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Book I of Kautilya's Arthasastra describes in detail activities of the heads of departments. Chapter 1 through Chapter 36 extensively describes the role and the specific activities of each head of the department. We discuss below the activities of some of the heads of the departments.
Khanyadhyaksh (Superintendent of Mines)
Khanyadhyaksh was the overall Incharge of all mineral resources in terms of their exploration, processing and sale. He was required to follow the classification of different mines and mineral resources and then accordingly undertake mineral exploration and processing. He was required to work out the economics of the mines in terms of direct operation or lease. It was expected that he would let for part-share or lease a mine that was burdensome in point of expenses or working. He was however, suggested to operate a light mine. He was instructed to fine a miner (Khanik) eight fold the value of pilfered items. He had to establish factories for copper, lead, tin, brass, steel, bronze, bell metal and iron and also trade in metal-ware. The Khanyadhyaksh had the mint master under his control. Who had to carry out the minting of silver coins in the denominations of one pana, a half pana, a quarter pana and a one-eighth pana. The Khanyadhyaksh established factories for conch-shells, diamonds, gems, pearls, corals and caustics as well as commerce them. The salt commissioner was working under the control of Khanyadhyaksh. He was required to collect the share of salt and trading salt at the proper time.
Suwarnadhyaksh (Superintendent of Gold)
Suwarnadhyaksh was responsible for exploring, mining, processing, production and trading, besides conserving these resources. He was required to set up factories for processing the gold and not allow unauthorized persons into the workshop. He was required to be conversant with the treatment of iron and copper.
Panyadhyaksha (Superintendent of Trade)
Panyadhyaksha was involved in the export and import of goods. He had to have an adequate knowledge of the differences' in the prices of commodities of high value and low value and the popularity or otherwise of goods of various kinds. He was required to collect commodity, which was plentiful in one place, and raise the price. In the case of goods having high prices, he was expected to increase their supply to bring down prices to normal levels. The Panyadhyaksha was not expected to make a big profit that would be injurious to the subjects. He was required to encourage the import of goods produced in foreign lands by providing incentives. No lawsuit could be slapped on foreign traders. Before initiating foreign trade, the Panyadhyaksha was required to ascertain the price of the commodity and calculate the profits. In case of a calamity, he was expected to rescue the goods considered to be of high value by Kuppyadhyaksha (Superintendent of Forest Produce).
Kuppyadhyaksha (Superintendent of Forest Produce)
He was required to procure forest produce and convert it into finished goods. The group of forest produce included several types of trees with hard wood (somavalka, sarja, sarala, khadira, tilaka, arjuna, etc), fiber plants, material for ropes, flowers, bulbous roots, group of medicinal plants, skin, bones, etc. he was required to set up separate factories for making goods out of forest produce for livelihood and protection.
Ayudhagaradhyaksha (Superintendent of Armoury)
He was required to manufacture machines for use in battles, for the defence of forts. For assault on the enemy, he was also engaged in the manufacture of weapons, armours, and accoutrements. He was also required to know the economics of manufacturing.
Potvadhyaksha (Superintendent of Weights and Measures)
He was assigned the task of setting up factories for the manufacture of standard weights and measures. He was also required to regulate the weighing practices.
Sutrashyaksha (Superintendent of Yarns and Textiles)
He was required to cause trade to be carried out in yarns, armours, clothes and ropes, through men expert in the work. He was required to get yarn spun put of wool, bark fibres, cotton, silk cotton, hemp and flax, through widows, crippled women, maidens, women who had deserted their homes, and women paying off their fine by personal labour. He was required to fix the wages after ascertaining the fineness, coarseness or quality of the yarn. He was expected to make gifts if he took work on festive days.
Seetadhyaksha (Superintendent of Agriculture)
He was involved in collecting seeds of all kinds, all kinds of grains, flowers, fruits, vegetables, roots, creeper fruits, flax and cotton. He was required to undertake cropping in the vacant / government land. He was required to keep sufficient stocks of ploughing machines, implements and bullocks. He had to undertake harvesting operations and ensure that not even husk was left in the field. Suradahyakhsa (Superintendent of Spirituous Liquors)
He was engaged in trade in wines and ferments. He had to ensure the safety of revenues arising out of sales. He was required to cheek on quality.
Navadhyaksha (Superintendent of Shipping)
He was assigned the activities concerning sea voyages and ferries at the mouth of rivers, as well as ferries over natural lakes, artificial lakes and rivers. He had to collect one-sixth as rent from fishermen of the boats. Traders also had to pay a part to him.
Appointment of PE Chiefs
The appointment of PE chiefs was considered very crucial for the successful functioning of PEs. Kautilya believed that people at the top with superior intellect and the quest for action were destined to instill great confidence among the colleagues.
Kautilya studied the views of various renowned Rishis (sages) As per Bharadwaj, the appointee to the top post should be the fellow-students of the king. Being known would ensure their integrity and capability. Visalaksha disagreed with Bharadwaj and suggested such persons for appointment as those with similar nature on secret matters, character and vices. According to Parashara, those, who had helped the king in calamities involving danger of life and thereby proved their loyalty, should be appointed. Pisuna disagreed with Parashara. In his view, only such persons were qualified for the top posts who by their efficiency of execution of task enhanced the income of the exchequer. Kaunpadamta rejected earlier assertions. He did not consider any one of the above as the necessary qualities in a chief. He suggested the appointment of such persons who come from the family of father and grandfather of the king, since their pure conduct was known. He observed that such people do not desert the king even when he misbehaves, being of the same kin. Vatavyadhi, only such people qualified or appointment to the top post who were recruited afresh and then made well versed in politics. He believed that New men looking upon wielder of the Rod as occupying the position of Yama (Lord of Death), do not give offence. Bahudantiputra, laid down all together different set of qualifications. According to him one, conversant with the science but not experienced in practical affairs would come to grief in undertakings. Therefore, only such people should be appointed to the top posts who are endowed with nobility of birth, intellect and integrity, bravery and loyalty.
In view of Kautilya, everything stated above was justified. The ability of a person in his opinion could be judged from the capacity for doing work. The rank could be distributed based on the quality of their work. Kautilya laid down that persons possessing qualities of sattva (spirit), prajna (intelligence) and vakyashakti (power of expression) were qualified for appointment in the state services. However, he regarded, above all proven integrity and loyalty to the ruler as of utmost importance. Kautilya suggested avoiding making appointment of three types of persons to high offices. These are mulahara (one who is known to have squandered his patrimony, tadatvika (one who spends everything as soon as he has earned it and kadarya (the miser who amasses wealth by causing hardship to himself and to his dependents).
The training was attached the top most importance. Each and every category of employee had to undergo training. The training related to general aspects of work, society and self. The accent was on developing an employee who could be an asset to the state and become an evolved soul.
Wages
Kautilya laid down ground rules for the payment of salaries and wages to the state employees and thereby PEs. One-quarter of the state revenue was earmarked to be spent on payments and wages. Salaries ranging as high as 48,000 panas to as high as 60 panas were recommended for the different categories of employees. Salaries were given on a liberal basis. The purpose behind the high salaries was to prevent discontent among the employees and ensure efficiency. As the state flourished with prosperity, the generous salaries could be given to the employees. Kautilya also laid down part payment of salaries in kind in case the treasury was not full. The part payment in kind was to be made in the form of forest produce, fields etc. Kautilya thought that the wages were paid for work done, not for what is not done.
Customer Orientation
Kautilya accorded importance to the concept of demand and supply and their impact on the pricing of the commodities. The customer relationship was identified as the key factor. The market intervention was suggested to protect customer's interests.
Accounts & Audit
Aksapatala was the head of audit and accounts. He had to conduct audit on regular basis of all the government departments including public enterprises. In the case of misappropriation of money on account of lapses in audit his office was solely responsible for it. Aksapatala had to develop benchmarks of performance, raw material consumption and performance measurement.
Organising PEs
Kautilya advanced the concept of responsibility accounting' which entailed preparation of budget and activity planning, reporting on the revenue and expenditure, responsibility for both the revenues and expenditures, as well as the profit, personal responsibility for exceeding budget limits and proper delegation of authority. This ensured smooth functioning of PEs as a well oiled machine with decentralisation and delegation of powers, vertically and horizontally covering entire canvass of PEs. The budgeting system was considered important to monitor the performance of various departments. The responsibility accounting created an environment for excelling performance, in that good performance was associated with rewards and vice-versa.
Financial Information and Control Systems
Kautilya recommended in addition to responsibility accounting for profits, a detailed information and control system, the purpose of which was to monitor the progress on a periodic basis. The revenue and expenditure were classified on various basis such as head of income, source, period, quantity, to generate inputs for decision making for multifarious purposes.
Relevance to Modern Day PEs
Kautilya's Arthasastra has a great relevance to the modem day PEs. Both at the central and the state levels there has been a talk of privatisation of PEs. The government in its New Industrial Policy 1991 mentioned that the PE portfolio would be trimmed to economize the expenditure of the government and save resources to increase spending on social overheads. During the last ten years, the government has not been able to evolve suitable criteria for identifying PEs which have lost their relevance. The Kautilya's Arthasastra provides a superb lead in this regard by mentioning the economic activities, which the state must get involved in. It is very clear from the description of the activities of the various superintendents that the socially relevant activities should be a part of the state portfolio without which the private sector may find it difficult to operate. The objective of the State's intervention in economic activities is to provide full employment and thereby create prosperity for the nation. The essence of the success of PEs during Kautilya's times was in high degree of professionalism with which the superintendents and their associates had to operate. PEs were exposed to both internal and external competition. The yardstick of their success lay in profitability and social responsibility. No enterprise could continue to function without generating adequate profits. Most of the PEs could learn from
Kautilya's Arthashastra, the art of contracting out. This will make them slim and fit to face the global competition and bring about rapid changes no sooner than required.
Kautilya's Arthasastra throws interesting light on the relations with labour. One, the wages were decent and related to productivity and performance. Two, the payment of wages was also related to the economic condition of the state. Three, indifferent labour had to pay a high price through fine. Four, lack of quality production was taken very seriously. Five, for different categories of employees there were different scales of wages. These principles applied seriously in PEs, can transform their working and provide them a global lift.
A large number of problems of PEs in India are because of the selection of an incompetent chief. The problem gets further aggravated, as the process of selection itself is dilatory and uncongenial. The public enterprise selection board (PESB) has to maintain a data bank and formulate a panel for the post of chief executives which is sent to the concerned ministries which indicate their choices which are summarised and put forward to the Cabinet Committee on appointments the recommendations of which are ratified by the Cabinet as a whole. It is evident that this process has been infructuous and failed to provide the kind of leaders PEs require. At the most, such process could give only managers who could be no substitute to leaders. PEs in India with considerable managerial resource have lagged behind in fulfilling expectations as they lack leadership.
Appointing chief executives involves validation of their practical experience and academic credentials. Kautilya, went much ahead to this. In his scheme of things, personal traits; spirit, intellect, powers of speech, integrity to rulers, were considered to be major elements of any such exercise.
Public accountability and performance evaluation have proved to be the waterloo for PEs where they have lost more wars and won a handful of battles. It is relevant to mention at this juncture as to why the exercise of memorandum of understanding (MoU) has turned out to be an utter flop. In Korea, the exercise has produced excellent results because the MoUs are reviewed by the Prime Minister's Advisory Council. Kautilya had suggested a direct review of the activities of PEs by the King which kept the Superintendents of various activities on tenterhooks. At the same time, the chief executives were also rewarded generously.
The accounting and auditing is another grey area for PEs. PEs have been talking of generally agreed accounting principles. Unless the health of basic accounting is taken care of, it will be a flight of fancy to imagine that the generally agreed accounting principles could be adopted by these enterprises. The auditing function is in disarray as it has limited itself to only test checks and financial checks. The benchmarking function of auditing has not taken roots. Kautilya's Arthashastra, holds the remedy for PEs where Aksapatala was not limiting his transactions to test checks but was going into economy and efficiency of the entire gamut of transactions through well trained auditors and accountants. One important thing that needs to be noted here is the level assigned to audit function. It was higher than accounting. This gave enough freedom to the auditors to be vigilant and daring in putting their views about the various business matters. PEs as such give either a very low place to audit or assign it an inferior place.
The cost of production in the present day PE shows that the materials cost constitutes about 55 percent of the total cost. Despite this, the materials management and inventory control have largely remained academic exercises. Kautilya's Arthashastra explains at length as to how the stores have to be managed and the punishment which the different functionaries were required to undergo incase of mismanagement of stores. The application of those principles could revolutionise the upkeep and management of stores.
The globalisation is the order of the day. PEs in India lost track through 1970s to 1990s as they did not benchmark their activities to global majors. Kautilya suggested a whole range of measures for global competitiveness and dealt at length as to how the Superintendent of Trade (Panyadhyaksha) could maximise revenues from both the internal and external trade. He did touch upon very complicated aspects of trade such as risk management which required high degree of professionalism. Kautilya's accent on organising business by creating responsibility centres holds an olive branch for their survival. This will have to go hand in hand with the setting up of an effective financial control and information system in vogue during the Kautilya's times.
To conclude, Kautilya's Arthashastra
is a gold mine for PEs. A large number of ills ailing PEs and constraining
government's success that could be earned but for these ills could be remedied
by the approaches contained in Kautilya's Arthashastra.
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