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KAUTILYAS
ARTHASASTRA:
ECONOMICS AND POLITY
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INTRODUCTION
Arthashastra has been attributed to Kautilya, thefamous minister of Emperor Chandragupta Maurya.Kautilya is regarded by historians as largelyresponsible for the overthrow of the rule of the
Nandas and for pacing Chandragupta on the throneof Magadha. The date of the work was supposed to be around
the end of the 4th century.
Arthashastra, despite its title, which means the
science of wealth, was not an enquiry into thecauses of the wealth of nations, but rather a work onpolity offering advice to the ruler on how to increaseand preserve his wealth and power.
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The Economic Functions of the State
The economy was completely dominated by the state. Thegovt. was not merely tax-gatherer but also agriculturist,road-builder, forester and merchant.
Private economic activity other than crop production was
only residual and subject to strict govt. regulation andcontrol.
The king represented the state and the actual business ofgovt. was conducted by a complicated hierarchy of govt.officials, who was expert in his field, as head.
The officials were required to collect regular & carefulcollection of statistics, by direct observation of conditionsby officials and above all by the employment of a widenetwork of well paid spies.
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The Economic Functions of the State
The another state activity was the settlement ofland.
The economic merits of diff. types of land was
considered. For e.g. as between a dry tract and landabounding in water, a small land abounding in wateris preferable to a large dry tract because of thecontinuousness & fixity of produce. Similarly
preference was given to land that can yield cropswithout much rain, is suitable for grain crops and soon.
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The Economic Functions of the State
The state was also responsible for the properdevelopment of forests, of which it was the soleowner.
A distinction was drawn b/w elephant forests to beestablished on the border of the country and
intended for military purposes, and product forestswith economic value.
The state was also resp. for the safety of cattlegrazing in the pastures and of caravans passingthrough. Pasture lands was leased out to herdsmen.
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The Economic Functions of the State
Another imp. area of state activity was thedev. of mineral resources.
The director of mining should be an expert in
dhatusastra. He had to make a survey of allregions where mineral deposits were to befound and start new mines and renovate oldones.
In earlier times, a small mine yieldingproducts of high value such as diamonds wasto be preferred.
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The Economic Functions of the State
Kautilya was greatly concerned with the incomethe state could derive from its activities.
There were 12 kinds of income which the statederived from the mines:
1.mulya, price
2.bhaga, share
3.vyaji, a sort of sales-tax
4.parigha, a kind of protective duty5.atyaya, penalty for violation of state monopoly
6.sulka, custom duty
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The Economic Functions of the State
7.vaidharana, compensation for transfer of state rightsof sale to private individuals
8.danda, fine
9.rupa, the inspection fee of one-eight percent10.rupika, a charge for manufacturer at 8 percent ofthe price
11.dhatu, metals
12.Panya commodities manufactured from them.So, mining and the industries based on it were
expected to be a valuable source of state incomeand that the treasury depends on the mines.
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The Economic Functions of the State
The another imp. area of economic activity by thestate was trade.
State goods (rajapanya) are classified into 2categories - svabhumija, indigenously produced andparabhumija, produced in foreign lands.
Indigenous goodsbelonging to the state were to besold in one place, the capital city, where all statestores were located. Imported goodswere to be sold
in a no. of centres. In both the cases, the interests of customers were to
be taken into account in fixing the selling price.
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The Economic Functions of the State
State goods were normally to be sold by stateservants but the aid of private traders could also besought. In that case, traders were required to pay afee, to make up for the loss of profit which the statewould have earned by sale through its servants.
The Director of Trade was also to arrange for theexport of state goods to foreign lands.
It was not just trade I state goods, that was understate control. All trade was controlled by the state
with the panyadhyaksa in over-all-charge. It implies strict control over pricing, distribution,
transport, building roads, as well as measures forproviding security to traders.
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The Economic Functions of the State
Because of the risk of attack by forest tribes and robbers,traders usually moved in groups and travelled together incaravans (sartha).
Inside the state boundaries, it was the states duty to protect
the caravans and was allowed to charge a kind of road cesscalled vartani, to be collected by the officer at the frontierpost, who wads also resp. for any loss suffered by the caravanon its way to the capital. Elsewhere the resp. for the losssuffered by a caravan appears to have been distributed over a
no. of officers. In addition to vartani, there is a reference to dtivahika, i.e.
escort charges, so that the state supplied an armed escort toaccompany the caravan from the frontier post to the capital.
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The Economic Functions of the State
The another industrial activity of the statewas textiles. This was not a state monopolyand was also open to private production.
The officer-in-charge, the sutradhyaksa, wasto get yarn spun from wool, etc.
Women from respectable families, who were
not used to going out for work, would beallowed to spin in their homes.
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The Economic Functions of the State
Another imp. resp. of the state was to arrange forstorageof a wide variety of goods.
The construction of stores is described at length.Part of the stores was made up of goods produced
by state enterprise, the rest were dues received bythe state in kind.
The stores would be used for making part paymentto state servants and others, the remainder was putup for sale.
The stores also provided a convenient means ofcreating buffer stocks and preventing a widefluctuation in price.
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Scope for Private Industries
Private production was carried out by artisans andcraftsmen. There were master artisans to do theactual work and there were artisans workingindependently with their own capital and in their own
workshops. In the latter case, the guild (sreni), to which the
artisan belonged, guaranteed the customer againstloss, damage, etc. caused by the artisan.
Artisan were subject to state-control: delay indelivery and failure to carry out the customersinstructions were offences punishable by the state.
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Scope for Private Industries
State control on agricultural operations on privateland was less extensive than that of industry.
In a normal year decisions on the choice of crops,and the allocation of land among diff. crops, was left
to the farmer himself. The aim of the state was to ensure that it was not
cheated of the share of output due to it as landrevenue. For this purpose it was to maintaincomplete statistical records of all agricultural
holdings with details about the various types of soiland the crops raised as well as sowing andharvesting of crops.
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TAXATION &
PRICING POLICY
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Taxation & Pricing Policy
In deciding on the activities to be undertaken bythe state, an imp. consideration for Kautilya wastheir long-run potential for adding to state revenue.The same principle underlies his approach totaxation.
Agriculture, the most imp. sector of the economywas the principal source of tax revenue. Normally a
one-sixthshare of produce was prescribed as taxbut in times of emergency, the share could go up toone-fourthor even one-third.
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Taxation & Pricing Policy
A no. of taxes were levied on village as a whole,for the maintenance of the army, for buyingpresents on festive occasions such as a princes
birth. For irrigated agriculture, a water rate was charged
by the farmer which was imp. source of staterevenue.
There was a schedule of the rate to be charged,depending on the nature of the irrigation worksused.
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Taxation & Pricing Policy
If the works were such that the water was setin motion by hand, the rate was one-fifthofthe produce.
If set in motion by shoulders, the rate rose toone-fourth.
The rate increased to one-thirdwhen waterwas set flowing in channelsby a mechanical
device.In all the cases the water rate was in
addition to the normal land tax of one-sixth.
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Taxation & Pricing Policy
Pricing policyby the state was an imp. part and thestate fixed prices of goods, rates of int. and wagesas well as conditions of work
If competition among purchasers pushes up theprice the increase in pricetogether with the dutyshall go to the treasury.
For fixing wages of workers employed in state
industries, the Superintendent of Yarns and Textilesshould fix the wage after ascertaining the fineness,coarseness and largeness or smallness of quantity.
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Taxation & Pricing Policy
The rate of intereston loans was different
depending on the types of loans.
The maximum permitted rate is higher for
transactions involving a higher degree of risk.
It is for e.g., twice as high for debtors
embarking on a journey by sea as for those going
on a journey through forests and the latter again isdouble of the interest on routine commercial
loans.
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THE LAND SYSTEM
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The Land System
Earlier all land was held in common as a whole andthe king, as the chief representing the tribe, wasregarded as the owner of the land. But later on, theprivate ownership of land started.
In the state owned category, all unoccupied landwas there. Kautilya states that such land, if ready foragriculture should be given to those who are willing
to pay the taxes, with the fear of loss of staterevenue. If the grantees failed to till the fields, theycould be taken away from them and given to others.
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The Land System
Land which was not already available was allowed to bebrought under cultivation by whosoever chose to do so. Inthis case, the land was not to be taken away but such afarmer must also be supposed to be a tenant on state land.
In case of privately owned land, the owner of the fieldwas distinguished from the tenant. If the tenant leaves, atthe time of sowing, a certain fine has to be paid, except incase of defect, calamity or unbearable conditions.
If there was a dispute regarding the boundaries betweentwo adjacent fields, and neither party could prove itsclaim, the disputed portion was to go to the state.
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The Land System
The cultivable land was allotted to tax-payers, it was alegal offence for a person who did not already own somelanded property.
The rules also required owners wishing to sell a dwelling,
in the presence of members of forty neighboring families.
The seller having set a price had to ask: at this price, whois willing to purchase? When this had been asked3 timesand no objections raised, the prospective buyer would be
entitled to purchase. If competition among buyers bid theprice up above that declared by the seller, the amt. of theexcess accrued to the state.
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The Land System
The another indication in case of privately ownedcultivable land was, depriving the farmer of land inthe event of failure to pay land revenue was theresponsibility of the particular type of officer for
enforcing payment. In the case of state lands, land could be taken away
from the person who failed to cultivate the landallotted to him and given to another.
State owned land not cultivated by a state agencycould be leased out to sharecroppers. Two types ofshare cropping arrangement were there-
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The Land System
Onerelates to those, who retained half theproduce for themselves; the other, who couldkeep only one-fourthor one-fifthof what they
produced. In the former case, the cultivatorshad to bring their own implements, seeds,bullocks, labourers, while in the latter case,the tenants depended on the state forimplements and seeds.
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The Land System
Kautilya did an attempt to raise sudras, manyof whom had been landless agriculturallaborers, to the status of peasant proprietors.
Kautilya was against landlordism and infavour of cultivation by owner-farmers.Kautilya believed in the elements ofexcellence in ajanapada(country or region).
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The Land System
Kautilya emphasis was on factors of production, i.e. onthe material basis of wealth and power. A body of loyaland hard working peasants and farm-workers forms partof that basis, and these qualities could well be expected
to have been fostered in people of the lower varnas. In the traditional theory of varna, raising crops and
farming cattle were jobs allotted to the vaisyas. Thesudras were supposed only to provide services. So, as a
result of economic growth, trade and commerce beganweaning away a large no. of vaisyas from agriculture totrade, and more and more sudras were required to replacethem.
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CONCLUSION
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Conclusion
According to Kautilya , the source of livelihood ofmen is wealth, in other words, the earth inhabited bymen. The science which is the means of theattainment and protection of that earth isArthashastra.
He distinguished 3 kinds of primary goods: spiritualgoods, material well-beingand sensual pleasure, hedeclares that material well-being, and by implication,wealth which alone can confer it, is the highest of
the three. Material well being alone is supreme:spiritual good and sensual pleasure depend onmaterial well being. It is wealth, not superstition ,that leads to achievement of any kind.
