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Introduction
Arthashastra, the marvels at how current and topical Kautilya is to present dynamic and
uncertain economic and social milieu. His work has relevance not only in contemporary India
but also the contemporary world. Though written in Sanskrit, it is unique in its entire canon of
Indian Literature, because of its unabashed advocacy of real politic and disciplined economic
management.
Kautilya's period is marked by emergence of studies by Manu, Brahaspati, Ushanas,
rise of Buddhim and Jainism on one hand and political disorder, mal administration, and
misrule of Nanda King. He generated a sense of patriotism through his discourses and
deliberations to fight against foreign invaders. He also reorganized the administration of the
entire kingdom to ensure an honest, efficient and compassionate administration. In accordance
with his advice Chandragupta built a strong state, defeated the invaders, established a clean
administration and subsequently became the imperial king of India.
Kautilya by taking a holistic and integrated approach to governance had provided a new
dimension to the field of economics, which has unfortunately remained neglected all this time.
He has talked about how economics works well with resource management, efficient
administration, fair judicial system, and knowledgeable people with integrity capable of taking
high positions.
He also suggested an important dimension of economic growth with equity and social
welfare to render sustainability to the economy’s management system. His most important
contribution pertains to treasury management which was designed in a holistic way. This
included the ruler being honest, committed and truly deserving of his position, the required
systems & procedures and norms that are to be observed being in place, and clearly spelt out.
The most striking feature is Kautilya’s penchant for pragmatic and realistic perspectives on
crucial determinants of governance. Strangely enough, we still grapple with the problems that
Kautilya had pointed straightforward solutions, years back. But what Kautilya propagated was
tackling fundamental problems relating not just to the economy but also human resource
management, which we lack today. Therefore, we are not able to practise his ideas.
Only if we could learn and apply methods proposed by this great scholar, we would not
have been suffering from a lot of miseries that the world faces today and could be better
prepared for the future. His foresight and vision can benefit us in almost all areas of life. This
project mainly aims at highlighting Kautilya's ideas on Political and Economic machinery of a
country as well as analyse how adaptation of those ideas has helped us develop many more
ideas and most importantly realize where we still lack.
Elements of State: Saptanga theory of the State
Kautilya nowhere exactly defines the state but he frankly adopts the time honoured seven
limbs, Saptanga theory of the State. The body politic is supposed to possess the various limbs
and each limb is supposed to be at par in importance to the other, though their importance
depends upon the achievement obtained by them. These are technically called the prakriti
(nature) of the rajya (state), i.e. the natural constituents of the state. The seven limbs are:
(i) Swami, the King
(ii) Amatya, the minister
(iii) Janpand, the territory
(iv) Durg, the fort
(v) Kosha, the treasury
(vi) Sena, the army
(vii) Mitra, the ally.
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The state can function properly only when all the limbs of its politic are mutually integrated
and cooperate with each other.
To Kautilya the swamin could be one person or many persons. However, swamin of
Kautilya is not a feudal chieftain but a veritable sovereign owing allegiance to none.
Amatya (minister or any kind of high official) must be native of the country and posses
steadfast devotion towards the swamin.
Janapad is interpreted as territory by some and population by others. Durg or forts were
considered vital part of the empire and were of great importance for the defence of the empire.
He refers to four kinds of forts, a water fort, a hill fort, a desert fort and a forest fort.
Kosha or Treasury is given wide importance because a good state should be rich in gold and
silver as well as big and variegated so that it may be capable of withstanding calamities for
long.
Kautilya mentions six types of armies or Bala hereditary forces, hired troops, troops
belonging to an ally, troops belonging to an enemy and soldiers of wild tribes. Ideal army is
hereditary one which has come down to him directly from his fathers and grandfathers.
Kautliya envisaged two types of allies (mitras), sahaj and kratrima. Sahaj mitra consisted of
persons whose friendship was derived from the time of father and grand-father and were
situated close to the territory of the immediately neighbouring enemy. Kratrim ally, on the
other hand, was an acquired ally whose friendship was reported for the protection of wealth
and life. Ally of first category were superior to the second one.

1. Monarchy
The normal form of government was monarchical. The Hindu state rarely presented
that high degree of centralization as that in the historical Roman Empire and the present-day
nation-state.
2. The King
The centre of the state administration was the king, usually hereditary in accordance
with the rule or primogeniture, living in high style and blaze of glory, in an enjoyment of
immense revenue from private and public property. From the ethical standpoint, king was
expected to lead a blameless life, disciplined to ceaseless administrative labour and committed
to the public good. So long he was on the throne, he presided over the executive and judicial
departments of government and was expected to take the lead on the field of battle.
3. Executive Machinery
The machinery for executive administration was well organized. It was the special care
of the king assisted by the ministers and many high officials. Below the great functionaries
stood a host of minor officials, military officers, diplomats and spies, secretaries, clerks,
technical employees and so forth.
4. Council of Ministers
Kautilya advises his king to see through the eyes of his aged ministers and to follow the
course of conduct that it approved them but he also advises the king to not depend upon the
advice of a single minister because such an advice could possibly be based on selfish motives.
He wanted king to consult many ministers and then come to his own conclusion. He insists that
a minister should be ‘native, born of high family, influential, well trained in arts, possessed of
foresight, wise, of strong arm, bold, eloquent, skilful, intelligent, possessed of enthusiasm
dignity and endurance, pure in character, affable, and firm in loyal devotion.
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5. No separation of powers
There was no separation of executive and judicial functions. But in practice there were
many people whose primary function was adjudication and who were assisted by a set of minor
functionaries.
6. Centre-State relations
Such was the machinery that normally worked at the centre. But it was difficult to
ensure it extension to the provinces, districts and villages. It was necessary to devise means for
reconciling central with local government and administration. Three lines were struck by
political theory:
(i) Federalism: A great deal of autonomy was left to feudatories and sub feudatories.
(ii) Feudalism: The King or feudatory organized a regular system of provincial and district
administration.
(iii) Autonomy: A great deal of autonomy was left to villages, more in the Deccan, less in the north.
7. Parallel Organizations
There existed parallel organization based on function, in the form of village
communities, kinship associations and guilds of manufacturers, merchant, bankers or others.
They enjoyed considerable autonomy in the management of their affairs. Their customs or rules
were recognized by the state and upheld by the law givers.
8. Horizontal and Vertical Government
Thus, organization was both horizontal and vertical and comprised many local and functional
jurisdictions and intermediate associations standing in various more or less ill-defined relations
with the state. For instance, Shreni or a guild consisted of persons following the same craft
though belonging to different castes, while the Nigama formed a guild of traders belonging to
various towns.
Four instruments of the state policy
Kautilya enumerated four instruments of state policy viz Sama or conciliation; Dama or gift,
Danda or chastisement; and Bheda or sowing dissensions. Kautilya recognized deceitfulness
or secret punishment among the legitimate means of statecraft. It was a natural consequence of
this state of things that there should grow up conventions and rules on relations between
independent sovereigns and suzerain and vassals.
The six-fold policy determines the relations of states with one another:
(i) Sandhi (treaty of peace or alliance);
(ii) Vigraha (war);
(iii) Asana (neutrality);
(iv) Yana (making preparation for attack without actually declaring war);
(v) Samsharaya (seeking the protection of another);
(vi) Dvadhibhava (making peace with one and waging war against another).
Functions of the State:
The state described by Kautilya is not a police state. The end of the state is not merely
maintenance of peace and order or protection but also to enable the individual to attain the
highest self-development with the help of the state. Here Kautilya’s opinion is like that of T.H.
Green. These aims are clear both from the description of the quality of a good state(limbs) and
the long list of departments of administration the major functions of the state according to
Kautilya are: Protection against internal as well as external threats; maintaining the common
law; upholding the social order; promoting the welfare of the people.
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GOVERNANCE
The Arthashastra is more a practical guide meant for kings than a theoretical
composition. The Arthashastra is a tome on how the king should rule and what aims should he
strive for. Kautilya knew the drawbacks of an evil ruler. He knew that even the strong republics
that existed in India and later succumbed easily to Persian and Greek invasion, fell primarily
because of maladministration. He realized the need for creating a strong and centralized
monarchy benevolent to the people. He could visualize the realization of a strong normal rule
in place of an evil one. He succeeded in creating an ideal state ruled by an ideal king,
Chandragupta Maurya. He administered the kingdom as prime minister and then wrote the
Arthashastra as a guideline for the benefit of the king.
The relevance of Kautilya’s Arthashastra to present day India and, indeed, the whole
world needed not be doubted. The work is relevant in many ways. For example, governance in
general and good governance in particular is the most relevant aspects. Those on an endless
search for good governance can expect a treasure trove in the Arthashastra. Many modern
thinkers, from Hobbes to Rawls, including Gandhi and Marx believed that human being
conceded coercive power to the state only in the hope of realizing good governance. Kautilya’s
treatise on the art of government and administration, the duties of kings, ministers, officials
and art of diplomacy is a guideline on good governance.
Kautilya wrote about governance in context of monarchic state and he enumerated
principles for governance of such a state. The political organization is said to have held seven
elements such as: the king, the minister, the territory, the fort, the treasury, the army and the
ally. The state is headed by the King who is bound by duties and obligations. Kautilya has
described King’s background, and his supreme position in all matters concerning state.
Kautilya prescribed a comprehensive daily routine, divided into seven phases from early
morning to late evening, so that King’s time was spent effectively on effective administration.
According to Kautilya, the four functions of the king are
i) to acquire what is not gained,
ii) to protect what is gained,
iii) to increase what is protected and
iv) to bestow the surplus upon the deserving. “In the happiness of his subjects lies his happiness,
in their welfare. Whatever pleases him personally he shall not consider as good but whatever
makes his subjects happy he shall consider goods.”
The three ‘powers’ of the king according to Kautilya are: power of good counsel, the
majesty of the king himself, and the power to inspire. The king is referred to as the ’promulgator
of dharma’ and hence Arthashastra advocates that the king should be free from the six passions
such as sex, anger, greed, vanity, haughtiness and over joy. “In the happiness of the subjects
lies the king’s happiness”, says the Treatise. The king should possess knowledge of philosophy,
old scriptures, political ethics, diplomacy and the functioning of the economy.
Since monarchy, is viewed as the only guarantee against anarchy in those days, Kautilya
advocates that “the king’s duty is to avert providential visitations such as famine, flood, and
pestilence. Hence, he is “bound to protect agriculture, industry, and mining, the orphan, the
aged, the sick and the poor”. The king has also to control crime with the help of spies, and to
settle legal disputes.
King should administer law and justice and he was the final arbitrator and the fountain
of justice. Although the king was at the centre of the body politic in Kautilya’s time, Kautilya
makes it clear that the king is bound by an implicit social contract and that the ultimate
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objective of the king, in economic and other affairs, should be to benefit his subjects. Their
happiness or welfare should be the prime objective of State policy.
Good governance in Kautilya’s mind was aimed at the welfare of the people. The
principles of good governance in Kautilya’s Arthashastra are well-drawn out. The king has no
individuality. His duties merged into his personality. He himself was one of the organs of the
state, albeit the most important organ. In Arthashastra, polity and society are merged and both
are restrained.
In good governance, the objectives of the state are to be fulfilled and realized. This is
possible through a properly organized and guided administration. This principle is relevant
even today. A government is good, if it is administered well. Kautilya suggests that good
governance should avoid extreme decisions and extreme actions. Soft actions (sama, dana) and
harsh actions (danda) should be taken accordingly. In what seems to be a very modern tone of
voice, Kautilya opines, “Sovereignty is practicable only with the cooperation of others and all
administrative measures are to be taken after proper deliberations.” The King and Ministers
were supposed to observe strict discipline. Kautilya recommended a strict code of conduct for
himself and for his administrators. This code of conduct is useful and applicable to modern
executives.
Even 2400 years ago, Kautilya emphasized capping at a quarter of the revenue the
salaries of the king and his officials. It was the duty of the king to maintain law and order in
society and to ensure protection of life, liberty and property. Ministers are directly responsible
for administration. They must be selected with great care. Their abilities must be tested before
their selection. They should be tested according to the jobs they will be assigned. Their abilities
and sincerities should be tested from time to time. All these measures are relevant to the civil
servants in present administration.
Kautilya also deals with the problem of corruption, in fact he points out about 40 ways
by which government funds can be embezzled. Good governance and stability go hand in hand.
If rulers are responsive, responsible, accountable, removable, recallable, there will be
instability. This is very essential in the present democratic set up. As in Kautilya’s monarchical
set up, similar qualities are required in our rulers and administrators.
The Arthashastra equates political governance with economic governance. The end is
economic governance while political governance is the means. But as economic objectives are
not realized in the absence of political ones, then political governance becomes an end and
economic governance the means. ‘The end justifies the means’; this is supposed to be the basis
of Kautilyan and Machiavellian philosophy. Political power and material wealth according to
Kautilya are the means and ends of governance. And good governance-political or economic-
depends upon justifying the ends and means as the socio, economic and political conditions.
Good governance is fundamental to the Kautilyan ideas of administration. Judging by the
countless governance scandals that are uncovered nearly every day in India, a reading of
Arthashastra, and imbibing its principles, ought to be the topmost priority of our leaders, both
political and corporate.
Arthashastra also finds classification of legal matters in to civil and criminal. He laid
down elaborate guidelines for administering justice of evidence, procedures, and witnesses. He
strongly believed in Dandniti, though he maintained that the penalties must be fair and just,
and proportionate to the offence created. This propagation was used to create a deterrent effect.
As for the state’s political administration, Kautilya has provided a full-fledged
commentary on how this should be undertaken. He gave instructions about defence of state
boundaries, protection of the forts, and the way an invasion by the enemy should be handled.
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He has described day-to-day functions to be performed by the King, ministers and other state
officials. He consolidated the Mauryan Empire into a unified central regime and he believed in
expansion and consolidation of state’s position. He believed in end results and hence was not
too sensitive about the means deployed. He is considered immoral on these grounds. Though
he upheld moral and ethical standards in his personal life. However, he straightforwardly
recommended fair and foul means for achieving goals.
While talking about good governance also, he has touched upon misappropriation of
state funds. He has given dubious methods employed for embezzlement of funds and other
similar malpractices. He explained working of checks and balances back then only which is
followed in the political setup of most democratic nations today.
Civil administration
The king oversaw an elaborate machinery to control civil administration. The heads of
the administration were the treasurer, chancellor, chief comptroller, and auditor. Under the
chancellor were frontier governors, provincial governors and judges. Under provincial
governors were magistrates. Under the chief comptroller and auditor were city commander,
city administrators, ministers’ head of manufacturing establishments, and city governor-
generals. Under the ministers were forest commanders and danda palav, chief forest officers
and the head of departments directly under chief comptroller and auditor.
Civil services
An honest, efficient and experienced civil service (i.e., bureaucracy) is a prime
requirement for efficient, equitable and just governance. Kautilya knew that a few civil servants
would feel the temptation to bite into a bite of the state’s wealth. Therefore, Kautilya
recommended that only those officials who did not eat the king’s wealth, but increased it in
just ways should be made permanent in civil service. While an officer negligent in his work
was fined double his wages and losses incurred, an officer who accomplished a task as ordered
or did better than that, was promoted and rewarded.
Conclusion
The ideal country of Kautilya is described as self-sufficient villages. The picture of
ideal Kautilyan state that emerges is one of a well-run state, prosperous and bustling. Among
other things, for him, the state should be easy to defend, should provide easy means of
livelihood, such as agricultural lands, mines, forests, pastures, trade routes, and so on and
should be inhabited by hardworking agriculturalists and men mostly of lower varnas. The rule
of Yatha Raja Yatha Prajah (As the King is, so are the people) must be upheld. It is a sacred
task of the king to continuously strive for the happiness and welfare of his people. He should
treat them all as equals. In the happiness of the subjects, lies the king’s own happiness and what
may be dear to the king may not be beneficial to him rather what is dear to the people may be
beneficial to him. The king would act as a good leader and take his people to where they ought
to go. It is prescribed that the Law of Inheritance (dharma), which may be peculiar to any
region or community or village should be recognized and upheld. One of the major reasons of
disputes in the country of India is this only, that one community or religion does not respect
the ideas of the other, so much so that they cannot tolerate each other’s existence. Kautilya’s
ideas on polity also inspire us to see through the fact that power comes from the countryside,
which is the source of all activity.
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Criticism
Kautilya is mainly criticized for his techniques of warfare. He is considered immoral
by some. Use of espionage and killing of enemies by the King’s secret agent is unethical. He
does not consider victory by deceit immoral. So long as the ends are met, means deployed do
not matter. As in his system of mandala, Kautilya advocated six-fold policy to interact with the
neighbours which included co-existence, neutrality, alliance, double policy, march and war. To
achieve this, he advised the king to resort to five tactics: conciliation, gift and bribery,
dissention, deceit and pretence, open attack or war. As such on the question of treaty and
alliance he suggests: “A King should not hesitate to break any friendship or alliances that are
later found to be disadvantageous.” Kautilya stated very frankly that the only way a king can
survive in the world is the rule of the fish, the big one eating up the smaller; only an empire of
considerable size and power and free from all internal instability could deter big fishes or alien
invasions.
Conclusion
For centuries to come and centuries that went by, which recorded in history talking of
the great men and legendary characters who shaped time through vision and exemplary actions.
Kautilya, is perhaps the only personality who has been accepted and revered as genius by both
Indian and western scholars. He is a historical milestone in the making of India amidst
tremendous upheavals and myriads of reversals. Celebrated as a shrewd statesman and a
ruthless administrator, he comes across as one of the greatest diplomats of the world. He had
the guts to speak his heart out even in front of the rulers, which shows his strong inclination to
democratic values and the audacity to put his views through. Although, he lived around the 3rd
Century BC, his ideas and principles show concurrence and validity in the present-day world.
Politics was his forte. Diplomacy in a politically charged environment shows his self-
confidence and the ability to stay calm in trying situations. He was a great laureate of
economics with a glittering intellect to perceive the intricate dynamics of the various economic
activities and principles. The centuries that succeeded him show distinct effects of his thoughts
on the way a kingdom is managed and other facets of economic administration. Chanakya,
apart from being a man of wisdom and unfailing strategies, propounded Nitishastra, the ideal
way of living for every individual of the society. He looked at the country like a person
surrounded by problems. He worked at the total annihilation of the problems by the roots. The
re-appearance of troubles only shows its growth. His contribution to foreign policy in the
present-day world is immense. Universities teach his principles to aspiring foreign policy
experts showing the infallibility of his principles. Kautilya's art of diplomacy is well known
across India and practiced in the areas of defence, strategy formation and foreign relations.
As a person, Kautilya has been described variously, as a saint, as a 'ruthless administrator', as
the 'king-maker', a devoted nationalist, a selfless ascetic and a person devoid of all morals. He
created controversy by saying, "The ends justify the means' and the ruler should use any means
to attain his goals and his actions required no moral sanctions. All his written works namely
'Arthashastra', 'Nitishastra' and 'Chanakyaniti' were unique because of their rational approach
and an unabashed advocacy of real politic. His views were dimensionally novel. He
recommended even espionage and the liberal use of provocative agents as machineries of the
State. In politics, he even attested the use of false accusations and killings by a king's secret
agent without any ambiguities. The observance of morals and ethics was secondary to the
interests of the ruler. Some of his stark views made him into an ambivalent personality for the
world.