twenty seven<br />
(days <strong>and</strong> nights) make a month <strong>of</strong> constellations. Since in every month<br />
<strong>of</strong> a day is less than 30, therefore in twelve months the number <strong>of</strong><br />
days are less than 360'. (<strong>Kautiliya</strong> Arthashastra-2, 2.20.43-50)<br />
Modern accounting system was intorduced by the western<br />
philosophers. But the description <strong>of</strong> accounting in <strong>Kautiliya</strong> Arthashastra<br />
abd <strong>Shukra</strong>n-niti provides the information <strong>of</strong> a well defined system <strong>of</strong><br />
accounting done by oriental statesmen. Not only the accountomg but<br />
also a well defined filing <strong>and</strong> index system is explained in <strong>Kautiliya</strong><br />
Arthashastra. The resopnsibility <strong>of</strong> government accounting was on<br />
The Superintendent <strong>of</strong> Accounts. According to Kautilya,' The<br />
Superintendent <strong>of</strong> Accounts shall have the accountant’s <strong>of</strong>fice<br />
constructed with its door facing either the north or the east, with seats<br />
(for clerks) kept apart <strong>and</strong> with shelves <strong>of</strong> account-books well arranged'.<br />
Cost <strong>of</strong> production can be estimated with the help <strong>of</strong><br />
expenditures <strong>and</strong> quantity <strong>of</strong> the goods produced. This is how<br />
accountancy is converted into the cost accounting. Modern techniques<br />
<strong>of</strong> cost accounting have progressed. However, it can be asserted that<br />
rudiments <strong>of</strong> accountancy <strong>and</strong> the conversions <strong>of</strong> accounting entries<br />
into unit cost was known to the merchants as well as the teachers <strong>of</strong><br />
ancient times.<br />
Possible expenditure <strong>and</strong> income accounting is presented in<br />
the table 6.3 <strong>and</strong> 6.4.<br />
84<br />
Table 6.3. Possible Expenditure Account<br />
Details Sravana Asadha Total<br />
1 2 ... 15 1 ... 30 1 ... 30 354<br />
Place<br />
Time <strong>of</strong><br />
accounting<br />
Date <strong>and</strong> time<br />
<strong>of</strong> receipt<br />
Accounting<br />
<strong>of</strong>ficer<br />
Value when<br />
received at<br />
counter<br />
Occasion<br />
Commodity<br />
paid<br />
Paid by<br />
Ordered by<br />
Received<br />
from store<br />
Who paid<br />
from counter<br />
Received by<br />
Note- 1= First day <strong>of</strong> bright fortnight, 1 = First day <strong>of</strong> dark fortnight,<br />
15= Full moon day, 30= Blue moon day<br />
Source: Rangrajan, 1992 : 277<br />
85
Details Sravana Asadha Total<br />
1 2 ... 15 1 ... 30 1 ... 30 354<br />
Place<br />
Time <strong>of</strong><br />
accounting<br />
Date <strong>and</strong> time<br />
<strong>of</strong> receipt<br />
Accounting<br />
<strong>of</strong>ficer<br />
Details <strong>of</strong><br />
current year<br />
Amount<br />
received<br />
Paid by<br />
Ordered by<br />
Received by<br />
Accountant<br />
Table 6.4.Possible Income Account<br />
Note- 1= First day <strong>of</strong> bright fortnight, 1 = First day <strong>of</strong> dark<br />
fortnight, 15= Full moon day, 30= Blue moon day<br />
Source: Rangrajan, 1992 : 277<br />
86<br />
Taxation Principles<br />
The theory that the taxes were wages for protection was so in<br />
gained in the constitution that even partial failure <strong>of</strong> protection was<br />
deemed to entitle the subject claim refund <strong>of</strong> wages in proportion to<br />
the loss <strong>and</strong> those claims as we have actual payment. The subject<br />
through that the servant king was not fulfilling his obligation. He thought<br />
that the compact was not fully kept <strong>and</strong> he threatened as the Arthashastra<br />
says to migrate to the enemy country, in other words, the subject<br />
threatened to transfer allegiance. The Mahabharata says the same thing<br />
when it sanctions the ab<strong>and</strong>onment <strong>of</strong> the king who fails to protect.<br />
According to Mahbharata, 'He is like a ship which leaks that is<br />
dangerous to remain with <strong>and</strong> he is like the barber who wishes to go to<br />
the forest evidently to become an ascetic. The barber has left his clientele<br />
<strong>and</strong> master <strong>and</strong> broken his contract <strong>of</strong> service. He is fit to be given up<br />
<strong>and</strong> another barber is to be appointed to the household'. (Jayasawal,<br />
1978:319-21) Similarly the king who failed in his duty was worthless<br />
fit to be given up. The relation between the king <strong>and</strong> the subject is<br />
proved to have ended by the very fact <strong>of</strong> the formers incapacity. The<br />
ties <strong>of</strong> allegiance is deemed dissolved the moment the king failed to<br />
fulfill this duty <strong>of</strong> protect action <strong>and</strong> the subject was free to employ<br />
another servant master instead. This was a natural corollary to the<br />
theory <strong>of</strong> taxation <strong>and</strong> the king’s legal position.(ibid)<br />
The mainstay <strong>of</strong> revenue was the kings’ fixed bhaga or the<br />
share <strong>of</strong> produce <strong>of</strong> agriculture. His share in merch<strong>and</strong>ise sold in<br />
the market was one tenth or so according to circumstances.(Manusmriti,<br />
7.130-132, Gautam-smriti 10, 24-27. Vasistha-smriti, 21.26-<br />
27, Apastamba 2.20,26-29, Vishnu-smriti 3, 20-25, Boudhayana,<br />
1.1018.1 cited in Jayasawal, 1978)<br />
87
There were however some other sources <strong>of</strong> revenue which<br />
are at present called excise <strong>and</strong> customs; these are called in ancient<br />
books as shulk. In the regulation <strong>of</strong> these the king had a somewhat<br />
free h<strong>and</strong>. The later law books attempted even to regulate these by<br />
fixed laws. Yet they could not exhaust the list ad a greedy or needy<br />
sovereign could find some loop hole. The N<strong>and</strong>as are accused to have<br />
taxed hides or furs. Evidently these articles had not been taxed before.<br />
There was a vast trade in skins or furs between the Magadha Empire<br />
<strong>and</strong> the Himalayan countries as the Arthashastra (Kautilya's<br />
Arthashastra, 11.2) proves.<br />
These imports when taxed by the predecessors <strong>of</strong><br />
Ch<strong>and</strong>ragupta gave rise to accusations <strong>of</strong> greed. Evidently it was with<br />
reference to such occasions <strong>and</strong> opportunities <strong>and</strong> the realization <strong>of</strong><br />
the bhaga in general that cannons <strong>of</strong> taxation were evolved <strong>and</strong> settled.<br />
The general principles <strong>of</strong> taxation in ancient books are-<br />
1. In taxation the king should not by greediness destroy his own<br />
foundations as well as those <strong>of</strong> others. 2 (Mahabharata, Shanti Parva 87.18)<br />
2. Subjects may be taxed in a way that they may remain strong<br />
to heart future burdens <strong>and</strong> if necessary heavier ones. If the calf is<br />
permitted to suck it grows strong. O bharata, <strong>and</strong> can bear heavy<br />
weight <strong>and</strong> pain. The king should milch taxes keeping the above<br />
principle in view. Over milching is to weaken the calf <strong>and</strong> consequently<br />
harms the milcher himself. (ibid, 87.20-21)<br />
3. It is not the heavily taxed realm which executes great deeds<br />
but the moderately taxed one, whose ruler not sacrificing the power <strong>of</strong><br />
defense manages administration economically. The subjects opposed that<br />
king who is extravagant in administration (eating too much). (ibid, 41.22)<br />
88<br />
4. The great principle emphasized is that taxation should be<br />
such that it may not be felt by the subject. The ruler should act like a<br />
bee which collects honey without causing pain to the plant. (ibid,87.89)<br />
5. In raising taxes higher it should be done little by little when<br />
the realm’s prosperity is increasing. The process must be mild so that<br />
the realm might not turn restive. 3 (ibid, 88.4)<br />
6. Taxes should be levied in proper form. They should never<br />
be realized by a proper form. They should never be realized by a<br />
painful mode, milch the cow but do not bore the udders4 . (ibid,88.4)<br />
In Taxing Imports<br />
For imports ancient economists have propounded some<br />
fundamental principles. These principles are described as follows-<br />
1. Sales (price realized), purchases (capital employed), distance<br />
traveled cost <strong>of</strong> importing, <strong>and</strong> the total cost also the risks incurred by<br />
the merchant should be fully considered. 5 (Manu-smriti, 7.127)<br />
2. Imports harmful to the state <strong>and</strong> luxuries (fruitless) are to<br />
be discouraged by taxation. 6 (Kautilya's Arthashastra, 1967, 2.21)<br />
3. Beneficial imports should be made free <strong>of</strong> imports duties.<br />
4. These articles which are rare in the country <strong>and</strong> those which<br />
would be seen for future production should be allowed in free.<br />
5. Certain commodities should not be exported while their<br />
imports are to be encouraged by not being taxed at all. They were for<br />
instance-<br />
(a). Weapons <strong>and</strong> armours<br />
(b). Metals<br />
(c). Chariots<br />
89
(d). Rare things<br />
(e). Grains <strong>and</strong> cattle<br />
6. Foreign favourites <strong>and</strong> private manufactures in wines <strong>and</strong><br />
liquors were taxed on the principle <strong>of</strong> compensation with reference to<br />
the state manufactures.<br />
Conclusion<br />
The analyais above can be summarized as follows-<br />
1. Righteously earned wealth facilitates creation <strong>of</strong> a sound<br />
set <strong>of</strong> instrumentalities for state administration. Such state<br />
administration may not need any ruler to impose his stern<br />
controls on subjects for peaceful living. In contrast the<br />
righteously earned wealth would facilitate disciplined <strong>and</strong><br />
peaceful self administration <strong>of</strong> the state by the people<br />
themselves. This is the core message <strong>of</strong> the theory <strong>of</strong> treasury<br />
propounded by Kautilya, <strong>Shukra</strong>, <strong>and</strong> <strong>Brihaspati</strong>.<br />
2. Tax was one <strong>of</strong> the source <strong>of</strong> government revenue other<br />
sources being revenue from government l<strong>and</strong> <strong>and</strong> industry.<br />
3. Public welfare was the main objective <strong>of</strong> tax collection <strong>and</strong><br />
utilization.<br />
4. The guiding principles <strong>of</strong> tax collection were like a bee<br />
collecting honey, like milking a cow, like flower picking.<br />
5. The behavior <strong>of</strong> tax <strong>of</strong>ficials was given high importance.<br />
They should be honest for their duty <strong>and</strong> humble towards tax<br />
payers.<br />
90<br />
Notes<br />
1 t:<strong>of</strong> nfekfngf]kfoM zf:qdy{zf:qldlt ..(The science explaining acquisition<br />
<strong>and</strong> growth <strong>of</strong> the wealth is Arthashastra.) <strong>Kautiliya</strong> Arthashastra 15.1.2<br />
2 gf]lR5BfbfTdgf] d"n+ k/]iff+ t[i0f<strong>of</strong> .<br />
(The greediness will destroy the foundations <strong>of</strong> ruler <strong>and</strong> public both.)<br />
Mahabharata, 12.87.18<br />
3 dw'bf]x+ b'b|fi6«+ e|d/f Ojkfbkd\ .. (As a bee collects honey from flowers)<br />
ibid, 12.88.4<br />
4 jT;fk]IfL b'x]Rr}j :tgf+Zr g ljs'6\6o]t\ . (Milk the cow, do not bore the<br />
udders.) ibid<br />
5 qmoljqmodWjfg+ eQm+ r ;kl/Jood\ .<br />
<strong>of</strong>]uIf]d+ r ;+k|]Io jl0fhf] bfko]Ts/fg\ .<br />
(Sales, purchases, cost <strong>of</strong> imports, <strong>and</strong> the risks incurred by the merchant<br />
should be fully considered.) Manusmriti, 7.127<br />
6 /fi6« kL8fs/+ ef08fd'lR5GBfkmn+ r ot\ .<br />
dxf]ksf/d[R5'Ns+ s'<strong>of</strong>{åLh+ t' ;'bn{ed\ . <strong>Kautiliya</strong> Arthashastra, 2.21<br />
91
CHAPTER SEVEN<br />
CONCLUSION<br />
Kautilya <strong>and</strong> his predecessors- <strong>Shukra</strong> <strong>and</strong> <strong>Brihaspati</strong> were<br />
farsighted <strong>and</strong> realist economic thinkers. Their policies are concentrated<br />
towards economic developement, political stability, <strong>and</strong> social harmony.<br />
They were aware for social welfare in every sense. Therefore their<br />
ideas are relevant in modern setup also.<br />
In the previous chapters we analyzed ideas <strong>of</strong> Kautilya, <strong>Shukra</strong><br />
<strong>and</strong> <strong>Brihaspati</strong> on agriculture, animal farming, trade, commerce, price<br />
theory <strong>and</strong> public finance. We have also compared these ideas with<br />
classical, neo-classical <strong>and</strong> modern economic ideas.We can now<br />
summarize economic ideas in the following topics.<br />
Material Prosperity<br />
Material prosperity was considered <strong>of</strong> vital importance from<br />
the view point <strong>of</strong> state. This view has been expressed by Kautilya,<br />
<strong>Brihaspati</strong> <strong>and</strong> <strong>Shukra</strong> unanimously. The most important element<br />
according to Kautilya, is neither the government nor the army, but<br />
treasury. Spiritual good <strong>and</strong> sensual pleasures depend upon material<br />
well being. In a sense the good life <strong>of</strong> the kingdom the well being or<br />
Yogkshem <strong>of</strong> the people will never occur if the economy is in shambles.<br />
This is one point that Kautilya’s reader cannot miss. (Boesche, 2002:<br />
65) The concept <strong>of</strong> Yogkshem is deeply rooted in public welfare.<br />
According to Kautilya, every good in political life- peace,<br />
conquest, order, the correct social <strong>and</strong> class structure, dharma, <strong>and</strong><br />
so on- depends on the state acquiring wealth <strong>and</strong> using it wisely. Men<br />
without wealth do not attain their objectives even with hundreds <strong>of</strong><br />
efforts; objects are secured through objects, as elephants are through<br />
elephants set to catch them. (Kautilya’s Arthashastra, 1967, 9.4)<br />
After declaring early in Book One that material well being<br />
alone is supreme, he continued later by saying that the king will be<br />
happy only when his subjects are happy, <strong>and</strong> therefore being ever<br />
active the king should carry out the management <strong>of</strong> material well being.<br />
(ibid, 1.7, 19.35) In this statement we find the key to underst<strong>and</strong>ing<br />
the importance <strong>of</strong> the economy for Kautilya. According to him the<br />
treasury ensuring (the success <strong>of</strong>) all endeavors is the means <strong>of</strong> deeds<br />
<strong>of</strong> piety <strong>and</strong> sensual pleasure. (<strong>Kautiliya</strong> Arthashastra-2, 2003,<br />
8.1.49) the goals are always well being <strong>and</strong> security from enemies<br />
from both within <strong>and</strong> without. (Boesche, 2002: 66)<br />
Whereas many thinkers in both the European <strong>and</strong> Asian<br />
traditions might declare that religion is most important, or that the<br />
political constitution is central to achieving peace <strong>and</strong> justice, or whereas<br />
some such as Machiavelli might see a disciplined army as central to<br />
political well being. Kautilya singled out the treasury. Without a treasury<br />
there is no effective army. (ibid)<br />
92 93
No wonder Kautilya stressed the importance <strong>of</strong> wealth. From<br />
the treasury obtained with the treasury as its ornament..., with money,<br />
troops… are obtained. Roger Boesche compares Kautilya’s compares<br />
Machiavelli in the following words- Kautilya said something that<br />
Machiavelli would never agree with that- is that a king with money can<br />
conquer an enemy by hiring or purchasing heroic men. (Boesche,<br />
2002: 66)<br />
Because the treasury enables a king to pay soldiers <strong>and</strong> make<br />
military equipment, the army needs the treasury <strong>and</strong> the treasury must<br />
be protected by the army, so they will always be interrelated but the<br />
treasury is ultimately more important. For the army is the means <strong>of</strong><br />
acquiring <strong>and</strong> protecting the treasury, the treasury that <strong>of</strong> treasury <strong>and</strong><br />
army because it brings into being all objects, the calamity <strong>of</strong> the treasury<br />
is more serious. (ibid, 8.1.51-52)<br />
Rajdharmanushasana Parva or the Book on Political Discipline<br />
<strong>of</strong> Mahabharata deals in material prosperity. It explains that proper use<br />
<strong>of</strong> wealth is more important than the sacrifice <strong>of</strong> wealth. Every person<br />
<strong>and</strong> every part <strong>of</strong> society should perform its proper functions which<br />
are predetermined by scriptures.<br />
Importance <strong>of</strong> Agriculture<br />
The economy <strong>of</strong> Kautilya, <strong>Shukra</strong> <strong>and</strong> <strong>Brihaspati</strong> was a three<br />
sector economy. Among the three pillars <strong>of</strong> economy they have given<br />
high importance to agriculture, the other two pillars being animal farming<br />
<strong>and</strong> commerce. <strong>Shukra</strong> <strong>and</strong> Kautilya were <strong>of</strong> the view that cultivable<br />
l<strong>and</strong> is better than mines because mines fill only the treasury while<br />
agricultural production fills both treasury <strong>and</strong> store houses.<br />
Specialization <strong>of</strong> agriculture was done with the help <strong>of</strong><br />
pr<strong>of</strong>essionally trained managers <strong>of</strong> farming <strong>and</strong> animal husb<strong>and</strong>ry.<br />
Techniques <strong>of</strong> animal farming, practical <strong>and</strong> theoretical measures to<br />
raise farmers’ status suggested by Kautilya <strong>and</strong> <strong>Shukra</strong> are relevant in<br />
modern agro based economy. A farmer busy in farming activity could<br />
not be arrested by the state. The farmer was protected by the law.<br />
Pricing <strong>and</strong> marketing <strong>of</strong> agro products <strong>and</strong> providing adequate<br />
infrastructure to the agricultural sector are crucial. Evidently as in<br />
other spheres, many <strong>of</strong> the principles enumerated in <strong>Shukra</strong>-niti <strong>and</strong><br />
<strong>Kautiliya</strong> Arthashastra are applicable to the modern agricultural sector.<br />
In stark contrast to the emphasis that Kautilya, <strong>Shukra</strong> <strong>and</strong><br />
<strong>Brihaspati</strong> assigned to rural development, agriculture, <strong>and</strong> the animal<br />
husb<strong>and</strong>ry, the present status is that these spheres have been neglected<br />
in present economic policies.<br />
Pricing Policy<br />
Kautilya <strong>and</strong> <strong>Shukra</strong> are <strong>of</strong> the view that normal price <strong>of</strong> goods<br />
should be equal to the cost <strong>of</strong> production in long run. Market price<br />
fluctuates around this price. They have given a fair discussion on the<br />
price <strong>of</strong> inputs. According to their evaluation the share <strong>of</strong> l<strong>and</strong>, labour,<br />
capital <strong>and</strong> entrepreneur should be 16.67, 41.67, 15, <strong>and</strong> 10 percent <strong>of</strong><br />
total national income. They are in favour <strong>of</strong> regular national saving <strong>and</strong><br />
the rate <strong>of</strong> this saving should be 16.67 percent. (Gewali, 2011b : 139)<br />
Kautilya envisaged a role for the state to ensure that excessive<br />
price fluctuation to commercial activities did not occur. This view<br />
94 95
follows the price policy explained by Manu. (Manu-smriti,<br />
1991, 8.410-13)<br />
Kautilya showed a highly refined underst<strong>and</strong>ing <strong>of</strong> the law <strong>of</strong><br />
dem<strong>and</strong> <strong>and</strong> supply <strong>and</strong> the influence <strong>of</strong> surpluses that occur due to<br />
imperfections <strong>of</strong> the market. He recommended an interventionist policy<br />
to situation <strong>of</strong> glut in the market. In this context he stated that whenever<br />
there is an excessive supply <strong>of</strong> merch<strong>and</strong>ise The Superintendent <strong>of</strong><br />
Market shall centralize its sale <strong>and</strong> prohibit the sale <strong>of</strong> similar<br />
merch<strong>and</strong>ise elsewhere before the centralized supply is disposed <strong>of</strong><br />
Kautilya realized that the role <strong>of</strong> the state was to ensure that commercial<br />
activities do not violate laws <strong>and</strong> if the state did not establish <strong>and</strong> enforce<br />
codes <strong>of</strong> conduct it would in fact raise transaction costs. The lack <strong>of</strong><br />
trust <strong>and</strong> guarantee <strong>of</strong> quality would diminish commerce <strong>and</strong> increase<br />
search <strong>and</strong> verification costs for agents undertaking commercial<br />
transactions.<br />
From the view point <strong>of</strong> commodity price determination their<br />
views are similar to classical views. At the same time Kautilya <strong>and</strong><br />
Manu have suggested to have a government control on price fluctuation.<br />
Which is similar to socialist view.<br />
Consumer’s Protection<br />
There are many legal provisions for the consumer’s protection<br />
in <strong>Kautiliya</strong> Arthashastra <strong>and</strong> <strong>Shukra</strong>-niti. In K-M economy two<br />
authorities were responsible for consumer’s protection- The<br />
Superintendent <strong>of</strong> Market <strong>and</strong> The Superintendent <strong>of</strong> Commerce.<br />
The consumer buyer is provided safeguards by the law in<br />
ancient economy. The sale or mortgage <strong>of</strong> articles such as timber,<br />
96<br />
iron, brilliant stones, tropes, skins, earthenware, threads, fibrous<br />
garments, <strong>and</strong> woolen clothes as superior, although they are really<br />
inferior, was to be punished with a fine.<br />
Adulteration <strong>of</strong> grains, oils, alkalis, salts, scents, <strong>and</strong> medical<br />
articles with similar articles <strong>of</strong> no quality was considered a serious<br />
<strong>of</strong>fense.<br />
It is interesting to note that Kautilya tried to establish guidelines<br />
for pr<strong>of</strong>essional service providers also, including medical practitioners,<br />
weavers, washer-men, boatmen, shipping agents <strong>and</strong> even prostitutes.<br />
System <strong>of</strong> Four Varnas <strong>and</strong> Asharams<br />
Varna <strong>and</strong> Asharam system was the basis <strong>of</strong> economic<br />
progress, personality development <strong>and</strong> social harmony in ancient times.<br />
The word Varna st<strong>and</strong>s for colour <strong>and</strong> Asharam st<strong>and</strong>s for institution.<br />
Initial Varna system was based on the function <strong>and</strong> not on caste. Later<br />
it was converted as caste system .<br />
These Four Varnas are-<br />
1, Brahman or the intelligent class<br />
2. Kshtriya or the warrior class<br />
3. Vaishya or the business class<br />
4. Shudra or the labour class<br />
Intelligent class was responsible for the advancement <strong>of</strong><br />
knowledge <strong>and</strong> regular research for the benefit <strong>of</strong> the society. The<br />
warrior was responsible for the protection <strong>of</strong> the country. Vaishya<br />
was the basis <strong>of</strong> economic system because the developemnt <strong>of</strong><br />
K-G-B sectors was the responsibility <strong>of</strong> this class. The responsiblity<br />
<strong>of</strong> labour class was to serve the country as a whole. All four classes<br />
were like four organs <strong>of</strong> a body <strong>and</strong> therefore complementary to<br />
each other.<br />
97
The system <strong>of</strong> four stages <strong>of</strong> personal life was mingled with<br />
Varna system. Ashram system was a social technique constructed for<br />
the personailty developemnt <strong>of</strong> an individual. The Gurukul system <strong>of</strong><br />
education was the foundation <strong>of</strong> these stages. These stages are as follows-<br />
1. Brahmacharya or the stage <strong>of</strong> learning<br />
2. Grihastha or the household life<br />
3. Vanaprastha or the retired life<br />
4. Samnyas or the w<strong>and</strong>ering ascetic.<br />
For socio-economic progress Kautilya, <strong>Shukra</strong> <strong>and</strong> Brihaspti<br />
supported Varnasharam system strogly. According to Kautilya the ruler<br />
who manages this systm, rules successfully. This is the basis <strong>of</strong> social<br />
welfare. (<strong>Kautiliya</strong> Arthashastram,2009, 1.3, 3.1)<br />
Tri-varga Balance<br />
Ancient thinkers have propounded the general equilibrium<br />
theory which was known as Trivarga-sewa or Tri-varga Balance, that<br />
is, the balance <strong>of</strong> three divisions. Actually it is an example <strong>of</strong> general<br />
equilibrium. In modern times the general equilibrium theory expalained<br />
with the help <strong>of</strong> Edgeworth box is the economic general equilibrium<br />
theory only. It is not a 'general' equilibrium <strong>of</strong> life.<br />
Tri-varga Balance Theory explains the unique equilibrium <strong>of</strong><br />
the three divisions or goals <strong>of</strong> life, three divisions being, dharma- the<br />
right conduct, artha- wealth, <strong>and</strong> kam- pleasure. Thus, Tri-varga<br />
Balance may be called as D-A-K equilibrum.<br />
They have suggested to make ingenious balancing among<br />
these three. This ideal point was known as Tri-varga Sewa. This<br />
word has been mentioned repeatedly <strong>and</strong> clearly by the ancient<br />
thinkers. L R Smith calls this balance as Hindu equilibrium. (Smith,<br />
2006: 58-63) According to him this Hindu equilibrium was the basis <strong>of</strong><br />
social, political <strong>and</strong> economic action in those times.<br />
Dharma as described in oriental economics has two<br />
characteristics- purity in action <strong>and</strong> general welfare in the goal.<br />
According to this view purity denotes purity in earning <strong>and</strong> spending<br />
both. General welfare means the situation when one’s action for his/<br />
her welfare supports the welfare <strong>of</strong> others. In technical terms it may<br />
be called Pareto optimality.<br />
Artha as economic resource has two main characteristicsscarcity,<br />
<strong>and</strong> utility. Resources are useful to satisfy our wants, therefore,<br />
we need it. But resources we need not only scarce but they have<br />
alternative uses. It means the degree <strong>of</strong> scarcity is very high. Due to<br />
these characteristics we are forced to economize available resources<br />
while satisfying our wants.<br />
Kam means desire to satisfy wants. It becomes pleasure if<br />
satisfied. Desires are not only unlimited, they are competitive also.<br />
From competitive <strong>and</strong> unlimited wants it is very hard to select <strong>and</strong><br />
satisfy wants. Since, their intensity is not the same, it becomes easier<br />
to select some important wants <strong>and</strong> put them in priority. Thus, we<br />
start from most intense wants. This maximizes our satisfaction.<br />
If we take any two out <strong>of</strong> the three divisions there will be<br />
three separate equilibrium positions- equilibrium <strong>of</strong> dharma <strong>and</strong> artha,<br />
equilibrium <strong>of</strong> artha <strong>and</strong> kam <strong>and</strong> equilibrium <strong>of</strong> kam <strong>and</strong> dharma.<br />
The equilibrium <strong>of</strong> dharma <strong>and</strong> artha determines the best<br />
individual economic action in social life. The equilibrium <strong>of</strong> dharma<br />
98 99
<strong>and</strong> kam helps in selecting the best goals <strong>of</strong> a social person. The<br />
equilibrium <strong>of</strong> artha <strong>and</strong> kam helps in the maximization <strong>of</strong> satisfaction.<br />
Because, it determines the optimum combination <strong>of</strong> wants <strong>and</strong><br />
resources. Thus, Tri-varga Balance determines the unique balance <strong>of</strong><br />
goals, actions <strong>and</strong> satisfaction. The propunders <strong>of</strong> this balance have<br />
warned the people not to be biased towards any one <strong>of</strong> them.<br />
Figure 7.1 explains this unique situation <strong>of</strong> Tri-varga Balance.<br />
Fig.7.1. Tri-varga Balance or The General Equilibrium<br />
(Dharma)<br />
Right conduct<br />
Action<br />
Balance<br />
Goals Satisfation<br />
(Kam)<br />
Pleasure<br />
Nepalese Products <strong>and</strong> Places<br />
(Artha)<br />
Wealth<br />
In Kirata period Nepalese woolen clothes were famous in<br />
Magadha This fact is expressed in <strong>Kautiliya</strong> Arthashastra. One <strong>of</strong> the<br />
mineral products described in <strong>Kautiliya</strong> Arthashastra is bitumen- Shilajit<br />
without mentioning the place <strong>of</strong> origin. Bitumen is found mainly in<br />
100<br />
Nepal. It is a rich source <strong>of</strong> various medicinal minerals <strong>and</strong> therefore<br />
used in Ayurveda.<br />
The <strong>Brihaspati</strong>-sutra mentions half a dozen names which are<br />
related with Nepalese geographical location, such as- Nepal, Kirat,<br />
Himvanta, Shalgram, Sivakshetra etc. Matsya Purana, Garuda Purana,<br />
<strong>and</strong> Agni Purana support the facts <strong>of</strong> <strong>Kautiliya</strong> Arthashastra <strong>and</strong><br />
<strong>Brihaspati</strong>-sutra. (Agni Purana, Chapter 46) Garuda Purana also has<br />
a clear description <strong>of</strong> Shalgram domain. This description is based on<br />
the famous Kali G<strong>and</strong>aki, Muktikshetra <strong>and</strong> Damodar Kunda.<br />
The misunderst<strong>and</strong>ings that Sanskrit literature leads to people<br />
in an imaginary world <strong>of</strong> mokhsa- the ultimate freedom becomes untrue<br />
after studying the ideas <strong>of</strong> Kautilya, <strong>Shukra</strong> <strong>and</strong> <strong>Brihaspati</strong>. Its therefore<br />
Roger Boesche calls Kautilya, the Great Political Realist. Their policies<br />
are equally useful in war <strong>and</strong> peace, for economic progress, for national<br />
integration, sovereignty <strong>and</strong> social harmony.<br />
Bokare opines that the first available book on economic thoughts<br />
is Rig-Veda <strong>and</strong> the first definitions <strong>of</strong> <strong>Economics</strong> were presented by<br />
Kautilya <strong>and</strong> <strong>Shukra</strong>. According to him, if Adam Smith is the founder<br />
<strong>of</strong> Modern <strong>Economics</strong> then Kautilya is the founder <strong>of</strong> Oriental<br />
<strong>Economics</strong>. (Bokare, 2009: 79, 93)<br />
We become astonished while studying the deep insight into<br />
the economic problem <strong>and</strong> their practical solutions given Kautilya <strong>and</strong><br />
<strong>Shukra</strong>.Theories propunded by these teachers were tested, revised<br />
<strong>and</strong> applied by the society for long. In the context <strong>of</strong> agriculture<br />
development, price stability <strong>and</strong> goverment finanace, ideas <strong>of</strong> Kautilya<br />
<strong>and</strong> <strong>Shukra</strong> are more practical than those <strong>of</strong> mercantilist, physiocrats<br />
<strong>and</strong> classical.<br />
Every student <strong>of</strong> <strong>Economics</strong>, today knows it very well that<br />
this subject was evolved in Europe, the first economic thinker was<br />
101
Plato <strong>and</strong> first economist is Adam Smith but very few <strong>of</strong> them have<br />
any knowledge about the contribution <strong>of</strong> oriental economic thinkers.<br />
In this study economic ideas <strong>of</strong> Brihasapti, <strong>Shukra</strong> <strong>and</strong> Kautilya have<br />
been discussed briefly, in fact, too briefly. But this small study is the<br />
evidence that discussions were held in those times on economic issues<br />
widely <strong>and</strong> intensely. These ideas reveal that socio-economic<br />
advancement is not a monopoly <strong>of</strong> any particular race. Rather it is a<br />
wealth <strong>of</strong> mankind.<br />
�<br />
102<br />
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108
Accounting 83-86<br />
Adam Smith 13, 63, 64<br />
Adulteration 96<br />
Agriculture 27,30<br />
Alternative price 66<br />
Animal farming 39<br />
Apastamb 3<br />
Artha 17,22<br />
Arthashastra 16-18, 87<br />
Aristotle 12,13,63<br />
Ashoka 88<br />
Balance 97<br />
Bhingisi 58<br />
Boesche 93,100<br />
Boudha 12<br />
Boudhayana 16, 87<br />
Brihasapti 1,5,28,48,73<br />
Brihasapti-sutra 5-9<br />
Business management 49<br />
Chanakya 9, 10<br />
Ch<strong>and</strong>eshwor 12<br />
Classical 13,62<br />
Coins 49<br />
Consumer’s protection<br />
53,96<br />
Cost 70<br />
Crops 35<br />
D-A-K equilibrium 98<br />
D<strong>and</strong>-niti 16<br />
Dem<strong>and</strong> 68<br />
Economic prosperity 47<br />
Equilibrium 71, 98<br />
Fine 79<br />
INDEX<br />
Fiscal year 83<br />
Four stages <strong>of</strong> life 97<br />
Four varnas 97<br />
General equilibrium 98<br />
Government revenue 54<br />
Hindu equilibrium 99<br />
Importance <strong>of</strong> agriculture 94<br />
Imports 89<br />
International trade 53<br />
Items <strong>of</strong> expenditure 80<br />
Jainism 12<br />
Jayasawal 12,27<br />
Kali G<strong>and</strong>aki 100<br />
Kautilya 9,17,28,73<br />
Keynes 13,20<br />
K-G-B sector 29, 97<br />
Kirata 59,60,100<br />
K-M economy 28,30,32<br />
L<strong>and</strong> tenure system 31<br />
Machiavelli 93<br />
Mahabharata 4,16, 87<br />
Manu-smriti 3, 65<br />
Market 71<br />
Marshall 13,18,63,73<br />
Marxian 13<br />
Material prosperity 92<br />
Megasthenes 32<br />
Mercantilists 27<br />
Metallurgy 54,58,78<br />
Methodology 21<br />
Mines 55-57<br />
Mining 49,58,78<br />
Mint master 49<br />
Moksha 100<br />
Monopoly tax 80<br />
National economy 28<br />
Neo-classical 13, 64<br />
Nepal 59,60,101<br />
Nepalese product 59,101<br />
Non-availability effect 70-71<br />
Oppert 8<br />
Ostrom, Elinor 38<br />
Pana 34<br />
Prosperity 19,47, 92<br />
Prostitutes 79<br />
Paitamaha-tantra 5<br />
Philosophy 16<br />
Physiocarats 13, 27<br />
Price 67, 70-73, 95<br />
Price policy 67, 95<br />
Price theory,<br />
foundations 62<br />
in <strong>Kautiliya</strong> Arthashastra 67<br />
in Manu-smriti 65<br />
in <strong>Shukra</strong>-niti 65<br />
in Wealth <strong>of</strong> Nations 64<br />
limitations 73<br />
Production <strong>of</strong> liquors 52<br />
Pr<strong>of</strong>it 74<br />
Political economy 13<br />
Purana 2-3<br />
Quality <strong>of</strong> milk 41<br />
Ramayana 4<br />
Rent 74<br />
Requirement <strong>of</strong> rain 35<br />
Reserved forest 44<br />
Rig-Veda 2,100<br />
Road transport 54<br />
Robbins 19<br />
Role <strong>of</strong> state 48<br />
Rural development 30<br />
Shalgram 60,101<br />
Shivaksetra 60,101<br />
Superintendent <strong>of</strong> Market 53,69<br />
Supply 69<br />
Superintendent <strong>of</strong> Salt 49<br />
<strong>Shukra</strong> 7-8,18, 28,49,86<br />
<strong>Shukra</strong>-niti 7-8,54,65,73<br />
Scarcity 19,69<br />
Shyamashastry 10<br />
Sources <strong>of</strong> revenue 10<br />
Taxation principles 87<br />
Thread industry 50<br />
Trade 47,53<br />
Transportation 54<br />
Treasury 56,73, 77<br />
Tri-varga balance 98<br />
Types <strong>of</strong> forests 43<br />
Varta 27<br />
Value 71-72<br />
Veda 2<br />
Vritti 17<br />
Wage 64<br />
Wages for farm workers 34<br />
Waterways 53<br />
Wealth 16,17<br />
Wealth <strong>of</strong> nations 13,64<br />
Wine 52<br />
Yagyawalkya 3<br />
Yogkshema 93<br />
Zimmer 16<br />
109 110
ECONOMICS OF KAUTILYA<br />
SHUKRA AND<br />
BRIHASPATI<br />
Dr. B R Gewali<br />
Associate Pr<strong>of</strong>essor<br />
Butwal Multiple Campus, Butwal<br />
Publisher<br />
Gyanjyoti Prakashan<br />
Rundhati Trust,<br />
Jyotinagar, Manigram<br />
2012<br />
˜<br />
Subject- <strong>Economics</strong>, Oriental<br />
Title- <strong>Economics</strong> <strong>of</strong> Kautilya, <strong>Shukra</strong> <strong>and</strong> <strong>Brihaspati</strong><br />
ISBN- 2-4888-4<br />
Copyright author<br />
Contact- 9847038095<br />
Email- brgewali_2008@yahoo.com<br />
First edition 2012<br />
Price- 120 NRs<br />
Fast Print Publications, Butwal, 9847244745
cy{zf:q+ ej]b\ uf}/+ ;fl/sfjbg+ z'ed\ .<br />
cIf;"q+ kmn+ lae|bGgfxf/+ sd08n'd\ ..<br />
(The God) <strong>Economics</strong> has the fruit <strong>of</strong> hard labour in one h<strong>and</strong>,<br />
Rudraksh (eleocarpus) in second, food in third, <strong>and</strong> water pot in fourth<br />
h<strong>and</strong>. His face is bright <strong>and</strong> voice is like myna.<br />
- Rajeswarshastry Drawid’s <strong>Kautiliya</strong>m Arthashastram (Second Chapter)<br />
PREFACE<br />
The definition given by Kautilya- manusyanam vrittirarthah...<br />
always attracted me. To analyze the oriental economic thoughts I studied<br />
economic ideas <strong>of</strong> Kautilya. In connection I studied <strong>Shukra</strong>-niti <strong>and</strong><br />
<strong>Brihaspati</strong> Artha-sutra. It is to be noted that thoughts <strong>of</strong> <strong>Kautiliya</strong>,<br />
Ausanas, <strong>and</strong> Barhasptya school are generally common <strong>and</strong> all claim<br />
that their schools have borrowed ideas from the long tradition <strong>of</strong><br />
Arthashastra- Political Economy.<br />
I found four different editions <strong>of</strong> Kautilya's treatise useful for<br />
my study- Kautilya’s Arthashastra (internet edition) by Shyamashastry,<br />
the <strong>Kautiliya</strong> Arthshastra Part 1,2,3 (reprint, 2003) edited <strong>and</strong> translated<br />
by R P Kangle, Kautilyako Arthashastra (1967) translated by K R Aryal,<br />
<strong>and</strong> Kautilya- the Arthashastra (1992) rearranged <strong>and</strong> explained by L N<br />
Rangrajan. For <strong>Brihaspati</strong>’s thought I used two sources- Barhaspatya<br />
Arthashastra or <strong>Brihaspati</strong> Artha-sutra (internet edition) edited <strong>and</strong><br />
translated by F W Thomas <strong>and</strong> scattered thoughts <strong>of</strong> <strong>Brihaspati</strong> in<br />
Mahabharata. Although there are various collections <strong>of</strong> <strong>Shukra</strong>-niti in<br />
the market but for my study I selected two books- <strong>Shukra</strong>-niti (1987)<br />
translated by D B Paudyal, <strong>and</strong> <strong>Shukra</strong>nitisar (2008) translation with<br />
commentary by Jagdiswaran<strong>and</strong>a.<br />
In the present study I have tried to compare the economic<br />
thoughts <strong>of</strong> Kautilya with <strong>Brihaspati</strong> <strong>and</strong> <strong>Shukra</strong>. The parameter <strong>of</strong><br />
comparison being Kautilya’s economic thoughts. The tools <strong>and</strong><br />
terminology for comparison have been taken from main stream<br />
<strong>Economics</strong>.<br />
I have not only tried to examine their modern relevancy but<br />
also find their place in Modern Economic Theory. While starting this<br />
study I was eager to incorporate latest comments on Oriental<br />
<strong>Economics</strong>. Unfortunately I found no such works in Nepal. Perhaps<br />
doing research in these traditional links is not an interesting job for the<br />
present generation. In research bulletins <strong>and</strong> in UGC’s reports these<br />
types <strong>of</strong> studies can hardly make place for themselves. For you, readers<br />
<strong>of</strong> the future, I hope this book is helpful.<br />
After doing internet searches I came to know the two new<br />
publications on oriental economic thoughts- one from USA <strong>and</strong><br />
other from India. My daughter Bhagirathi Gewali Tripathi <strong>and</strong> son-inlaw<br />
Loknath Tripathi from Irel<strong>and</strong> helped me to find the book- The<br />
Great Political Realist, from Washington. My former student Tara<br />
Rayamajhi Pokhrel from Butwal, helped me finding the book-<br />
Arthashastra in <strong>Economics</strong> from New Delhi. Both <strong>of</strong> the books are on<br />
<strong>Kautiliya</strong> Arthashastra. But I did not find any new publication or<br />
comment or research on <strong>Brihaspati</strong> <strong>and</strong> on <strong>Shukra</strong>. So, I became<br />
dependent only on traditional sources for the economic ideas <strong>of</strong><br />
<strong>Brihaspati</strong> <strong>and</strong> <strong>Shukra</strong>.<br />
There are many people to whom I am grateful. I am indebted to<br />
Pr<strong>of</strong>. D R Pant, Pr<strong>of</strong>. Dr. N R Kanel, Pr<strong>of</strong>. Dr. M R Dahal, Pr<strong>of</strong>. Dr.<br />
Madhavi Singh, Dr. Madhab Raj Panthi, <strong>and</strong> Dr. Tika Ram Panthi for<br />
their kind suggestions while writing the book. I would like to thank my<br />
friends B P Pokhrel, Prakash Koirala <strong>and</strong> Prashant P<strong>and</strong>eya who helped<br />
me at the time <strong>of</strong> final pro<strong>of</strong> reading <strong>and</strong> to D R Ghimire <strong>and</strong> U K<br />
Parajuli, who always encouraged me to complete my writing.<br />
It will be a mere formality to say that without the help <strong>of</strong> my<br />
wife I could not have finished the book in time. If this small efforts <strong>of</strong><br />
mine encourages my readers to explore new ideas in the field <strong>of</strong> Oriental<br />
<strong>Economics</strong> I will feel my effort meaningful. I will welcome the comments<br />
<strong>and</strong> suggestions <strong>of</strong> my readers <strong>and</strong> well wishers.<br />
Jyotinagar, Manigram<br />
Rup<strong>and</strong>ehi, 2012
CONTENT<br />
Chapter 1: Introduction 1<br />
Chapter 2: Definitions <strong>and</strong> Methodology <strong>of</strong><br />
Oriental <strong>Economics</strong> 15<br />
Chapter 3: Agriculture <strong>and</strong> Animal Farming 27<br />
Chapter 4: Trade <strong>and</strong> Commerce 47<br />
Chapter 5: Pricing Policy 62<br />
Chapter 6: Government Finance 76<br />
Chapter 7: Conclusion 92<br />
LIST OF TABLES<br />
Table 1.1. Chapter Divisions in <strong>Brihaspati</strong>-sutra 7<br />
Table 1.2. Ancient Scholars <strong>of</strong> Arthashastra 11<br />
Table 2.1. Comparison <strong>of</strong> the Definitions 19<br />
Table 3.1. The Requirement <strong>of</strong> Rain 35<br />
Table 3.2. Types <strong>of</strong> Forests 43<br />
Table 3.3. Reserved Forest 44<br />
Table 4.1. Road width in <strong>Kautiliya</strong> Arthashastra <strong>and</strong> <strong>Shukra</strong>-niti 54<br />
Table 4.2. Revenues from Mine 56<br />
Table 4.3. Enumerative Sutras Related with Metallurgy 58<br />
Table 5.1. Alternative Prices <strong>of</strong> Cattle 66<br />
Table 5.2. Elements <strong>of</strong> Price Determination 68<br />
Table 5.3. Availability <strong>and</strong> Non-availability Effect in <strong>Shukra</strong>-niti 71<br />
Table 5.4. Shares <strong>of</strong> Factors <strong>of</strong> Production 74<br />
Table 6.1. Revenue Sources in <strong>Shukra</strong>-niti <strong>and</strong> <strong>Kautiliya</strong> Arthashastra 81<br />
Table 6.2. Working Days 83<br />
Table 6.3. Possible Expenditure Account 85<br />
Table 6.4. Possible Income Account 86
LIST OF FIGURES<br />
Fig, 4.1. Business Organization 51<br />
Fig. 5.1. Equilibrium in the Market 72<br />
Fig. 5.2. Availability Effect 72<br />
Fig. 5.3. Non-Availability Effect 72<br />
Fig. 7.1. Trivarga-sewa or The General Equilibrium 100<br />
LIST OF ABBREVIATIONS<br />
A C : After Christ<br />
Atharva. : Atharva-Veda<br />
B C : Before Christ<br />
D-A-K Equilibrium : Dharma, Artha <strong>and</strong> Kam Equilibrium<br />
K-M Economy : Kautilya Maurya Economy<br />
K-G-B : Krisi, Goraksha <strong>and</strong> Banijya<br />
Rig. : Rig-Veda<br />
Yaju : Yajur-Veda