RATE OF INTEREST IN ANCIENT INDIA: A WAY TOWARDS FINANCIAL INCLUSION AND SUSTAINABLE DEVELOPMENT...

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RANJAN B U

RESEARCH SCHOLAR,

MANDAVYA RESEARCH AND

DEVELOPMENT CENTRE,

MANDAVYA FIRST GRADE

COLLEGE, MANDYA DIST.

KARNATAKA, INDIA

RATE OF INTEREST IN ANCIENT INDIA:

WAY TOWARDS FINANCIAL INCLUSION AND SUSTAINABLE DEVELOPMENT WI

SPECIAL REFERENCE TO MANU SMRITI AND KAUTILYA’S ARTHASHASTRA



Page | 2

From,

RANJAN B U

Research Scholar

Mandavya Research & Development Center

Mandavya First Grade College, MandyaEmail: [email protected]

Mobile: 8105356290

To,

The Organizing Secretary

Dept. of P G Studies in Commerce

University College

Mangalore – 575001

Respected Sir,

Sub: Submitting the original abstract and full paper for National Conference: reg

With reference to the subject cited above, I hereby submitting my original abstract and full

paper titled RATE OF INTEREST IN ANCIENT INDIA – A WAY TOWARDS

FINANCIAL INCLUSION AND SUSTAINABLE DEVELOPMENT WITH SPECIAL

REFERENCE TO MANU SMRITI AND KAUTILYA’S ARTHASHASTRA, to IBMT –

2015 UGC SPONSORED Three day National Conference on “Indian Banking: managing

transformation in the era of Globalization & information Technology”, sub theme

‘Financial inclusion’ . The Conference will be hosted in your esteemed Institute on 6th

7th

& 8th

January 2015.

I kindly request you to accept the paper and oblige the same

Thanking you,

Always yours at the service of needy,

DATE: 6/1/2015

PLACE: MANDYA (RANJAN B U)



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RATE OF INTEREST IN ANCIENT INDIA:A WAY TOWARDS FINANCIAL INCLUSION AND SUSTAINABLE DEVELOPMENT

WITH SPECIAL REFERENCE TO MANU SMRITI AND KAUTILYA’S ARTHASHASTRA

ABSTRACT

In the matter of economic development of our country, it should be based on our own basic

philosophy and structure laid down by our ancestors from the time immemorial. Our smritis &

darmashastras unanimously declare the concept of TRIVARGA SIDDHANTA; say Dharma (virtue)

Artha (wealth/economy) & Kama (desires). By studying these texts, astonishingly, I found the

concepts of charging interest in ancient India. Among which Manu smriti & kautilya’s

arthashastra inspired me to develop this concept.

The Manu’s conception on rate of interest based on Varna system (division of society based on

work) which was surprisingly resulted in financial inclusion, but kautilya’s arthashastra

concerned more on administrative aspects than that of personal laws, which give raises to

sustainable development in those days.

This paper explores the ancient texts (manu smriti and kautilya’s arthashastra) & its perceptionon the rate of interest in ancient India which leads to financial inclusion and sustainable

development. Methodology is used to present this paper is called hermeneutics, which comprises

of studying, understanding and interpreting the ancient texts. It is a qualitative research

methodology used in social science. Eventually an abbreviated attempt is exercised to present its

modern relevance along with inference.

Keywords: Rate of Interest, Ancient India, Financial Inclusion, Sustainable Development,

Manu Smriti & Kautilya’s Arthashastra



Page | 4

INTRODUCTION:

“It seems to me that before we can appreciate Swaraj, we should have not only love but passion

for Swadesi. Every one of our acts should bear the Swadesi stamp. . . There could be several

methods to improve our economy and commerce of the country. It requires expert planning, but

it should be rooted in Swadesi thought*”, It's, indeed, at this confluence, there is a need to go

back and to study our ancient scriptures to rejuvenate provincially in all affecting strata.

However, at the same time, Manu Smriti & Kautilya’s Arthashastra will also provide remarkable

references and practical ideas to improve our country’s economy and commerce.

Heretofore, the problems of modernism can seek the solution from Ancientness. It can get

pioneer and complex remedies. Notably, I found some of the practices and laws relating to Rate

of Interest in ancient India. I'm delighted to develop the concept of charging Interest in ancient

India which results in financial inclusion and sustainable development with special reference to

Manu Smriti & Kautilya’s Arthashastra.

The interest rate is a percentage of principal paid a certain number of times per period for all

periods during the total term of the loan or credit. Surprisingly, Manu’s Rate of Interest (ROI) is

based on varna System, a quadruple division of society based on an occupation performed, it is

not to be confused with the much coarser Cast System in India. Unlike Manu’s Rate of Interest,

Kautilya in his Arthashastra gave significance to the level of risk involved or the purpose of the

loan rather than the socioeconomic status of the borrower. The imposition of fines for disputes in

associated with ROI, Invalid surety of minor and Exception from the payment of interest under

different circumstances were expressed under the conceptual framework in detail.

__________________________________________

*Said - Dr. M Rama Jois, Former Chief Justice of Punjab & Haryana High Court, Former Governor of Jharkhand &

Bihar, in national conference on 18 th November 2004 at Center for Inter-Disciplinary Studies and Research in

Sanskrit, Canara College, Mangalore.

http://en.wikipedia.org/wiki/Percentage

http://en.wikipedia.org/wiki/Principal_sum





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LITERATURE REVIEW:

Charles Waldauer, William J Zahka & Surendra Pal (1996) ‘Kautila’s Arthashastra: A

neglected Precursor to classical Economics’, demonstrated the kautilya’s views on

international trade, principles of taxation, labor theory of values. They adversely concluded that,the kautilya’s arthashastra is another example of occidental philosophy through suffering from

not having access to oriental philosophical thought.

Michael liebig (2014) ‘ kautilya's arthaśāstra: a classic text of statecraft and an untapped

political science resource’, states that, Kauṭilya's ideas and concepts in the Arthaśāstra

represent an untapped reservoir of ideas and concepts that can be used to tackle political science

puzzles. That goes both for the history of political thought and for theory building with respect to

current questions and puzzles of political science, including International Relations theory. The

analysis and explication of the central ideas and concepts of the Kauṭilīya Arthaśāstra with the

help of 'covariant' or structurally homologous categories of political science should be a – long

overdue – contribution to introducing a 'de-orientalized' Kauṭilīya Arthaśāstra in the political

science discourse internationally.

Nanda Lal Darnal, article, ‘ Kautilya's Arthashastra and Economic Development: An

Analytical study on state's Role in Modern Perspective’ accomplished that, There are many

elements of modern economics in Arthashastra but only a few aspects can be mentioned here. It

was a valuable guide to political economy in its time and provides us with privileged insights in

to the Mauryan economic system and society. With careful reading, one can glean from it many

economic wisdom of relevance to our times, and it certainly can be used to illustrate several

modern economic ideas.



Page | 6

OBJECTIVE OF THE STUDY:

i. To reveal the concept of rate of interest in ancient India.

ii. To divulge Manu’s rate of interest and its connection with financial inclusion.

iii. To study Kautily’s rate of interest in his Arthashastra and how it results in sustainable

development.

SCOPE OF THE STUDY:

This paper narrowly focuses on versatile aspects of Rate of Interest in ancient India based on

Manu Smriti & Kautilya’s Arthashastra and its stages, imposition of fines for disputes in

associated with ROI, Invalid surety of minor and Exception for the payment of interest under

different circumstances.

METHODOLOGY:

This paper is based on a qualitative research methodology called Hermeneutics. Hermeneutics

are related to the name of the Greek god Hermes, in his role as the interpreter of the messages of

the gods. Current context, hermeneutics can be described as the interpretation and understanding

of ancient literature and religious texts. Hermeneutics is widely applied in many fields of socialscience such as philosophy, religion, theology, law, sociology, and also international relations.

Under this methodology, the references or notes were stated in its original text where ever it

requires.

LIMITATIONS:

No research methodology is perfect with any drawback. The limitation of the study includes:

i. The study is micro in nature restriction only to the concept of ROI in ancient India.

ii. The study restricted its references only to Manu Smriti & Kautilya’s Arthashastra.

iii. The study is at an introductory stage and not addresses the deepest and most critical

aspects in detail.



Page | 7

CONCEPTUAL FRAMEWORK

TERMINOLOGY – THE DOCTRINE OF TERMS:

I. RATE OF INTEREST :

An interest rate is the rate at which interest is paid by borrowers (debtors) for the use of money

that they borrow from lenders (creditors). Specifically, the interest rate is a

percentage of principal paid a certain number of times per period for all periods during the total

term of the loan or credit. Interest rates are normally expressed as a percentage of the principalfor a period of one year; sometimes they are expressed for different periods like for a month or a

day. Different interest rates exist parallel for the same or comparable time periods, depending on

the default probability of the borrower, the residual term, the payback currency, and many moredeterminants of a loan or credit. 1

II. FINANCIAL INCLUSION :

Financial inclusion or inclusive financing is the delivery of financial services at affordable coststo sections of disadvantaged and low-income segments of society, in contrast to financial

exclusion where those services are not available or affordable. It is argued that as banking

services are in the nature of public good; the availability of banking and payment services to the

entire population without discrimination is the prime objective of financial inclusion public

policy.

2

III. SUSTAINABLE DEVELOPMENT :

The United Nations World Commission on Environment and Development (WCED) in its 1987report Our Common Future defines sustainable development: "Development that meets the needs

of the present without compromising the ability of future generations to meet their own needs”

Broadly defined, sustainable development is a systems approach to growth and development and

to manage natural, produced, and social capital for the welfare of their own and future

generations. The term sustainable development as used by the United Nations incorporates bothissues associated with land development and broader issues of human development such as

education, public health, and standard of living.3

_______________________________________________

1

http://en.wikipedia.org/wiki/interest_rate

2

http://en.wikipedia.org/wiki/Sustainable_development3

http://en.wikipedia.org/wiki/financial_inclustion

http://en.wikipedia.org/wiki/Interest

http://en.wikipedia.org/wiki/Lender



http://en.wikipedia.org/wiki/Financial_services

http://en.wikipedia.org/wiki/Society

http://en.wikipedia.org/wiki/United_Nations

http://en.wikipedia.org/wiki/Brundtland_Commission

http://en.wikipedia.org/wiki/Our_Common_Future

http://en.wikipedia.org/wiki/Social_capital

http://en.wikipedia.org/wiki/Land_development

http://en.wikipedia.org/wiki/Human_development_(humanity)

http://en.wikipedia.org/wiki/Sustainable_development

http://en.wikipedia.org/wiki/Sustainable_development

http://en.wikipedia.org/wiki/Human_development_(humanity)

http://en.wikipedia.org/wiki/Land_development

http://en.wikipedia.org/wiki/Social_capital

http://en.wikipedia.org/wiki/Our_Common_Future

http://en.wikipedia.org/wiki/Brundtland_Commission

http://en.wikipedia.org/wiki/United_Nations

http://en.wikipedia.org/wiki/Society




http://en.wikipedia.org/wiki/Lender

http://en.wikipedia.org/wiki/Interest



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IV. MANU-SMRITI :

Manu-smriti, (Sanskrit: “Laws of Manu”) traditionally, the most authoritative of the books of

the Hindu code (Dharma-shastra) in India. Manu-smriti is the popular name of the work, which

is officially known as Manava-dharma-shastra. It is attributed to the legendary first man and

lawgiver, Manu. In its present form, it dates from the 1st century BCE.

The Manu-smriti prescribes to the Hindu his dharma — i.e., that set of obligations incumbent on

him as a member of one of the four social classes (varnas) and engaged in one of the four stages

of life (ashramas). It contains 12 chapters of stanzas, which total 2,694. It deals with

cosmogony; the definition of the dharma; the sacraments ( samskaras); initiation (upanayana)

and study of the Vedas (the sacred texts of Hinduism); marriage, hospitality, obsequies, dietary

restrictions, pollution, and means of purification; the conduct of women and wives; and the law

of kings. The last leads to a consideration of matters of juridical interest, divided under 18headings, after which the text returns to religious topics, such as donations, rites of reparation,

the doctrine of karma, the soul, and hell.1

V. ARTHASHASTRA :

The Arthashastra is an ancient Indian treatise on statecraft, economic policy and military

strategy, written in Sanskrit. It identifies its author by the names "Kauṭilya" and

"Vishnugupta" both names that are traditionally identified with Chanakya (c. 350 – 283

BCE), who was a scholar at Takshashila and the teacher and guardian of Emperor Chandragupta

Maurya, founder of the Mauryan Empire. The text was influential until the 12th century, when it

disappeared. It was rediscovered in 1904 by R. Shamasastry, who published it in 1909. The first

English translation was published in 1915.

Centrally, Arthaśāstra argues how in an autocracy an efficient and solid economy can be

managed. It discusses the ethics of economics and the duties and obligations of a king. The scope

of Arthaśāstra is, however, far wider than statecraft, and it offers an outline of the entire legal

and bureaucratic framework for administering a kingdom, with a wealth of descriptive cultural

detail on topics such as mineralogy, mining and metals, agriculture, animal husbandry, medicineand the use of wildlife. The Arthaśāstra also focuses on issues of welfare (for instance,

redistribution of wealth during a famine) and the collective ethics that hold a society together.2

________________________________________________________________ 1

http://www.britannica.com/EBchecked/topic/363055/Manu-smriti

2 http://www.britannica.com/EBchecked/topic/36913/Artha-shastra

http://www.britannica.com/EBchecked/topic/266312/Hinduism

http://www.britannica.com/EBchecked/topic/160730/Dharma-shastra

http://www.britannica.com/EBchecked/topic/363047/Manu

http://www.britannica.com/EBchecked/topic/160657/dharma

http://www.britannica.com/EBchecked/topic/623520/varna



http://www.britannica.com/EBchecked/topic/38363/ashrama



http://www.britannica.com/EBchecked/topic/520744/samskara



http://www.britannica.com/EBchecked/topic/618595/upanayana



http://www.britannica.com/EBchecked/topic/624383/Veda

http://www.britannica.com/EBchecked/topic/312474/karma

http://www.britannica.com/EBchecked/topic/555149/soul

http://www.britannica.com/EBchecked/topic/260218/hell/260270/Islam

http://en.wikipedia.org/wiki/Treatise

http://en.wikipedia.org/wiki/Public_administration

http://en.wikipedia.org/wiki/Economics

http://en.wikipedia.org/wiki/Military_strategy


http://en.wikipedia.org/wiki/Sanskrit


http://en.wikipedia.org/wiki/Chanakya

http://en.wikipedia.org/wiki/Takshashila

http://en.wikipedia.org/wiki/Chandragupta_Maurya


http://en.wikipedia.org/wiki/Mauryan_Empire

http://en.wikipedia.org/wiki/R._Shamasastry

http://en.wikipedia.org/wiki/Autocracy

http://en.wikipedia.org/wiki/Economy

http://en.wikipedia.org/wiki/Ethics


http://en.wikipedia.org/wiki/Bureaucracy

http://en.wikipedia.org/wiki/Welfare_state

http://en.wikipedia.org/wiki/Famine_in_India



http://en.wikipedia.org/wiki/Famine_in_India

http://en.wikipedia.org/wiki/Welfare_state

http://en.wikipedia.org/wiki/Bureaucracy


http://en.wikipedia.org/wiki/Ethics

http://en.wikipedia.org/wiki/Economy

http://en.wikipedia.org/wiki/Autocracy

http://en.wikipedia.org/wiki/R._Shamasastry

http://en.wikipedia.org/wiki/Mauryan_Empire



http://en.wikipedia.org/wiki/Takshashila

http://en.wikipedia.org/wiki/Chanakya





http://en.wikipedia.org/wiki/Public_administration

http://en.wikipedia.org/wiki/Treatise

http://www.britannica.com/EBchecked/topic/260218/hell/260270/Islam

http://www.britannica.com/EBchecked/topic/555149/soul

http://www.britannica.com/EBchecked/topic/312474/karma

http://www.britannica.com/EBchecked/topic/624383/Veda





http://www.britannica.com/EBchecked/topic/160657/dharma

http://www.britannica.com/EBchecked/topic/363047/Manu

http://www.britannica.com/EBchecked/topic/160730/Dharma-shastra

http://www.britannica.com/EBchecked/topic/266312/Hinduism



Page | 9

MANU’S RATE OF INTEREST:

The law of Manu (manu smriti), is the most important and earliest metrical work which

authorizes the practice of charging interest on borrowing. Surprisingly, Manu’s Rate of Interest

(ROI) is based on varna System, a quadruple division of society based on an occupation performed, it is not to be confused with the much coarser Cast System in India. The scheduled

ROI is established on the grounds of social states of a borrower rather than the level of risk

involved or the purpose of the loan.

Manu declared, just two in the hundred, three, four, and five (and not more), he may take as

monthly interest according to the order of the varna1 in Sanskrit text ( 8.142)

To Brahmana (The Thinker or Scholar) was charged – 2 % p.m – 24% p.a

To Ksatriya (The Leader) was charged – 3% p.m – 36% p.a

To Vaisya (The Profit Minded) was charged – 4% p.m – 48% p.a and

To Shudra (The Worker) was charged – 5% p.m – 60% p.a

If we look at the above facts, Manu’s differential & High ROI give rise to the predominant

question say, why it is discriminatory in nature with high rate of interest and will it results in

financial inclusion?

Reflecting the capability for correct and valid reasoning, Manu did not charged much for

Brahmana (24% p.a) & Ksatriya (36% p.a) while compare with Vaisya (48% p.a) & Shudra (60% p.a) ,

because Brahmana, The thinker, who is expected to devote his lifetime for learning and teaching;

Likewise Ksatriya , The Leader, who is also expected to devote his lifetime by offering protection

to the society, They never carry out any such business which results in Profit. Neither a

Brahmana, nor a Kshatriya must lend (money at) interest; but at his pleasure (either of them)

may, in times of distress when he requires money) for sacred purposes, lend to a very sinful man

at a small interest ( 10.117)2 in Sanskrit text said Manu. By this statement, it is clear that, only Vaisya &

Shudra were given authority to lend money at interest.

_____________________________________________________________________

1

2



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We think that the Manu’s ROI is very high, logically, Manu ordains not take interest beyond the year, nor

such as is unapproved, nor compound interest, periodical interest, stipulated interest, and corporal

interest (8.153)1 in Sanskrit text one of the interpretation of manu Smriti states that the interest payable

beyond one year is prohibited, even if the money due is paid by the debtor after 2 or 3 years.

Interest beyond one year was considered as redundant. If the debtor is unable to pay a debt (at the

fixed time), wishes to make a new contract, may renew the agreement, after paying the interest

which is due. (8.154)2 in Sanskrit text

Manu’s ROI results in financial inclusion by charging a minimum rate of interest to Brahmana &

the Ksatriya class of people whose socioeconomic status were speculative on those days. He

enacts that the interest should not take beyond the year. In case of beneficial pledge (i.e. One from

which profit accrues, has been given ), he shall receive no interest on the loan; nor can he, after keeping

(such) a pledge for a very long time, give or sell it (8.143)3 in Sanskrit text. In order to justify the Vaisya &

Shudra class of people he made a rule that neither a brahmana, nor a kshatriya must lend money

at interest by which only the vaisya & shudra classes were authorized to lend money for interest

and to make reasonable profit.

Manu strongly held the view that, if the debtor is dead and the money borrowed was expended

for the family, it must be paid by the relatives out of their own estate even if they are divided .

(8.166)4 in Sanskrit text even the present banking practices can cope with it. The Manu’s rate of interest

based on the grounds of social states of a borrower rather than the level of risk involved or the

purpose of the loan pragmatically results in financial inclusion by delivery of financial services at

affordable costs to sections of disadvantaged and low-income segments of those days.

________________________________________________________________________________

1

2

3

4





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KAUTILYA’S RATE OF INTEREST:

Unlike Manu’s Rate of Interest, Kautilya in his Arthashastra gave significance to the level of risk

involved or the purpose of the loan rather than the socioeconomic status of the borrower.

Kautilya does not give importance to varna System and he hasn't linked the interest rates with

Varna. We get fewer references with regard to ROI in Kautilya’s Arthashastra. The annual

interest rate structures1 for various categories of borrowers in Kutilya’s Arthashastra

are to be:

For non-commercial loans - 15%

For less risky commercial loans - 60%

For risky commercial loans - 120% and

For foreign trade - 240%

If we closely look at the above chart, it is found that the rate of interest on loans for foreign trade

(240% per annum) was much higher than that of loans for internal trade. The most feasible

explanation for the highest rate of interest for foreign trade is the concern for sustainable

development along with the high risk factor used to play a dominant role in those days. In

Kautilya’s Arthashastra there is an additional focus on maintain and to improve the planetary

resources for use by future generations.

In case of interest on loan against food grains, Kautilya states that , Interest on grains in seasons

of good harvest shall not exceed more than half (<50%) when valued in money2 , further he allows,

Interest on stocks (prakshepa) shall be one-half of the profit and be regularly paid as each year

expire3 , This shows a remarkable concern of Kutilya upon country’s economy. Kautilya never

concerned much with the human laws, like Manu, but he gave significance on the administrative

aspects of Muryan Kingdom.

_______________________________________________________________

1.

Shamasastry, R. (1961) Translator. ‘ Kautilya’s Arthasastra’ Mysore Printing and Publishing House, Mysore- chapter XI Recoveryof Debt – page no. 250

2.

Shamasastry, R. (1961) Translator. ‘ Kautilya’s Arthasastra’ Mysore Printing and Publishing House, Mysore- chapter XI Recovery

of Debt – page no. 250

3.





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IMPOSITION OF FINE:

Both Manu smriti and Kautilya’s Arthashastra will impose fines for the disputes relating to the rate of

interest under various circumstances, which are stated below:

i.

A debt being admitted as due, the defendant shall pay five in the hundred (5%) as a fine, if it be

denied and proved twice as much.1 in Sanskrit text

ii. Stipulated interest beyond the legal rate, being against the law, cannot be recovered; they call

that a usurious way of lending; the lender is in no case entitled to more than five in the

hundred.2 in Sanskrit text

iii.

A person claiming interest when it is not due, or representing as principal the total amount of

his original principal and the interest thereon shall pay a fine of four times the amount under

dispute (bandhachaturgunah).3 in Sanskrit text

iv.

A creditor who sues for four times the amount lent by him shall pay a fine of four times the

unjust amounts. Of this fine, the creditor shall pay ¾ths and the debtor ¼th.4 in Sanskrit text

v. If a creditor refusing to receive the payment of his debt shall pay a fine of 12 panas.5 in Sanskrit text

Minor’s surety is invalid:

Kautilya states that, the minor ’s surety is invalid (na prátibhávyamanyat ), minor’s surety is

inefficient (bálaprátibhavyam asáram6 = surety of a minor is not strong), Even today, we can

find the same practice in current banking transactions.

____________________________________________________________________

1.

2.

3.



4.



5.



6.





Page | 13

EXEMPTION FROM THE PAYMENT OF INTEREST:

i. Interest on debts due from persons who are engaged in sacrifices taking a long

time (dírghasatra), or who are suffering from disease, or who are detained in the

houses of their teachers (for learning), or who are either minors or too poor, shall

not accumulate.

ii. If the creditor’s refusal to receive the payment due to some reasonable cause, then

the amount free of interest for subsequent time shall be kept in the safe custody of

others.

iii. Debts neglected for ten years, except in the case of minors, aged persons, diseased

persons, persons involved in calamities, or persons who are sojourning abroad orhave fled the country and except in the case of disturbances in the kingdom

(rájyavibhrama), shall not be received back.

iv. Cultivators or government servants shall not be caught holding off for debts,

while they are engaged in their duties or at work.

v. A wife, though she had not heard of the debt ( pratisrávaní ), shall not be caught

holding off for the debt contracted by her husband, excepting in the case of

herdsmen and joint cultivators ( gopálakárdhasítikebhyah). But a husband may be

caught for the debt contracted by his wife.

vi. Debts contracted from each other by either a husband or wife, either a son or a

father, or by any one among brothers, of undivided, interests shall be

irrecoverable.

vii. In case of beneficial pledge (i.e. one from which profit accrues, has been given),

the creditor shall receive no interest on the loan; nor can he, after keeping such a

pledge for a very long time, give or sell it.1 in Sanskrit text

_______________________________________________________________________________

1.



Page | 14

FINDINGS:

i. It is found that, the Manu’s ROI is based on Varna System having differential and

high rate of interest for quadruple classes of people which results to financial

inclusion.

ii. Kautilya in his Arthashastra, while charging interest rate, gave significance to the

level of risk involved or the purpose of the loan rather than the socio-economic

status of the borrower. This gave rise to sustainable development of country’s

economy of those days.

iii.

The imposition of fines for disputes in associated with ROI, Invalid surety of

minor and Exception from the payment of interest under different circumstances

were found out.

SUGGESTION:

It is suggested to embark on mysterious study and interpretation of our sacred scriptures, in order

to enhance the ROI and allied concepts. It is also suggested to consider our ancient ideology in

policy and decision making process to improve our country’s economy and commerce rooted

with Swadesi thoughts.

CONCLUSION:

Indeed, both Manu smriti and Kautilya’s Arthashastra provide extensive references on the

concept of Rate of Interest in ancient India having the concern for financial inclusion and

sustainable development. Even today, the banking sector can effectively adopt and practice some

of the ideas on Rate of Interest bestowed by Manu and Kutilya.



Page | 15

Eventually, I would like to conclude my paper by citing Swami Vivekananda: “The debt which

the world owes to our motherland is immense. Taking country with country, there is not one race

on this earth to which the world owes so much as to the patient Hindu (CW. 3.105) The more, therefore,

the Hindus study the past, the more glorious will be their future, and whoever tries to bring the

past to the door of everyone, a great benefactor to his Nation. The degeneration of India camenot because the laws and customs of the ancients were bad, but because they were not allowed to

be carried to their legitimate conclusion (CW. 4.324)”

REFERENCES:

i.

Shamasastry, R. (1961) Translator. Kautilya’s Arthasastra, PDF format , Mysore Printing

and Publishing House, Mysore. Page no. 250-254

ii. Charles Waldauer, William J Zahka & Surendra Pal (1996) Kautila’s Arthashastra: A

neglected Precursor to classical Economics, Indian Economic Review, Vol.XXXI, No.1,

1996, pp. 101-108

iii.

Dr. N K Thingalaya(2006) Rural Credit In India: Its Concepts Evolution And Relevance,in Economic and Commerce: ancient concept and modern relevance, page no. 90-98.

iv. Michael liebig (2014) ‘ kauṭilya's arthaśāstra: a classic text of statecraft and an untapped

political science resource’ heidelberg papers in south Asian and comparative politics,

working paper no. 74 July 2014

v.

Nanda Lal Darnal, article, ‘ Kautilya's Arthashastra and Economic Development:An

Analytical study on state's Role in Modern Perspective ‘

vi. Ratan Lal Basu (2011) “ Kautilya’s Arthasastra (300 B.C.): Economic Ideas” Ratan Lal

Basu Smashwords Edition Smashwords Edition, License Notes.

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