Kautilya and Modern Economics by Balbir S Sihag

Introduction to Kautilya and his Arthashastra 

Kautilya was a learned, ethical, wise, experienced, secular, progressive, independent and original thinker. He believed that poverty was death while living. His Arthashastra is a manual on promoting Yogakshema—peaceful enjoyment of prosperity—for all the people. It is shown that his approach is more suitable to our economy than the currently adopted western approach. He understood the economic system as an organic whole with interdependent parts. He undertook an in-depth and detailed analysis of each part at the micro level without losing sight of the macro goal of engineering shared prosperity. He believed in the power of persuasion, moral and material incentives and not in coercion or force to elicit effort. He designed material incentives in such a way that no crowding-out occurred, that is without weakening the moral incentives. He advanced a holistic yet logical and comprehensive approach to bring shared prosperity. 

In fact, a stakeholders-model in which the businessmen, workers and consumers share prosperity, is discernible in his Arthashastra. He relied both on the invisible hand (the market) and the direct hand (principles, policies and procedures) to enrich the people. Kautilya was deeply influenced by the Mahabharata (3102 BCE) and it appears as if it had happened in not too distant a past. Secondly, Rao (1973) points out that the measurements used in the Arthashastra are very similar to those prevalent during the Sindhu-Sarasvati Civilization (2600 BCE-1800 BCE).1 

 According to the new research, Chandragupta Maurya ruled around 1534 BCE and not during the 4th century BCE. The preponderance of emerging evidence indicates that Kautilya wrote his Arthashastra—science of wealth and welfare—several centuries earlier than the fourth century BCE which has been advanced by the Western Indologists. They had taken upon themselves the selfless and tortuous task of dating, without any margin of error, all the historical events, such as the Aryan Invasion Theory and providing authentic interpretations of our ancient texts. They really need their well-deserved retirement from this demanding responsibility and leave it to the native amateurs. 

Kautilya was far-sighted, foresighted, ethical but not very religious, believed in designing an efficient organizational structure but was not a bureaucrat. Kautilya: The True Founder of Economics The following table lists some of the concepts innovated and used by Kautilya. It also provides the time-periods of their re-emergence. 

Table 1: Concepts Developed and Used by Kautilya 

On the other hand, Adam Smith did not innovate a single concept in economics. Barber (1967, p17) observes, “Little of the content of The Wealth of Nations can be regarded as original to Smith himself. Most of the book’s arguments had in one form or another been in circulation for some time.” 

Kautilya as a One-Man Planning Commission and More 

Kautilya's Arthashastra is comprehensive, coherent, concise and consistent. It consists of three fully developed but inter-dependent parts. 

(a) Principles and policies related to economic growth, taxation, international trade, efficient, clean and caring governance, moral and material incentives to elicit effort and preventive and remedial measures to deal with famines. 

(b) Administration of justice, minimization of legal errors, formulation of ethical and efficient laws, labour theory of property, regulation of monopolies and monopsonies, protection of privacy, laws against sexual harassment and child labour. 

(c) All aspects of national security: energetic, enthusiastic, well trained and equipped soldiers, most qualified and loyal advisers, strong public support, setting-up an intelligence and analysis wing, negotiating a favourable treaty, military tactics and strategy, and diet of soldiers to enhance their endurance. 

II Kautilya’s Ethics-based economics Versus Modern Self-interest based Economics 

Modern Economics Based on Self-interest: Complex contracts are written to safeguard against potential harm that might be caused by the partners’ opportunism. It seems that propensity for opportunism is the dominant phenomenon everywhere. Economists and organizational scholars believe that it is not possible ex ante to differentiate a trustworthy person from an untrustworthy one, so it is prudent to adopt a ‘calculative’ approach to trust, that is, treat trust as a risk and suggest taking necessary protective measures. 

Kautilya’s Ethics-based Economics: Ancient sages realized that genuine trust was an ethics-intensive concept since non-violence, truthfulness, honesty and benevolence were the foundation for trust. Kautilya accepted that insight wholeheartedly. That is, trust flourished only in an ethical environment. How to make sure that children grow-up to be ethical adults? Kautilya suggested teaching ethical values at an early age. Kautilya believed that dharmic (ethical) conduct paved the way to bliss and also to prosperity. That is, according to Kautilya, a society based on contracts alone is less productive and more anxiety prone than the one based on conscience and compassion. If the social environment is predominantly ethical, there is less of a need to take defensive measures to protect against opportunism. He emphasized ethical anchoring of the children for replacing the ‘culture of suspicion’ with a harmonious and trusting one. 

Critical Role of Trust in a Knowledge-based Economy: Trust may be an intangible asset/good but has the most tangible role in creating and sustaining the social, economic, cultural and political structures. It is the brick and mortar to the building of inter-personal relationships. In an industrial economy, trust (a) reduces transaction costs by reducing opportunism, enhances a feeling of wellness by reducing anxiety and (b) also might increase GDP by reducing the demand for lawyers and turning them into engineers. 

Trust is the most valuable asset in a knowledge-based economy. Both creation and sharing of ideas depend on trust. The distinguishing characteristic of a knowledge-based economy is a frequent sharing of tacit knowledge and exchange of information among the cognitive labor. As soon as a person codifies his/her tacit knowledge everyone has access to it. Knowing this fact a person will share tacit knowledge only if s/he is sure of not getting fired. Creating ethical-based trust is the key to realizing all the potential gains from creating and sharing of knowledge. 

Adam Smith focused only on invisible hand. But economists now deal with cases II and III also. Kautilya was the only one discussed all four cases. 

Table 1: Interests and Incentives 

Dharma and Prosperity 

Since the mid-90s, a considerable amount of intellectual effort has been devoted to study the nature of relationship between institutions, good governance and economic growth. One group of economists argues that institutions are the most important determinant of economic growth. In fact these economists call institutions as the ‘deep determinants’ of growth. For example, Dani Rodrik, Arvind Subramanian, and Francesco Trebbi (2004) (2004) claim, “This exercise yields some sharp and striking results. Most importantly, we find that the quality of institutions trumps everything else.” 

The other group of economists gives primary importance to good governance and only secondary to institutions. Edward Glaeser, Rafael La Porta, Florencio lopez-de-Silanes and Andrei Shleifer (2004, p 298) conclude, “But institutional outcomes also get better as the society grows richer, because institutional opportunities improve. Importantly, in that framework, institutions have only a second-order effect on economic performance. The first order effect comes from human and social capital, which shape both institutional and productive capacities of a society.” 

Apparently, economists, even now in 21st century, are debating about the relative importance of institutions versus to that of good governance. Kautilya settled this debate more than two thousand years ago. He argued that good governance created opportunities and institutions allowed them to be availed of implying that both were essential to prosperity and it was futile to compare them. However, according to Kautilya, most important was the ethical environment, which improved the quality of both. 

Kautilya on Importance of Institutions: Kautilya believed that poverty was a living death and also not conducive to the practicing of ethical values. He argued that maintenance of law and order was a prerequisite to economic prosperity. He (p 108) observed, “By maintaining order, the king can preserve what he already has, acquire new possessions, augment his wealth and power, and share the benefits of improvement with those worthy of such gifts. The progress of this world depends on the maintenance of order and the [proper functioning of] government (1.4). 

Importance of Good Governance: Similarly, according to Kautilya, good governance was needed for prosperity. He (p 149) suggested, “Hence the king shall be ever active in the management of the economy. The root of wealth is economic activity and lack of it brings material distress. In the absence of fruitful economic activity, both current prosperity and future growth are in danger of destruction. A king can achieve the desired objectives and abundance of riches by undertaking productive economic activity (1.19).” 

Kautilya’s ideas if expressed in today’s language imply that quality of institutions reduced risk and good governance increased return on investments. This may be captured by the following figure. 

The risk-return possibility frontier, AB shifts to A'B' and also becomes more concave. That makes it possible for an investor to move from point E to point E'. U1 and U2 are the indifference curves. Two points may be noted. Kautilya’s insights may be expressed not only as a shift in the feasibility frontier but also as a change in its curvature.

Table 8.1: Conceptual Framework on Dharma and Prosperity 

Conduct and Prosperity: Kautilya argued that a king, whether he fulfilled his moral duty or followed his enlightened self-interest, had to enrich his subjects. However, he understood the major differences between them: according to the moral duty, the king wanted to enrich the public whereas according to the enlightened self-interest, the king had to enrich the public. He preferred an ethical king rather than a king motivated by his enlightened self-interest. The following figure may be used to express his ideas on comparing the relative consequences of following moral duty to those of enlightened self-interest. 

AB is the income possibility frontier. Point M denotes the combination (high public income, low king’s income) if the king follows his moral duty. Point F denotes the combination (very low income for the public, very high income for the income) when the king is immoral. Point S denotes the combination (somewhere in between points M and F) when the king is amoral, that is, follows his enlightened self-interest 

Kautilya specified three possibilities. (i) His argument based on moral duty implied that a rajarishi (king, wise like a sage) would take a very modest amount for his own consumption, that is, point M would not be too far away from point A on the vertical axis.8 Such a king would promote ethical behavior, use almost all the tax revenue on the provision of public goods and welfare programmes and follow judicious polices to encourage economic growth. As a consequence there would be both spiritual and economic (i.e. over time the income possibility frontier would shift outwards) enrichment of his subjects. 

(ii) A king motivated by his enlightened self-interest would promote public interest to the extent that it promoted his own interest, that is, promotion of public interest was merely a means to the promotion of his own interest (whereas in the above-mentioned case (i) promotion of public interest was an end in itself). Kautilya’s argument based on enlightened self-interest implied that the king might choose a point like, S. 

(iii) According to Kautilya, a myopic and unethical king would try to grab almost all the resources for himself. This is indicated by point F on the possibility frontier. Such a king would ruin himself as well as the economy. This is comparable to Olson’s ‘roving bandit’. Since such a king would leave very little for the public, that is, point F would be very close to point B on the horizontal axis. Such extortion and myopic behavior would adversely affect future economic growth (i.e., most likely, the income possibility frontier would shift inwards). 

Minimal and Maximal Economic Growth: Thus two types of growth models are discernible from The Arthashastra: one based on moral duty and the other based on enlightened self-interest. Kautilya preferred the one based on moral duty since that would lead to the highest possible growth in income of the people. Whereas the growth rate based on enlightened self interest was the minimum required of a king to stay in power. That is, so long as the king managed to keep income above the poverty line, y > yPl, (the poverty level of income) and judicial fairness, J > JR at a reasonable level of fairness (that is, punishment somewhat proportionate to the crime and low probability of judicial errors), there would be law and order and the king could stay in power. However, the king had to provide some infrastructure and have pro-growth policies to promote economic growth. Thus, even in this model, both institutions and governance were needed for generating economic growth and institutions alone could not be labelled as the ‘deep determinant’ of growth. 

III Ethical Anchoring of Children 

According to Kautilya, it is better to pass on good values rather than ill-gotten wealth to the younger generation. If we insist on labeling reforms as the ‘first generation’ reforms and ‘second generation’ reforms, Kautilya might suggest a more appropriate distinction: to undertake reforms of the ‘old generation,’ which is running the country at the moment and whose unethical behavior could be casting a long shadow on the character building of the younger generation. Kautilya (pp 155-156) wrote, “‘There can be no greater crime or sin’, says Kautilya, ‘than making wicked impressions on an innocent mind. Just as a clean object is stained with whatever is smeared on it, so a prince, with a fresh mind, understands as the truth whatever is taught to him. Therefore, a prince should be taught what is dharma and artha, not what is unrighteous and materially harmful (1.17).” In a democratic country every child is a prince. Moreover, he (p 123) pointed out, “Whatever character the king has, the other elements also come to have the same (8.1).” 

IV Kautilya’s Insights 

(a) An ounce of ethics was better than a ton of laws. Ethical anchoring could be more effective in preventing systemic risk than a heap of rules and regulations. (b) Principles were only as good as the people who practiced them, and policies were only as good as the people who formulate and implement them. (c) Material incentives should complement and not substitute moral incentives so that there is no crowding- out. (d) Education should include ethical education also. Secular values, such as non-violence, honesty, truthfulness, compassion and tolerance do not violate the separation between religion and state. (e) Market failure is bad, government failure is worse but moral failure is the worst since moral failure is true cause for other failures. (f) Ethics and foresightedness could improve governance and bring sustainable prosperity for the whole of humanity. (g) Sound organizational design could complement the ethics-based approach by enhancing specialization and reducing the scope for conflict of interest situations. (h) Wisdom is the most valuable asset and knowledge-management is a subset of management by wisdom. References: Kautilya: The True Founder of Economics, 2014, Vitasta Publications, New Delhi, India

Article courtesy: https://ignca.gov.in/invitations/About_the_lecture.pdf

CSR as Mandatory Trusteeship is an Oxymoron by Prof Satish Y Deodhar

Corporate social responsibility or CSR as we know it today, has always been a part of Indian culture and history.  Traditionally, business communities have always supported construction of dharmashalas, panjrapols, ghats, and pathshalas.  In one of the earliest printed books in India published in 1863, the author Govid Madgaokar makes a mention of annachhatras patronized by the rich in the nineteenth century Mumbai.  In modern day equivalents, these can be termed as holiday inns, animal-health clinics, river-fronts, primary schools, and charity dining halls.  Today, of course, from food to fundamental research, the spectrum of CSR activities is very wide.  This includes provision of mid-day meals through Akshay Patra foundation to patronizing fundamental research since the early years of independence through institutions such as Tata Institute of Fundamental Research (TIFR).

Why would businesses undertake such CSR activities?  It turns out that society understands that free market fails to deliver right quantity and quality of merit goods such as education, health, and environmental sustainability.  For example, social benefit of educating poor young girls is much higher than the private benefit that accrues to those girls.  Economist and evangelical supporter of free enterprise, late Milton Friedman had said that a corporate executive’s responsibility is to make as much money as possible, provided he confirms to the basic rules of law and ethical system.  The qualification he makes about ethical system is important, for profits are inextricably linked to communities and environment without which a firm cannot operate effectively.  Though it is not obvious, CSR efforts help a firm improve the Triple Bottom Line (TBL) of profit, people and planet.  Two centuries prior to Friedman, father of modern economics, Adam Smith had also echoed this social responsibility aspect of business in his treatise, The Theory of Moral Sentiments.  And, in the Indian subcontinent, it was father of the nation, Mahatma Gandhi who invoked the notion of Voluntary Trusteeship through individual philanthropy.  Industrialist G.D. Birla, for example, was always very liberal in donating money to Gandhi if any of his projects were held back due to want of money.

Of course, CSR is not the main activity of corporates and there is no denying that one of the very raison d'être for the existence of a government is to provide merit goods.  After India’s independence, the statist model advocated by the first prime minister Jawaharlal Nehru, characterized social responsibility as an overarching state-driven endeavor.  However, following the Soviet model, state started dictating terms in each and every sphere of economic life.  This came at a heavy price – gross neglect of provision of merit goods.  Experience of seven decades since independence and the low levels of human development indices show a glaring state failure on this front.  Perhaps the abject failure on the part of government has now forced it to co-opt private sector in CSR activities through the new Companies Act of 2013.  In quite a few countries such as Australia, Denmark, France, Holland, Norway, and Sweden, while CSR reporting is mandatory, CSR spending remains a voluntary act.  India is the only country in the world, where both reporting and spending on CSR is mandatory for a certain section of the firms.  The Gandhian principle of voluntary trusteeship has been trapped in the legal net, reformulating it in what I call as the Mandatory Trusteeship!

It is true that government has the coercive power to impose mandatory trusteeship and corporates cannot wish it away.  However, the perception of various stakeholders in the economy can be gauged from a spectrum of opinions – Arguing from the left of the centre, the opinion would be that the government has abdicated its own responsibility.  Instead of asking firms to spend two per cent on CSR activities, government could have raised corporate tax by two per cent, prioritized the socially beneficial activities, and spent the tax collection in its own right.  On the other hand, arguing from the right of the centre, forcing a mandatory spending of two per cent of profits on CSR amounts to increasing corporate tax-rate by two per cent.  Already a 34.6 per cent corporate tax-rate in India is higher than the global average of just about 24 per cent.  Mandatory two per cent spending on CSR makes Indian corporates less competitive globally.  Moreover, arguing from a centrist perspective, it seems absurd to force CSR spending on corporates.  CSR is viewed as an inspirational activity which comes voluntarily from within.  Therefore, voluntary CSR mandated by law, a sort of mandatory trusteeship, is an oxymoron.

The new CSR norms apply to firms with a net profit of Rs. 5 crore and more, and/or a net worth of Rs. 500 crore and more, and/or a turnover of Rs. 1000 crore and more.  These firms must spend two per cent of their average net profits made during three immediately preceding financial years.  For this, firms have to form CSR Committees and their boards must mandatorily report the CSR activities.  Moreover, the spending has to be on about dozen eligible activities as per the law, which includes spending on items such as healthcare, education, poverty eradication, gender equity, as also contribution to Prime Minister's National Relief Fund.  The spending cannot be related to the firms’ own business activities.  These norms and processes are indicative of potentially inordinate administrative burden imposed by the act, both on the government and the firms.  In fact, studies have shown that the potential mandatory CSR spending was expected to be much more than Rs. 25,000 crore a year.  However, the actual spending has turned out to be only about Rs.5,000 crore.  Moreover, a survey conducted in December 2015 showed that among top 84 firms by market capitalization, only 38 per cent of them had spent two per cent of profits on CSR.   Furthermore, if we are to go by the experience of many decades of License Raj, the coercive policies of the government may create perverse and obfuscating reactions from stakeholders.  This may happen at all three stages – implementation, monitoring, and punitive actions.

The eligible list of CSR activities as laid down in CSR norms seems broad but not broader enough.  Almost all the eligible activities prescribed by the CSR norms come under the category of philanthropy through donations or running CSR foundations.  However, there are two other channels of CSR activities that do not get covered under the norms.  First,when firms improve their operational efficiency, say by developing smart-building solutions that contribute to reduced energy consumption, and/or they convert their food waste into biogas, and/or they ensure that mercury from the used CFL bulbs and tube-lights is recycled using a special crusher; these activities improve the triple bottom line of profits, people and planet.  Second, transformational business models by firms such as say drip irrigation initiative may also contribute to triple bottom line.  Selling drip irrigation system may increase firm’s profit, increase farmers’ land productivity and income, improve resource sustainability by lowering salinity ingress, and, importantly, conserve water for the society.  In its own interest firm may give loans to and buy-back produce from farmers for this initiative to succeed.  Such activities do not fall under the CSR activities specified under the companies act.  Now, to fulfill the straight-jacketed mandatory requirements, firms may anchor their CSR efforts away from such activities.  Clearly there will be a qualitative anchoring away from efforts, which in fact, improve the triple bottom line of profits, people, and planet.

The two per cent mandatory norm may create another kind of anchoring effect, this time a quantitative anchoring effect, which also may adversely affect CSR initiatives.  Experimental studies (including one at IIMA) suggest that quantitative anchoring effect may lower CSR spending by firms that are already voluntarily spending more than two per cent or were planning to spend more than two per cent.  Once a legal yardstick of two per cent is created, firms may reassess their CSR activities and anchor their spendings down to match the bare minimum new legal yardstick.

All in all, therefore, government may want to do a rethink on the mandatory trusteeship.  A reconsideration of Friedman, Smith, and Gandhi’s ideas of rules of ethics, moral sentiments, and voluntary trusteeship could be a step towards saving the firms’ CSR from getting trapped in the legal net.

Courtesy: http://profsatishdeodhar.blogspot.com/2017/01/csr-as-mandatory-trusteeship-is-oxymoron.html

Indian Business Models: Business in Ancient India - Prof P. Kanagasabapthi

 Commerce played a great role in making India the universal exporting centre of the economic world in ancient times. Not only was the corporate form used for business enterprises in Ancient India, but also for political and social purposes and went by variety of names-gana, samgha, sabha, sreni and others too.

As India is an ancient nation with a proud economic background, businesses must have existed and flourished since the earlier times. It is relevant to remember that India was well-known in the international business since the ancient times. Agarwala writes: “Commerce played a great role in making India the universal exporting centre of the economic world in ancient times.” He notes that there were commercial cities and trade centres dominated by the merchant class more than five thousand years ago. To quote: “Commercial cities like Harappa and Mohenjodaro were founded in the fourth and third millennium BC. Trade centres had also come up in western India in the fourth and third millennium BC resulting in the domination of Indian society by merchants; these commercial people were instrumental in bringing about the first mercantile revolution. India thus became a great exporting country”.

Apart from the individual and family-based businesses, different forms of organizations seemed to have functioned since the earlier times. Khanna notes: “The earliest Indian writings do make references to organizational forms. The Rig Veda makes reference to the pani (akin to a partnership amongst traders for trade caravans) and the Mahabharata to the sreni.” Evidences indicate that these forms of organizations were known to have existed at least about 2800 years ago. Based on sources, Khanna writes: “… if one uses the most recent dating for the earliest written materials (1500 BC to 1000 BC) then by 1000 BC to 800 BC the sreni and pani were known to Indians.” He notes further that ‘the sreni predates the earliest Roman prototype corporations by centuries’ and it is ‘considerably more complex and detailed than the Roman entities’

It is important to note that the ancient sreni and the modern corporate form of organization exhibit similarities, though they are separated by many centuries. Table 6.1 compares the select characteristics of the modern US corporate and the ancient Indian sreni forms of organizations.

Table 6.1 shows that the ancient Indian sreni form of organization possessed characteristics similar to the modern US corporations. It only shows the capacity of ancient Indians to establish different types of enterprises suited to the growth of businesses much ahead of the times. Besides business, the corporate form of organization was used for other purposes also in the ancient days. “Not only was the corporate form used for business enterprises in Ancient India, but also for political and social purposes and went by variety of names-gana, samgha, sabha, sreni and others too”.

During the period of Indus Civilization from about 4000 BCE to 1900 BCE, there was trade within and outside the country. Khanna mentions that even during this period, “… it does appear that some of the basic pre-conditions for the development of organizational forms were present….” Around 700 BCE, two Indian religions, namely Buddhism and Jainism were founded. Different sources suggest that during this period, “the sreni were numerous, in varied fields, and indeed could be mobile from one place to another. The sreni were clearly important in the society as they were often invited for official state functions. They were also actively involved in trading, production (crafts), and rudimentary banking services by this time. Their importance is further highlighted by the fact that the Bhandagarika (an arbitrator for inter-sreni disputes) became established as a government official” Later during the times of the Mauryan Empire, the state played an important role in regulating the economic activities and “the sreni were a large and growing sector of Indian life”

The Gupta Empire roughly dating from 240 to 550 CE is referred to as “India’s Golden Age.” Efficient administration, scientific and technological developments and contacts of the rulers with the other countries helped the growth of the economy and resulted in a vibrant domestic and foreign trade during this period. “Some estimate that there were at least 150 sreni by this time”. It is reported that the written sources during this period provide detailed accounts of sreni, “… the importance and enforceability of sreni dharma, the mobility of the sreni, the multi-profession sreni, and the expansion of the sreni into various other aspects of life!”. During the post-Gupta period, a number of kingdoms ruled parts of India for around 400 years, and there were wars resulting in the general decline of trade. Around 1000 CE, different parts of North India was subjected to Islamic invasions and about two centuries later South India was invaded. During that time onwards, there were frequent wars within the country to obtain control of different regions. As a result the business suffered and the sreni form of organization continued to weaken.

Agarwala notes that “During the period of Delhi Sultanate, which extended from the closing years of the twelfth century to the founding of the Mughal Empire in 1526, the economic activities in cities continued to flourish despite the decay of the ancient self governing village assemblies. Ibn Battutah, during his travels from 1333 to 1346, found great cities with rich markets in the Upper Gangetic valley, in Malwa and Gujarat, in the Deccan and in Bengal as well as in the Malabar region in the extreme south. He found the ports of Quilon and Calicut in Malabar comparable with Alexandria in Egypt, Sudak in the Crimea and Zaytun in China in terms of their magnificence and the quantum of trade handled by them.”

Bibliography:

Indian Models of Economy, Business and Management (3rd Edition) by P. Kanagasabapathi 

Article courtesy: https://cisindus.org/2022/07/12/indian-business-models-business-in-ancient-india/

Perspective of Mahatma Gandhi and Modern State - Archna Sharma

RRIJM 2015, All Rights Reserved

ABSTRACT

Mahatma Gandhi was the most important political figure of 20th Century. His principles inspired million of people all over World. In Gandhi's assessment the State (Western type) was the symbol of violence in a concentrated form. He learned from his experience in South Africa that excessive power with the State meant more violence or greater amount of coercion. In the name of maintenance of law and order, the South African white government acquired enormous power and this led to the ruthless administration, exploitation and end of individual's liberty. So his philosophy was „anti modernist‟ and opposed the idea of Modern State. Gandhi's critique of the Modern State was central to his political thinking. The case of Gandhiji theory of politics is to show that the citizen is the true political subject and not the State. Gandhi's book „Hind Swaraj‟ give us an idea of Gandhian vision of a modern Indian State. He believed that in the „Ideal State‟ there will be no political state therefore there will be no political Institution and political power. He said in his classical statement "That government is the best which governs least"

1. Introduction

The middle of the 19th century had seen the British become, in effect, the rulers of India. Their control was organised in a bureaucracy that boasted of a tradition of justice and fair dealing in the matters concerning the State and its subject. From the standpoint of administrative theories, there had emerged a Modern State with claims to democracy in India. The basic framework of this modern State was provided by a Rule of Law for the maintenance of public order and a political arrangement, the real motive of which were, however, commercial in nature. A workable basis for this State was provided by a taxation method that was essentially a combination of a tax assessment and tax collection.

Mahatma Gandhi‟s perspective on the theory of the State questions, at the theoretical plane, the very basis of the Modern State. It reflects a growing dissatisfaction with the working of the State and contents its unsuitability for India. Gandhi ji found in the Modern State a System considerably nonadjustable with the socio-economic characteristics of the Indian Society. His study of the functioning of British State in England and in the colonial territory of South Africa seemed to have given him a deep understanding of the theoretical framework of the Modern State and its actual working in a variety of situation. Consequently, he developed an understanding of the Modern State that was profoundly original in its approach and refreshingly analytical in its assessment. These features made possible a model of polity whose guiding principles and functional doctrine constitute an innovative system known as "Swaraj". Gandhiji talks about "Swaraj" in the framework of a code that should determine the constitutional formulation of Indian Home rule. Hind Swaraj signals the need for an alternative approach to civil society beyond Modernism. This approach combines 'Swaraj' with the practical tenents of a non-violent, self contained, grass roots level society. He clearly said “To me political power is not an end but one of the means of enabling people to better their condition in every department of life. In such a state everyone in his own master. He rules himself in such a manner that he is never a hindrance to his neighboure”1 This paper attempt to understand the vision of Mahatma Gandhi on Modern State and some of the principles concerning the theory of the State in consonance with the Gandhiji perspective. It is a clear exposition can be found in Hind Swaraj written in 1909, with its succinct on the Wetern ideals of techno-modernism and its expression of the elements of “Swaraj”. The first section briefly analysis the perspective of Gandhi and the Modern State. Second section discusses the difference between Modern State and India. The third section about the model of polity “Swaraj” with functional Doctrine and understanding of swaraj. The fourth section briefly outlines Liberalism and Trusteeship as Gandhi's novel contribution in the sphere of Political Philosophy.

2. Perspective of Gandhi ji and Modern State

Mahatma Gandhi is widely recognized as one of the most original and influential political thinker and activist of the 20th Century. His perspective on the theory of the state questions, at the theoretical plane, the very basis of the Modern State. The basic framework of this Modern State was provided by a Rule of Law for the maintenance of public order which defined the State as "necessary evil", but welfare promoter. According to Gandhi, the „Western State‟ was the symbol of violence. He strongly believed that the state or the system like democracy can not be final ideal. These institutions are based on political power, therefore, they can only be the means of improving the conditions of people at different level walks of life, but it cannot lead human welfare.

A western state runs on the foundation of the taxation method that is essentially a combination of tax calculation and tax collection. The State, with its stress on commerce and industry, and its emphasis on demonstrable competence, projected a contradictory picture in which the privileged class was favored and the needy ignored. His had a deep understanding of the theoretical frame work of the modern state and its actual working in a variety of situations. Therefore, the State to the „Rule of law‟ and its impact on the society were matters that were very disquieting to Gandhi. Consequently, he presented an original approach to the Modern State.

3. Gandhi's critique of the Modern State

At a basic level, the model of the Modern State was linked to his concepts of non-violence. According to Gandhiji democracy can not be ideal in the form of Institution like State. Institution which are based on political power are only a means to make people comfortable in their daily life but not success to achieve the goal of human beings. An individual cannot be forced to do any work against his will or spontaneous desire. In the other word according to him the progress of society can be achieved only when the individuals perform willingly i.e in autonomy. The concept of autonomy was the key element in his critique. According to him individuality means two things – one that citizens should neither be dominated by others members of the society nor by the State and other idea that individuals should be „self governed‟. He believed that modernity was an obstacle to autonomy since it introduced and justified new forms of domination based on a predetermined, external process of economic productivity. He stated that since „autonomy‟ is absent in the Modern State, hence the objective of self governance also missing in it.

He found that the character of Modern State is too rigid. Another noteworthy feature of Gandhi's critique was related to the intrinsic homogenising tendency of the Modern State. The uniform rules and bureaucratic management were the two principle tools of the State with the help of which a society was governed. In a write up Mahatma Gandhi said “The State represents violence in a concentrated and organised form. The individual has a soul, but as the State is a soulless machine, it can never be weaned from violence to which it owes its very existence”. 2

4. Modern State and India

Modern State and India was an important issue in Gandhi's thought. A close understanding of Modern State and its allied institutions during Gandhi's South Africa days had opened his mind to various questions. Gandhi's case for the incongruity of Modern State in India can be understood by following comparative study:

 Indian civilization is spiritual in essence.

o State is a product of materialistic civilization.

 In Indian culture „Non-violence‟ is deeply ingrained.

o The State is violent character.

 India has a rich diversity of customs, religions and social norms.o The Modern State promotes homogeneity in nature.

 Basically India is a rural country.

o Promotion of urban civilization is the base of Modern State.

 Stratified Indian Society has autonomous and self governing castes, sects and ethnic groups as its constituent units which require a variegated system of governance.

 A uniform system of laws and a set of rules and procedures that ironed out variations was Modern State's unequivocal commitment.

 Indian Society values and is based on direct and unmediated relations between human beings.

 The Modern State is a highly abstract institution.

 Decentralised power structure that could take care of India‟s diversity was needed for Independent India.

 Based on these differences Gandhiji rejected the Modern State as a suitable for independent India.

5. Mahatma Gandhi’s Model of Polity: "SWARAJ"

The concept of Swaraj has received a very prominent place in Gandhi's spiritual, political, social and economic ideas and has been expressed in his writings and speeches. Swaraj generally mean self governance or 'Self rule' and is used as the concept of „home-rule‟ by Mahatma Gandhi. But the world usually refers to Gandhiji concept for India freedom from foreign rules. Swaraj lays stress on governance not by a hierarchical government, but self governance through individuals and community building. Swaraj- the main elements of swaraj autonomy of individual, self-governing, self responsibility and self respect. Gandhi ji strongly argued for the abolition of Modern state which was the English rule. It is swaraj when we learn to rule ourselves, it is therefore in the palm of our hand, but such swaraj has to be experienced by each one for himself. One drowing man will never save another.Formulation of the idea of „Swaraj‟ can be seen in his other writings from young India, Hind swaraj, Harijan and published elsewhere.

Gandhi had envisioned for independent India a polity that would be based on the principle of democratic self - government or self rule. Gandhi opted for “'Ordered Anarchy' under which citizen enjoyed maximum freedom consistent with minimum necessary order.”3 Self governance or Self-rule at a general level carried the meaning of „Swaraj‟. Thus, „Swaraj‟ was a collective goal of the Indians as well as their individual goal and it did not necessarily mean an alternative State or a reformed structure of the Modern State. 'Hind Swaraj is a text where a clear sighted formulation of the idea of 'Swaraj can be seen. This has to be supplemented by Gandhiji‟s views in Young India and Harijan and those published elsewhere.

The main principles of 'Swaraj'

 Non violence was the bedrock of Gandhian ideology, it was obvious that polity was firmly rooted in it.

 Second was the individual‟s autonomy which was equally required for Swaraj

 Self- realization of power to build up courage among its people.

 It was also required in the new polity to respect the Indian society diversity which boost-up Indians.

 Establishment of national unity and end of those things which create differences among people.

 New polity would be in favour of self- governing local communities.

 The importance and requirement regeneration of Indian culture could not be neglected in this new policy.

Gandhi‟s thought that the real foundation of the new polity was co-operation amongst the people. He firmly believed that co-operation of the people, whether active or passive, would lay the foundation of the new polity.He said “ I belive that you want the millions of Indian to be happy, not that you want the reins of government in your hands. If that be so, we have to consider only one thing: how can the million obtain self rule” 4 According to Gandhiji real India lived in village. The functional doctrine of new polity was therefore provided by the famous 'Village republics' of Gandhian conception. The village communities were supposed to manage their affairs through panchayats elected annually by every literate adult. The village panchayat in the model of republic were to have legislative, executive and judicial powers. He believed in strong sense of local strength and solidarity by village panchayat which provide meaning full interpersonal relationship, encourage a sense of social responsibility and the spirit of cooperation and act as a 'nursery of civil virtues'.

In an interview given by Gandhi on 28th July 1946 in Harijan, he said “We must have a proper picture of what we want before we can have something approaching it. It there ever is to be a republic of every village in India, then I claim verify for my picture in which the last is equal to the first or, in other words, no one is to be the first and none the lost.

In this picture every religion has its full and equal place. We are all leaves of a majestic tree whose trunk cannot be shaken of its roots, which are deep down in the bowels of the earth. The mightiest wind cannot move it.”

A. Understanding, Swaraj

Swaraj is a more than basic concept of non-violence since non-violence is only a means to 'Swaraj' whereas 'Swaraj' is an individual's state of being. The concept of 'Swaraj' can be summarized as

 Independence of a country from alien rule.

 Political freedom of the individual.

 Economic freedom of the individual

 Attainment of spiritual freedom or autonomy of the individual.

Gandhiji said “Self government means continuous effort to be independent of government control, whether it is foreign government or whose it is national. Swaraj governance will be a sorry affair if people look up to it for the regulation of every detail of life.”4 He was unequivocal in his recommendation of the non-violent means. “Violent means will give violent Swaraj. That would be a menace to the world and India herself. ” 5

He dreamed of a “casteless and classless society in which there are no vertical division but only horizontal' no high no law, all service has equal status and carries equal wages......... women will enjoy the same right as men. Since we shall be at peace with all the rest of the world neither exploiting, nor being exploited, we should have the smallest army imaginable.”6 The national movement, which was organised in India before his (Gandhiji) entry in the movement suggested that principal objective of the movement was gaining an administrative control of the country. The picture of this movement was clear in his mind before he participated in it. He had written in Hind Swaraj, “In effect it means this: that we want English rule without the Englishman. you want the tiger's nature, but not the tiger; that is to say, you would make India English and when it becomes English. It will be called not Hindustan but Englistan. This is not the Swaraj that I want”7. The autonomy of the individual completes the Gandhian sketch of „Swaraj‟.

He said “The individual ceases to count, what is left of society ? His weariness of the Modern State was also on the count that in it the individual was completely replaced by an abstract complexity -the State, which was therefore impersonal to individual member of society. This autonomy, however, was not an unbridled license for individual will to prevail in all matters.”7 B. Liberalism and Trusteeship: After understang of „Swaraj‟ it become clear that Gandhian theory of the State holds a ground of Liberal perspective. In his view only a federally constituted polity based on vigorous and self governing local communities was truly democratic. The fundamental fact of democracy was the recognition that citizens were self-determining moral agents. The principal objective of democracy was to organise the conduct of collective affairs without any governmental domination.

According to Gandhiji Liberalism was a way of life. „Swaraj‟ describes „true democracy‟. According to Gandhiji, “True democracy cannot be worked by twenty men sitting at the centre. It has to be worked from below by the people of every village.”8

He had elaborated his concept “My notion of democracy is that under it the weakest should have the same opportunity as the strongest. That can never happen except through non-violence. No country in the world today show any but patronising regard for the weak....... western democracy, as it function today, is diluted Nazism or Facism - India is trying to evolve true democray, i.e. without violence . Our weapons are those of 'Satyagraha' expressed through the 'Charkha' the village industries removal of untouchability, communal harmony, prohibition, and non-violent organization of labor as in Ahemdabad. These means mass effort and mass education. We have big agencies for conducting these activities, they are purely voluntary, and their only sanction is service of the lowliest.”9

Gandhiji further wrote in a letter to Jawahar Lal Nehru “The village of my dreams is still in my mind. After all every man lives in the world of his dreams, My ideal village will contain intelligent human beings. They will not live in dirt and darkness as animals. Men and Women will be free and able to hold their own against anyone in the world. There will be neither plague, nor cholera nor smallpox, no one will be idle, no one will wallow in luxary. Everyone will have to contribute his quota of manual labour. I do not want to draw a large scale picture in detail.”10 In the sphere of political philosphy “Trusteeship” is the great and novel contribution of Gandhiji, and it was the economic extension of his political philosphy.

Gandhi ji had a view of „social trust‟ of all material property. The owner of property must not take more than what was needed for a moderately comfortable life. The other members of society who were associated with the property were jointly responsible with the owner for its management and were to provide welfare scheme to all. The owner and the rest of people should regard themselves as trustees of the property. He elaborated his concept about Trusteeship in his editorial saying, “Suppose I have come by a fair amount of wealth either by way of legacy, or by means of trade and industry, I must know that all that wealth does not belong to me, what belongs to me is the right to an honourable livelihood, no better than that enjoyed by millions of others. The rest of my wealth belongs to the community and must be used for the welfare of the community .. ...” He further wrote and opposed Zamindars and ruling Chief,… “ The labourer has to realise that the wealthy man is less owner of his wealth than the labourer is owner of his own, viz, the power to work.”11. The writing of a draft on Trusteeship was the result of long discussion with Gandhiji and a group of socialists. The final text of the draft said:

 Trusteeship provides a means of transforming the present capitalist order of society into an egalitarian one. Instead of the capitalist, it gives the owning class a chance of reforming itself.

 It does not support the right to private ownership of property.

 It does not exclude legislative regulation of the ownership and use of wealth.

 It calls for both a decent minimum living wages and the fixation of a maximum income that allowed to any person in society. The difference between such minimum and maximum income limit should be reasonable, equitable and variable over time.

 Economic production should be determined by social necessity and not by personal whim or greed. He said, “you may say that Trusteeship is a legal fiction. But if people mediate over it constantly and try to act up to it, then life on earth would be governed for more by love than it is at present.”12

6. Conclusion

Thus, we find that in Gandhian perspective state, democracy, Swaraj, non violence, liberalism and trusteeship all are closely connected. Gandhi ji was the great social activist who always make effort for the upliftment of weaker section of society. He believed India is a country of village‟s and its countrymen are economically poor as well as socially. So he advocated swaraj for self development but he believed swaraj- self governing should be come with self responsibility and for economically growth trusteeship is best option. He has deep understanding of theoretical and practical framework of modern state so he always denied its acceptance for the India and developed his theory for the build up a good nation-India. Gandhiji strongly advocated swaraj and trusteeship, for him the well being of every individual consists in swaraj and trusteeship is the west mean to attain the ends of capitalist which insure the autonomy and liberty of individual.

Author is Asstt. Professor, Economics, Sahu Ram Swaroop Mahila Mahavidyalaya, Bareilly Uttar Pradesh (India)

 

Stakeholders' Welfare and Arthashastra: Learning for Modern Business Management - Rishi Manrai & Utkarsh Goel

 Abstract

The ancient scriptures of our civilization are sources of immense knowledge and Kautilya's Arthashastra is no exception. Teachings of Arthashastra which explains the politics and economics of governance was primarily written for the rulers and kings. Today's modern business can be compared to the ancient empires and the managers have to play a role similar to the kings. This study tries to highlight the learnings for modern business organization from the teachings of Arthashastra to ensure welfare of all stakeholders. The study specifically focuses on corporate governance, training and group dynamics, corporate social responsibility and value base management. The study further proposes a new SHASTRA model which models the teachings of Arthashastra and acts as a guideline for effective business management based on ancient wisdom. The proposed model if adopted by a business organization is expected to improve its performance without reducing its obligation towards the society.

1. Introduction

Deriving management principles and learning from ancient Indian texts specifically history, philosophy and culture are increasing (Kale and Shrivastava, 2003). However contemporary research in the domain is generic and has not been conducted in details which leave room or lot of research. Most of the researchers in the area have worked more on the philosophies and managements thoughts of the western part of the world as compared to the eastern part. Therefore, management theories from the west have a greater influence on management thinking and decision making from over the last two centuries.

The investigation into the Eastern perspective of management learning for decision makers started with in depth understanding of the Japanese management several years ago (Maruyama, 1994).

On the other hand the research based on ancient management dissertations in China, from this perspective accelerated in the last few years.

Literature from Confucianism and Sun Tzu Art of War had a very important role to play in this. Not only China, a significant portion of tradition and culture of several South East Asian nations derive their management lessons from heritage emerging from Confucian philosophy. Indian management also, following the other parts of the world has a strong philosophical convention which is continuing to sustain the cross cultural philosophies in Indian organizations (Chatterjee,2007).

Indians and Indian literature have an enormous contribution in various fields of knowledge, arts and literature. The Indian civilization which dates back to several thousand years, with recorded history, is perhaps one of the ancient civilizations in the world. Indian epics like Valmiki Ramayana, Mahabharata, Puranas, etc offers significant knowledge and lessons which in several contexts are highly relevant to present times. Using the literature which is more than 5000 years ago the paper discusses the principles of ethical profit making in Arthashastra by Kautilya, with reference to business decision making.

2. Literature Review

Research papers analyzing the ancient works of Indian sub-continent, for example Kautilya's Arthashastra in the perspective of modern day management practices are indeed limited. Due to the extensive amount of concepts of management literatures and concepts available on papers, Asians in particular, continue to use the theories and models of the western world. Another reason to substantiate this is that the modern day managers receiving there management degrees from western

Business schools follow their tradition (Muniapan,2006). The relationship between companies' financial and social performance has been an important area of research for many years. Waddock and Graves (1997) and Preston and O'Bannon (1997) provided several evidences of research in the domain, testing and verifying the relationship between corporate social performance (CSP) and financial performance. Through their research they advocated a strong support for the hypothesis that perceived high quality of management. The researcher further explained corporate performance with reference to the various stakeholders like consumers, suppliers etc.

Preston in his research tested different hypotheses to explore the relationship between corporate social and financial performance and found significantly negative lead lag relationship. Earlier studies did not attempt to express any causation.

Cochran and Wood (1984), on the other hand found a positive relationship between the two factors in question. However, Aupperle et al. (1985), found either no relationship or insignificant results due to the method used to measure CSP has been varied and contentious.

Specifically, researchers like Brown and Perry (1995) demonstrated the presence of a "financial halo" in the fortune data, declaring the same as Inappropriate measure of social performance.

Their research used publicly-reported information for both financial performance data and confirmation of a broad concern for stakeholder interests.

Another study by Hofstede in the year 1983 on “National Cultures in Four Dimension” and studies conducted by researchers like Deresky (2006) show that eastern nations are high in power distance.It was delineated by the studies that Indian employees recognize and accept the top manager's authority. The basis of the same is that they seldom bypass the chain of command.

Besides the above mentioned factor, Indian markets are highly volatile, which means managers have a tendency for safer decisions. India also has low eccentricity, which implies that country, society as well as peer groups, are more important than individuals.

Suresh and Janki (2012) from their research said that the current business scenario is highly volatile because of several causes like unethical practices, declining values and shortage of value-based leaders at decision making level. In their research the authors explored value-based principles adapted from Holy Scriptures especially Bhagavad

Gita, the teachings of which remains valid even in the present day. Incorporating these value based principles with modern management theories may lead to good Corporate Governance. The fruits of which can be realized only when ethical means are adapted as policy and are practiced in an organization.

Value-based management is a source of providing a strong foundation to quality systems and such organizations are very active in CSR initiatives.

Ethical leadership of the organization is like a parenting a child, infuse the value systems, beliefs, culture in the organization to shape a good corporate governance. This will help organizations to achieve their prime objective of enhancing stake-holder's value while protecting the environment. Though a corporation is a single/ small entity but definitely its governance, policies etc. make an impact on the whole corporate world.

Muniapan and Dass (2008) also explored the philosophy of corporate social responsibility (CSR) from an ancient Indian viewpoint. Previous studies in the domain shows that there are very few references mentioned in the literature in the form of articles which discusses the concept of CSR as derived from the philosophical, historical and from the ancient perspectives. The study, discussed the subject area with reference to India by tracing the origin of CSR from the Vedic literatures such as the Valmiki Ramayana and Mahabharata including the Bhagavad-Gita and the ancient Puranas.

By using the appropriate methodology, the authors in their research discusses some corporate teachings on CSR, providing lessons to corporate leaders/ decision makers of today. It was further concluded that Arthasastra provided an inclusive approach to CSR, i.e expansion of the individual leader's self conscience, as compared to American and European perspective that talks about only outside-in aspect. The roles of decision makers in corporations are very critical as these are the people who ensure transparency, good conduct and governance leading to CSR.

Muniapan and Satpathy (2010) through their study praised Valmiki Ramayana as one of a masterpiece discussing the different dimensions of Ramayana ranging from philosophy, spirituality, economics, technology and others have been explored by researchers over the centuries. However, the researchers were of the view that the epic had not been studied from management perspective despite Valmiki Ramayana having several lessons for managers. The researchers tried to explore the consequences of Valmiki Ramayana for growth of present day managers by employing a technique called hermeneutics. This is a qualitative methodology, where the researchers deduced dharmic organization, decision taking, humanism and equanimity from Valmiki Ramayana. The same principles are applicable to managers for enhancing managerial effectiveness. Valmiki Ramayana can further be explored in other areas of management such as strategic management, people management to derive more corporate lesson.

3. Kautilya's Arthashastra

The Arthashastra an ancient text written in several hundred years ago by Kautilya (believed to be written in 4th Century B.C.) in the ancient India is atreatise on political economics. Kautilya also known as Chanakya was the chief adviser and one of the significant ministers for a very powerfulnEmperor Chandragupta Maurya, the first ruler of Mauryan empire. Kautilya is believed to be instrumental in finishing the Nanda Empire in Magadha. He helped establish the Maurya empire which is believed to be larger than the Mughal empire and even British empire in India (Singh, 2016). Arthasharta was written by Kautilya as a guide for those who govern and deal withneconomics and politics. In the text the great master discusses three important aspects namely national security, administration of justice and economic growth policies. It is clearly evident that although the text was written for King Chandragupta Maurya but the author had acknowledged in its introduction that it has been written as a rulebook for “those who govern” or in simple words for decision makers.

The study specially focuses on the teachings of Arthashastra which lay special emphasis on stakeholder benefits and development. The study divides the learnings into four parts viz. corporate social responsibility, training and group dynamics, corporate governance and value based management.

4. Corporate Social Responsibility

CSR can be understood as the responsibility or obligation of an organization to take care of all its stakeholders which includes its employees, suppliers, customers, shareholders and also the community and society. From modern business perspective, CSR may be defined as the commitments of any business to contribute to economic development for improving the quality of life of the all stakeholders and the society in an ethical way. It can be said that CSR requires that organization not only thinks about its profits but also about the welfare of shareholders and society as a whole. Right from Rig Veda, CSR has always been stressed in ancient Indian wisdom as a king is expected to work towards welfare of his subjects and not just concentrate on wealth accumulation.

The Arthashastra by Kautiliya focuses on running the empire/state efficiently and covers all the aspects of administration and governance. It stresses that a ruler or king (in organizational context CEO) should not care about his own self interest but rather but work towards the happiness and well being of all the people of his kingdom i.e. Bahujana sukhaya bahujana hitayacha (stake holders of organization). The king should find happiness in the happiness of his people i.e. Praja Sukhe Sukham Rajy) and similarly the CEO and management should work towards maximization of shareholders wealth and welfare of all stakeholders.

Kautilya write that there are three prime responsibilities of a king viz. raksha, palan and yogakshma (Muniapan, 2008) which mean security of people, sustainability/growth and welfare of people. This is very much aligned to today's corporate world where an organization need to look after the security, growth and welfare of its employees and other people who are part of its ecosystem. Arthashastra says that only a king with strength and wealth can protect the interest of its subjects and similarly a financially strong firm with good profits can only think about and in practice protect the interest of its stakeholders.

Indian rules mandate the firms to spending 2% of net profit on CSR related activities and this money by organization is spent on health, education, environment protection etc. Thus the activities of organization closely resemble the responsibilities of welfare state in olden times. Kautilya had “stressed the importance of happiness to all stakeholders of an organization as in the stakeholders' theory” which suggests that organization should not only work for benefit of themselves but also towards betterment of all (Singh, 2016; Muniapan and Raj, 2014).

5. Training, Development and Group Dynamics

In modern management the critical role of training and development cannot be denied. Most organization spends a substantial amount of money in training and enrichment of its employees which include even the top management. Kautilya has also stressed the importance of learning and suggests that the king should keep an open mind, despise nobody and listen to everyone.

Arthashastra says that wise men make sense of even child's words. This is very much applicable in business today as new business ideas come from listening and learning from others.

The Arthashastra lays emphasis on the training, learning and discipline of king. Even the learning and training of crown price has been greatly emphasized in Arthashastra. This has been stressed so that the prince is able to gain the necessary skills that are required to become a good king whenever the time comes. The prince was supposed to take Veda education from gurus, had to practice celibacy till 16 years and devote most of their time in education and skill development. This concept is very much aligned to the idea of training which is given to junior employees so that they gain the skills required for higher positions.

In today' organization there is emphasis on  continuous training and development of employees specially the management. This has been even stressed in Arthashastra which says that a king should learn new things and revise already learnt things during the free time in day and also in night. Business organizations too expect their managers to continually strive for learning whenever they get time.

Moreover, group learning and group dynamics are being attached high importance in modern business firms and important decisions related to product development, future planning et are taken at group level. Focus group discussion and brainstorming are being emphasized so that diverse thinking from different points of view can achieve better solutions to business problems.

Arthashastra too has laid the importance of discussion with councilors and ministers. It points out that “just as a single wheel cannot move a cart, the king alone cannot ensure the welfare of the State” and thus a king should consult advisors and experts of respective fields before taking decisions. Thus, the advices of Kautilya in Arthashastra to kings regarding learning, continuous development and collaborative decision making are very much applicable to managers of modern businesses.

6. Corporate Governance

Corporate Governance is an ancient concept and is relevant in contemporary business as development of welfare concept. Kautilya in his work took a holistic and integrated approach to governance and provided an innovative dimension to corporate governance, which unfortunately remains neglected in pursuit of profit maximization. Manjula and Ramalingam (2015) recently described that welfare of business means not only growth and advancement of business in terms of holistic growth of the society. There is a requirement of lot of answerability and commitment among the various authorities within the organization in this process. The history of effective Corporate Governance can be traced back to Ancient period. They state “Arthashastra advises never to forget the two pillars of the art of governance: Nyay, the justice and Dharma, the ethics”.

Lot of archeological evidences, scriptures and religious text give indication to the existence of efficient Corporate Governance practiced in the past times. The contemporary approach of Corporate Governance is talked is more concerned with business as compared to over all administration of state in Ancient India. Research focused on concept of Corporate Governance which existed during Ancient times had focus on administration and management of policy.

Chanakya's Arthashastra also explores the lessons in corporate governance, signifying his contribution towards organizational science in ancient India.

Another significant study recently conducted by Hassan (2015) delineated that major research and practices in the domain and its sustainability have been largely dependent on the West and its concepts and models of governance, versus good governance as well as global governance. On the other hand Indians claim these concepts and models of governance as well as its patterns and indicators are of Indian origin. Not only this, the area of governance had found prominence in Asian scholastic works and government in the ancient times. For an in-depth understanding of the eastern concepts Kautilya's Arthashastra is an essential reference. Kautilya teaches that the internal enemies should be conquered first in order to be successful. The internal enemies in an organization are those managers who are not working towards benefit of the organization but are pursuing their own goals. To keep a tab on such managers by putting proper check practices is termed as corporate governance in the modern world.

7. Value based Management

With the augmented growth in corruption level in business organizations there is a necessity of value based management in organizations. Every now and then one sees irregularities and cases of cheating in the Indian stock market, clearly points out to the worsening tendency in the ethical attitude of people in the decision making authorities of big organizations. Kumar and Rao (1996) through their research delineated that there is a burning requirement for guidelines for promoting moral behavior among these decision makers. The relevance of Kautilya's framework is that it offers a scaffold for the practice of value based management. A prominent feature of Kautilya's Management philosophy as compared to other modern management thinkers is that it has a high degree of similarity with the accessible models of ideal behavior of manager. Following the Kautilya's approach the contemporary models researchers recognizes the significance of various components like organization philosophy, for the effective practice of value based management.

Arthashastra uniquely defines that this value based framework is an elevated order of an organization. This is further explained in terms of YOGAKSHEMA also known as social interests leading to the foundation of the value based management framework. Social progress, development and welfare are the principals based on which an organization strives a sense of self fulfillment to the employees.

Kautilya's framework would be most useful to such a business corporations which are of the thought or mindset that the objective of business must be to keep society in attaining progress and welfare. The decision makers of such firms would realize a sense of personal fulfillment through contributing to welfare of the society. The integrated framework developed in Arthashastra would be a guide lines as a holistic approach towards the practice of value based management.

According to Kautilya the organization's philosophy should be clearly defined and the leadership should be such that it complements the organization philosophy. Kumar and Rao (1996) state that Arthashastra suggests development of a corporate culture based on organization philosophy and leadership and this culture should imbibe the values that are supposed to guide the organization's members and should be able to check unethical practices. All this should then be supplemented with general value guidelines such as truthfulness, uprightness and compassion. It is also suggested the leaders should take continuous feedback of the system. The organization philosophy, value based leadership, organization culture and the general value guidelines will help the organization in achieving its objectives.

Arthashastra thus has provided a comprehensive framework for value based management of an organization which was valid in ancient times and is still relevant for business organizations in modern times.

8. The SHASTRA Model

The above discussion clearly indicates that even hundreds of years ago Kautilya through his shastra which is known as Arthashastra had given critical principles of management which are valid even today. These philosophies are being applied to modern business as they strive for shareholders' wealth maximization. These principles of Arthashastra can be modeled and abbreviated as SHASTRA.

S stands for Social and society development

H stands for Higher propose

A stands for Authority and administration

S stands for Standards and values

T stands for Training and development

R stands for Reliability and transparency

A stands for Association and group dynamics

The proposed SHASTRA model is self explanatory. 'S' highlights that the purpose of all business organizations is social development of all stakeholders of the firm and not just profit maximization. 'H' stresses that top management should not just concentrate on self development but must be devoted for higher purpose which is maximization of shareholders wealth and growth of all stakeholders. 'A' signifies the importance of good administration and authority which stresses the principles of effective corporate governance as suggested by Kautilya. The next 'S' lays emphasis on the importance of having higher standards and values in management. This derives from the principles of value based management. 'T' signifies the importance of continuous training and development of all employees including top management to increase their skill and knowledge level. 'R' lays high emphasis on reliability and transparency of the system. This is achieved if the business follows effective corporate governance practices. Finally, 'A' highlights the importance of association and group dynamics i.e. it stresses on significance of group discussion, consultation with area experts and brainstorming. Thus the

SHASTRA model derived from teaching of Arthashastra is able to act as a guideline for effective business management.

Conclusion

Indians look into ancient study based models from cultural roots, and Kautilya's Arthashastra is one of such text which is testimony to the same. On studying the various aspects of Kautilya's Arthashastra the existence of Kautilya's Arthashastra and its management relevance on the foundations of management in organizations can easily be gauged. It is important to look at this ancient management text, from time to time as they provide intelligent interpretation to apply effectively in the context of modern day

management.

There are several lessons that can be learned from Kautilya's Arthashastra but still not many managers are aware that the lessons of Kautilya's Arthashastra are relevant to the corporate world.

This study tries to relate the teachings of Arthashastra on stakeholders' welfare to the modern business management by discussing corporate governance, corporate social responsibility, training and value based management. The principles of Arthashastra and Chanakya Neeti can directly be applied to present day corporate world to achieve profits from multinational corporations without following any unhealthy/unethical business practices. This concept is called as Shubh Labh i.e. auspicious profit.