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Economic Ideas in Arthasastra and their relevance today
Fr. John Felix Raj. S.J.

Kautilya, author of the Arthashastra (literally means science of material gain) lived in the 4th Century BC. North India's political landscape was transformed by the emergence of Magadha in the eastern Indo-Gangetic Plain. In 322 B.C., Magadha, under the rule of Chandragupta Maurya, began to assert its hegemony over neighboring areas. Chandragupta, who ruled from 324 to 301 B.C., was the architect of the first Indian imperial power-the Mauryan Empire (326-184 B.C.) - Whose capital was Pataliputra, near modern-day Patna, in Bihar. Ashoka, grandson of Chandragupta, ruled from 269 to 232 B.C. and was one of India's most illustrious rulers. Situated on rich alluvial soil and near mineral deposits, especially iron, Magadha was at the center of bustling commerce and trade. The capital was a city of magnificent palaces, temples, a university, a library, gardens, and parks, as reported by Megasthenes, the third-century B.C. Greek historian and ambassador to the Mauryan court. The manuscript of Arthasastra was discovered at Tanjore and Mr. Shamasastry gave its first translation in 1905 and subsequently published it as a text in 1909, as Vol.37 of the Bibliotheca Sanskrita of Mysore.

Legend states that Chandragupta's success was due, in large measure, to his Brahman minister and adviser, Kautilya (Chanakya). Arthasastra was a textbook that outlined governmental administration and political strategy. There was a highly centralized and hierarchical government with a large staff, which regulated tax collection, trade and commerce, industrial arts, mining, vital statistics, welfare of foreigners, maintenance of public places including markets and temples, and prostitutes. A large standing army and a well-developed espionage system were maintained. The empire was divided into provinces, districts, and villages governed by a host of centrally appointed local officials, who replicated the functions of the central administration.

Arthasastra [i] has on the whole 15 books, 150 chapters, 180 sections and 6,000 slokas. It is made as a compendium of almost all the Arthasástras, which, in view of acquisition and maintenance of the earth, have been composed by ancient teachers. “This Sastra, bereft of undue enlargement and easy to grasp and understand, has been composed by Kautilya in words, the meaning of which has been definitely settled”.

Kautilya begins his work with salutations to God. He starts with “Om, Salutation to Sukra and Brihaspati.” He does not specifically speak about God in his work. While describing the city plan within the fort, he mentions about the apartments to be erected for gods and goddesses in the centre of the city. According to Kautilya, the king fulfills the functions of god (Indira and Yama) upon earth; all who slight him will be punished not only by the secular arm but also by heaven. Mauryan kings including Asoka took the title of “Beloved of the Gods” (Devanampiya). [ii] They were no doubt looked on as superior semi-divine beings. The Mauryans left behind them the tradition of the Universal King. The king was usually held in great awe and respect. We are able to understand between the lines of his pragmatic approach that Kautilya was a God-fearing man.

Economic ideas and their relevance

His economic and political thoughts as found in Arthashastra (Science of Material Gains) are centered around the following areas: Life, role, excellence and qualities of a king; upright kingdoms; faithful citizens; the functions of governments; the duties of ministers, ambassadors, secretaries etc; planning and good process of decision-making; employment and the beauty of work; wealth and its role; a good army and the role of soldiers; agriculture and its importance; the various problems of the state like poverty, famine, crimes etc. We shall discuss and appreciate these ideas under fifteen topics, for they are unique and have great relevance for today.

  1. Life, Excellence, Qualities and Duties of a King
    These ideas are found in Book I which is on “Discipline” and Book VI which is on “the Source of Sovereign States” of Arthasastra. “The king who is well educated and disciplined in sciences, devoted to good government of his subjects, and bent on doing good to all people will enjoy the earth unopposed” (AI: VI). [iii] ‘A saintly king shakes off the aggregate of the six enemies like: lust, anger, greed, vanity, haughtiness and over joy; acquires wisdom, restrains from the organs of senses; he is disciplined, maintains his subjects; employs good ministers for assistance; and keeps away from unrighteous transactions’ (AI: VII).

    “If a king is energetic, his subjects will be equally energetic”. ‘He should keep a time table/ programme each day. If he is accessible to people, he may be sure to avoid confusion and public disaffection. He keeps company with priests and teachers. “In the happiness of his subjects lies his happiness, in their welfare his welfare… the king shall ever be active and discharge his duties; the root of wealth is activity, and of evil its reverse” By his good activities, he can achieve his desired ends and abundance of wealth’ (AI: XIX).

    ‘Born of a high family, godly, possessed of valor, seeing through the medium of aged persons, virtuous, truthful, not of a contradictory nature, grateful, having large aims, highly enthusiastic, not addicted to procrastination, powerful to control his neighboring kings, of resolute mind, having an assembly of ministers of no mean quality, and possessed of a taste for discipline; these are the qualities of an inviting nature. Inquiry, hearing, perception, retention in memory, reflection, deliberation, inference and steadfast adherence to conclusions are the qualities of the intellect. Valor, determination of purpose, quickness, and probity are the aspects of a king’s enthusiasm. He is possessed of a sharp intellect, strong memory, and keen mind, energetic, powerful, trained in all kinds of arts, free from vice’ (AVI: I). Kautilya holds that a blind king is better than an erring king, because “a blind king can be made by his supporters to adhere to whatever line of policy he ought to. But an erring king who is bent upon doing what is against the science, brings about destruction to himself and to his kingdom by misadministration” (AVIII: II).

  2. Planning
    While talking about planning, Kautilya says “the king shall plan his administrative measures after deliberations in a well-formed council. The subject matter of the council shall be entirely secret” (AI: XV). Book II of Arthasastra deals with the duties of government superintendent in detail in 36 chapters. Kautilya touches upon every possible area of administration starting from “Formation of Villages” and “Division of Land”, and describes the duties of the superintendent of respective departments. Take for example chapters III and IV. Kautilya describes in detail the plan of how a fort should be built and a blueprint of a city within the fort.

  3. On Employment of Ministers and others
    Kautilya says, “Sovereignty (rajatva) is possible only with assistance. “A single wheel can never move.” Therefore, a king shall employ ministers and councilors and listen to their advice”. At the head of affairs was a small body of elder statesmen, whom the king was advised to choose with the utmost care. The size of this privy council (mantri-parishad) varied. (AI: VII). ‘Men whose ability is inferred from their capacity shown in work, should be, having taken into consideration the place and time where and when they have to work, appointed as ministerial officers (AI: VIII). ‘The king shall examine the character of ministers. He shall ascertain their loyalty and disloyalty by temptations through priest spies (AI: X). Thus, in Kautilya’s time, every aspect of the life of the individual was watched over, and as far as possible controlled by the government.

    ‘Those who are possessed of foresight, wise, of strong memory, bold, eloquent, skilful, intelligent, possessed of enthusiasm, dignity and endurance, pure in character, affable, firm in loyal devotion, free from procrastination and fickle mindedness, and free from such qualities as excite hatred and enmity, should be appointed as ministers, councilors and priests’ (AI: IX). The qualifications of ministers have also been described in AVIII: I, and AV: VI.

  4. On Upright Government
    According to Kautilya, the elements of Government are the king, ministers, the country, the fort, the treasury, the army and the friends.’ ‘Excepting the enemy, these seven elements are said to be the limb-like elements of sovereignty.’ “A wise king can make even the poor and miserable elements of his kingdom happy and prosperous; but a wicked king will surely destroy the most prosperous and loyal elements of his kingdom.” “A wise king, trained in politics, will though he possesses a small territory, conquer the whole earth with the help of the best-fitted elements of his sovereignty, and never be defeated” (AVI: I). Chapter II of Book VI is on peace and exertion. Kautilya claims “acquisition and security of property are dependent upon peace and industry. Efforts to achieve the results of works undertaken are industry (vyayama). Absence of disturbance to the enjoyment of the results achieved from work is peace. The application of the six-fold royal policy is the source of peace and industry. (AVI: II).

  5. Secret Service and Law
    Employing spies seems to have been common and part of royal administration in the ancient times. In Arthasastra we find that “the king shall create spies under the guise of a fraudulent disciple, a recluse, a householder, a merchant, an ascetic, a classmate, a fire-brand, a poisoner, and a mendicant woman. Of these spies, those who are of good family, loyal, reliable, well trained shall be sent by the king to espy in other parts of his country (wandering spies) the movements of his ministers, priests, commanders of army” etc (AI: XI). Perhaps the least pleasant feature of political life in Arthasastra time was the espionage. The spy was an important means of keeping a finger on the pulse of public opinion. Concerning law Arthasastra says ‘in cities and at places where districts meet, there will be three members acquainted with sacred law and three ministers of the king carrying out the administration of justice (AIII: I). Book III has twenty chapters dealing with law and justice at various levels in the kingdom.

    Ancient kings, it appears from Arthasastra, feared revenge and assassins. Against such possibilities they had a network of spies. They had arrangements for authorities in various districts and villages to know all comings and goings. People who were considered dangerous to the king and his rule would disappear without trace. They had food tasters to avoid being poisoned. And, like Shih Huang-ti, they never slept in the same bed two nights in succession.

  6. On Envoy/Ambassador
    Regarding qualities of envoys and ambassadors, Arthasastra enumerates: ‘the envoys and ambassadors shall make friendship with the enemy’s officers etc. They will carry out their mission even at the cost of their own lives. Envoys and messengers are mouthpieces of the king. They will not care for the mightiness of the enemy, they shall avoid liquor and women, and they will ascertain through spies the loyalty or disloyalty of the people of the enemy. They must be friendly to all and put on brightness in tone, face etc’ (AI: XVI).

  7. On King’s Secretaries and Courtiers
    Book V of Arthasastra is on the conduct of courtiers. ‘A courtier possesses enough experience of the world and its affairs. He will sit by the side of, and close to the king. He shall avoid speaking slyly; he shall never make false statements; he shall never interrupt the king while speaking; he shall tell the king both what is good and pleasing.’ “He shall avoid evil aspersions against others, nor ascribe evil to others; he shall forgive evil done to himself and have as much forbearance as the earth” (AV: IV). ‘When employed, he, the courtier shall follow the king in his pursuits after hunting, gambling, drinking, and sexual pleasures. Ever attending upon the king, he shall, by flattery, endeavor to arrest his fall into evil habits and save him from the intrigues, plots, and deceptions of enemies. He shall also endeavor to read the mind and appearance of the king. He shall show the net revenue after all kinds of expenditures are met with. He shall also show the exact particulars of whatever work he does’ (AV: V).

  8. On Kingdom
    Book IV is on “Removal of Thorns” which speaks about protection of artisans, merchants, remedies against natural calamities, punishment of the wicked, detection of youth of criminal tendency, protection of all types of government departments, atonement for violating justice etc. It deals with categories of violations – both human and natural, and protection against them. These are the aggregates of a prosperous and peaceful kingdom.

    As Arthasastra holds, ‘the seven elements of a kingdom are: the king, the minister, the country, the fort, the treasury, the army and the friend (AVI: I). The end of a king and his kingdom is happiness, which is secured by his strength. The three kinds of strength are power of deliberation (intellectual strength), the possession of a prosperous treasury and a strong army, and material wealth. For peace and prosperity in the kingdom, the six-fold policy must be applied. What produces favorable results is policy, and vice versa. The king who is of good character is the fountain of policy (AVI: II). “In a kingdom, forts, finance and the army depend upon the people; likewise buildings, trade, agriculture, cattle rearing, stability, power and abundance of wealth” (AVIII: I).

  9. On Fort/Fortress
    Kautilya advocated that ‘ on all four quarters of the boundaries of the kingdom, defensive fortifications against enemies shall be constructed: a water fortification, a mountainous fortification, a desert fortification and a forest fortification (A II: III). Chapter IV of Book II describes the demarcation of the ground inside the fort and the buildings within. ‘The fort shall contain twelve gates, provided with both a land and water and a secret passage’. This section gives a detailed account of what should be where, like king’s palace, the apartment of gods, treasury, storehouse, houses, hospitals, shops, manufactories, guilds and corporations, roads, animals etc.

  10. On Wealth
    Kautilya holds that “wealth, wealth alone is important, in as much as charity and desire depend upon wealth for their realization.” (AI: VII). Wealth, virtue and enjoyment form the aggregates of the three kinds of wealth. Of these, it is better to secure the first…while describing different kinds of wealth, Arthasastra mentions that “wealth which, when obtained, increases the enemy’s prosperity, or which causes loss of men or money, is dangerous wealth; wealth which causes fear from one’s people is provocative wealth” etc (AIX: VII).

  11. On Good Army
    Kautilya writes about army and its role in many sections and chapters particularly in Books IX and X. According to him, ‘the king himself should supervise the army’ (AI: IX); the army is one of the seven elements of sovereignty (AVI: I). Kautilya describes the various kinds of army in a kingdom in Book VII, chapter VIII. The army should be arrayed on a favorable position, facing other than the south quarter, with its back turned to the sun, and capable to rush as it stands (AX). ‘The kshatriya caste is the best for army’ (AI: XXXI). His minister and priest should encourage the army. Astrologers and other followers of the king should infuse spirit into his army by pointing out the impregnable nature of the array of his army, his power to associate with gods, and his omniscience; Stationing the army so as to stand abreast is called a staff-like array (danda). Stationing the army in a line so that one may follow the other is called a snake-like array (bhoga). Stationing the army so as to face all the directions is called a circle-like array (mandala) (AX:VI).

  12. On Agriculture
    Chapter I of Book II is on “Formation of Villages”. ‘The king shall protect agriculture from oppressive fines and taxes, and cattle from thieves… and disease. He must protect his citizens, and peasants in particular who are the ultimate source of prosperity.’ Chapter II is on “Division of Land” where it is said that ‘there must be cultivable land, pasture land, well developed forests’. While describing the duties of the superintendent of agriculture, Arthasastra explains how he shall cultivate state land, raise wet and dry crops and supervise harvests etc. “Lands may be confiscated from those who do not cultivate them, and given to others” (AII: I). “The destruction of crops is worse than the destruction of handfuls, since it is the labour that is destroyed thereby; absence of rain is worse than too much rain” (AVIII: II).

  13. On Social Evils and other problems
    Arthasastra speaks about various social issues and problems. ‘Those orphans who are to be fed by the state and are put to study science and the duties of the various orders of religious life etc shall be employed as classmate spies’ (AI:XII). “The king shall provide the orphans, the aged, the infirm, the afflicted, and the helpless with maintenance. He shall also provide subsistence to helpless women when they are carrying and also to the children they give birth to.” Kautilya also sees the issues from people’s angle. For instance, “when, without making provision for the maintenance of his wife and children, any person embraces asceticism, he shall be punished with the first amercement; [iv] likewise any person who converts a woman to asceticism” (AII: I).

    Book VIII of Arthasastra deals with vices and calamities in detail. It describes the calamities of the elements of sovereignty; troubles of the king and of his kingdom; troubles of minister, troubles of the army, troubles of the treasury, troubles of men (vices like gambling, drinking, addiction to women etc). Kautilya advises that ‘in order to avoid internal troubles, the king should keep under his control the powers of finance and army’ (AVIII: II). “Of what kind the king’s character is, of the same kind will be the character of his people” (AVIII: I).

  14. Characteristics of Enemy
    Kautilya in Book X explains all the wisdom relating to war. He advocates under certain circumstances going straightaway against the stronger enemy first, so that a subsequent engagement against the ‘assailable’ enemy may not be necessary.

    Kautilya devotes the whole chapter III of book VII to the attitudes and behavior of weak kings towards a strong monarchy. One example is: Kautilya claims “the king should always make peace with an equal or superior king, and crush down an inferior.” In other words, aggrandizement is human nature, and that a power superior in strength should launch a war against an inferior, and that war keeps a nation’s blood circulation regular. [v]

  15. On Citizenship
    Chapter III of Book I of Arthasastra narrates the respective duties of four castes and of the four orders of religious life as determined by the three Vedas (Sama, Rik and Yajus). “Harmlessness, truthfulness, purity, freedom from spite, abstinence from cruelty, and forgiveness are duties common to all. The observance of one’s own duty leads one to Svarga and infinite bliss (Anantya). When it is violated, the world will come to an end owing to confusion of castes and duties. Hence, the king shall never allow people to swerve from their duties; for whoever upholds his own duty, ever adhering to the customs of Aryas, and following the rules of caste and divisions of religious life, will surely be happy both here and hereafter. For the world, when maintained in accordance with injunctions of the triple Vedas, will surely progress, but never perish”. Kautilya concludes chapter IV of this section in the following words: “This people (loka), consisting of four castes and four orders of religious life, when governed by the king with his scepter, will keep to their respective paths, ever devotedly adhering to their respective duties and occupations”.


About the same time, around 4 centuries before Christ, there were the renowned Greek philosophers like Thales, Plato and Aristotle, and Chinese philosopher, Confucius. Kautilya’s Arthasastra immediately followed Plato’s philosopher king and Confucius’ Noble Prince.

The line of thinking in Kautilya’s Arthasastra is oriented to practical politics, of almost the same pragmatic approach as in Machiavelli’s ‘prince’. In the classical Hindu view of personal evolution, there are four aims or ends in life:

  1. Artha (accumulation of material wealth and family, implying all the strategies of survival, all the diplomacy of private and public politics and the manipulation of power and wealth);

  2. Kama (the quest for pleasure and love);

  3. Dharma (the laws of moral action and religious rituals); and

  4. Moksha (spiritual release, redemption and transcendence). [vi]

The Arthasastra is devoted to the first aim in life, that is science of property and material success, and this success includes political and diplomatic strategy, which aimed, according to Kautilya, at uniting all kingdoms under one king, Chandragupta. Kautilya seems to have had little time for other aspects of life. His book has no Dharma. [vii] It is totalitarian and secular in nature. It is pragmatic in the sense that there is no permanent friend or enemy in politics – “ my enemy’s enemy is my friend”. It maintains that royal ordinance can rightly override all other sources of law, which is disagreed by many theorists.

Some of the modern ideas of organization, planning, administration, management and bureaucracy are found elegantly enshrined in some sections of the Arthasastra. The State, In Kautilya’s days, was primarily the king, and so, kingship is dealt with in substantial detail in Arthasastra – the qualitative aspects of a king’s personality and leadership such as education, training for leadership and personal conduct. While most of their precepts would primarily apply to king’s handling of projects, finance and warfare, many of the instructions on normal life’s requirements will apply equally to educated and virtuous people of today.

*The author is vice-principal and professor of economics, St. Xavier’s College, Kolkata and Director, Goethals Indian Library and Research Society, Kolkata.


[i] I have used R. Shamasastry’s translation of Kautilya’s Arthasastra (Mysore: Wesleyan Mission Press, 1923) for reference and quotes.

[ii] Basham, A. L., “The Wonder that was India”, Ancient Indian Polity: Life and Thought, visit: www.india.emb.org 

[iii] The numbers in bracket like (AI: VI) denote Arthasastra Book I: Chapter VI.

[iv] First amercement was a fine of 48 to 96 panas. Book II, chapter XIX of Arthasastra is on weights and measures.

[v] Smitha F Frank, “Chandragupta – Emperor and Martyr”, Chapter 14 in World History, visit: www.fsmitha.com. s

[vi] Visit www.ubu.com/aspen; No.10, section 2, “Thou are That”.

[vii] Diaz S. M., Thirukkural, Chennai: Vathaman Pathippagam, 2001.




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