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Public Administration in Ancient India c16: Chapter XIII

Public Administration in Ancient India c16

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English

Chapter XIII

c16.1

IN the earliest period of Indian history the State perhaps depended for its own support on the voluntary contributions of the people. But some method of compulsory contribution must have been found necessary in India as soon as a more improved form of government had come into existence. The early tax-system, however, was a very simple one, and the evolution of a complex system of Public Finance was doubtless a slow and gradual process. By the fourth century B.C. the system of Public Finance had reached a very advanced stage of development, as is evidenced by Chānakya’s Arthasāstra and the Brahmanical and Buddhistic religious works.

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The income of the State was derived from various sources. In very early times, the burden of taxation was extremely light. But as the duties of the State increased, the burden became progressively heavier. Gautama, one of the early law-givers, says: “Cultivators must pay to the King a tax (amounting to) one-tenth, one-eighth, or one-sixth (of the produce).¹ Some declare that (there is a tax) also on cattle and gold, (viz.) one-fiftieth. In the case of merchandise one-twentieth was the duty, and of roots, fruits, flowers, medicinal herbs, honey, meat, grass, and firewood, one-sixtieth.”² In the time of Vishnu, who perhaps wrote about two centuries later, the rates of taxation were appreciably higher,—namely, a sixth part of every kind of crops and of meat, fruits, and flowers, a duty of 2 per cent. levied on cattle, gold, and cloths, of 10 per cent. on goods locally manufactured, and of 5 per cent. on articles imported from abroad.³ Manu mentions even higher rates, except as regards the land, and also gives a longer list of articles on which taxes were to be levied. He says: “A fiftieth part of the (increments on) cattle and gold may be taken by the King, and the eighth, sixth, or twelfth part of the crops. He may also take the sixth part of trees, meat, honey, clarified butter, perfumes, (medicinal) herbs, substances used for flavouring food, flowers, roots, and fruits; of leaves, pot-herbs, grass, (objects) made of cane, skins, of earthen vessels, and all (articles) made of stone.”⁴ The Mahābhārata describes the tax-system in very general terms. It says: “With a sixth part, upon a fair calculation, of the yield of the soil, with fines and forfeitures from offenders, with the imposts levied according to the Sāstras upon merchants and trades in return for the protection granted to them, a King should fill his treasury.”¹

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¹ It seems that the rate varied according to the quality of the soil. Rich soils were more highly taxed than poor lands.

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² Gautama, X. 24-27.

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³ Vishnu (Jolly’s Sanskrit text), Ch. 3.

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⁴ Manu, VII. 130-132.

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¹ Mahābhārata, Sānti Parva, Sec. 71, sl. 10.

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We are indebted to Chānakya for a detailed description of the financial system as it existed in Chandragupta’s time. He gives two distinct classifications of the revenues of the State. According to the first, the income is classified under seven heads, in view of the sources from which they are derived, namely, (1) the capital, (2) the country parts, (3) mines, (4) public works, (5) forests, (6) pasture-lands, and (7) trade-routes.²

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² Arthasāstra, Bk. II. ch. 6.

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The various kinds of income from the capital were : excise duties levied on certain articles locally produced, such as cotton goods, oils, salt, liquors, and metallic manufactures ; taxes on warehouses, guilds of artisans, and temples ; duties collected at the city gates ; and fines on gambling and betting. The rates of duties were fixed in view of the nature of a particular commodity and also of its place of origin.³

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³ Arthasāstra, Bk. II. ch. 21. So, Manu says : “ Having well considered (the rates of) purchase and (of) sale, the length of the road, (the expenses for) food and condiments, the charges of insuring the goods, let the King make the traders pay duty.” VII. 127. Duties were remitted in the case of merchants who sold goods at a loss. Vide Arthasāstra, Bk. II. The Sukraniti says : “ The King should not realise any duties from a merchant who sells his goods at a price which is less than, or equal to, the cost of production ; but he may realise the duty from the buyer if he has made a bargain.”

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The duties varied from one-tenth to one-twentieth.¹ If it was a harmful commodity, a fine was imposed in addition to the usual duty. But goods which were calculated to be of special benefit to the community, such as valuable seeds, were allowed to enter toll-free, as also were articles required for marriage ceremonies and the worship of gods. In order that the duties might not be evaded, the sale of goods at the place of production was prohibited.²

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¹ Megasthenes also speaks of this duty of one-tenth. The Agni Purāṇa, however, puts it at one-twentieth.

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² Arthaśāstra, Bk. II. ch. 22. The duties were collected either on the roads or at the market-places. Sukranīti, IV. 2.

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The income from country places consisted of the produce of the State lands, a share of the produce of each plot of land cultivated by private individuals, minor taxes assessed on lands, tolls paid at the ferries, and road cesses.

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The mines formed a very important source of revenue to the State. The receipts from mines consisted of the yield of the State-mines and also a share of the produce of mines privately owned, whether the produce consisted of precious metals or of ordinary minerals. The nine kinds of income derived from mines were: (i) output of minerals, (ii) a share of the output, (iii) a duty of 5 per cent., (iv) assaying charges, (v) fines, (vi) tolls, (vii) compensations for the loss of the King's revenues, (viii) coining charges, and (ix) a premium of 8 per cent.³

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³ Arthaśāstra, Bk. II. ch. 12.

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The receipts from public works were: fruits of trees, vegetables grown in the public gardens, the yield of fisheries, and so forth. The forest revenue was derived from the lease of forest lands for hunting, and for the sale of elephants and other animals. The income from pastures consisted in dues paid to the State for grazing cattle on public lands. The tolls payable on land-routes and water-ways formed another important source of State income.

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The other classification of the revenues given by Chānakya is also important. This we may slightly modify and put in modern form. The income of the State, according to this classification, would fall into two parts, namely, (1) tax-revenue and (2) non-tax-revenue. The first head would comprise (i) fixed taxes (piṇḍa-kara), (ii) one-sixth share of the produce (ṣaḍbhāga), (iii) supply of provisions for the army (senā-bhakta), (iv) religious taxes (bali), (v) tributes from subordinate rulers (kara), (vi) forced benevolences (utsanga), (vii) royalties (pārśva), (viii) compensations (pārihīṇika), (ix) presents (aupāyanika), and rents of public buildings (kausṭheyaka). Under the second head fall (i) the agricultural produce of crown lands, (ii) sale proceeds of grains, (iii) grains obtained by special request, (iv) incidental gains from trade and commerce, (v) interest on capital, and (vi) profits of manufactures undertaken by the State. Besides these, there were certain minor sources of income, such as escheats, fines, confiscations, and forfeitures of the property of rebels.¹

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¹ Arthaśāstra, Bk. II. ch. 15. The Sukranīti treats of the various sources of income in Ch. II. sls. 335, etc.

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Taxes were paid either in cash or in kind, or partly in cash and partly in kind. Kautilya expresses himself strongly in favour of the collection of taxes in cash. Industrialists, Sūdras, and all other persons who lived by their labour (karma-jīvinaḥ) gave their labour free to the State for one day in every month in lieu of taxes.² But no forced labour was exacted.³ Brāhmaṇas were exempt from the payment of taxes on the ground that they paid taxes to the State in the shape of their religious services.⁴ The other classes of persons who were exempt were women, minors, students, blind, deaf, dumb, and diseased persons, and those to whom the acquisition of property was forbidden.⁵

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² Vishnu (Jolly's Sanskrit text), Ch. III. So, Manu says: "Mechanics and artisans, as well as Sūdras who subsist by manual labour, he may cause to work (for the State) one (day) in each month." VII. 138.

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³ Hiuen Tsiang says: "The families are not entered on registers, and the people are not subjected to forced labour." Buddhist Records, Bk. II. And again, "When the public services require it, labour is exacted but paid for. The payment is in strict proportion to the work done." Buddhist Records, Bk. II.

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⁴ It was, however, only the learned Brāhmaṇas who were exempt. Those Brāhmaṇas who were engaged in occupations proper to the inferior castes had to pay taxes.

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⁵ Āpastamba, II. 10, 26, 14-17. Vasishtha, Vishnu, Manu, and Kautilya also express similar opinions.

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In times of financial stress, a ruler was held justified in raising money by means other than those laid down in the Sāstras. For instance, he might demand one-fourth or even one-third of the share of the produce of the soil, as well as a higher percentage of the other kinds of produce. The King's officers might also compel the people to grow additional crops in the interests of the public treasury. In case such measures failed to bring in enough money, the Collector-general asked the people for benevolences in view of the needs of the State, and those who offered handsome amounts received precedence in rank, robes of honour, and decorations. Religious institutions were also compelled to contribute to the funds of the State. On occasions of grave financial difficulty, various other devices were adopted, but, in order that these might not lead to trouble, Chānakya utters the voice of warning in these words: "Such expedients should be resorted to only once, and never more than once." 1

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It should be noted that the land-tax was the most important of all the sources of the State revenue. The King, however, was never regarded as the owner of the land, and he never claimed a right to the unearned increment of the land. His claim was limited to a fixed share of the produce.² In later times, kings came to possess private landed properties of their own, and the income derived from such crown lands, as Hiuen Tsiang observed, helped considerably to lighten the incidence of taxation on the people.

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¹ But Kautilya adds: "He should not make such demands of persons who cultivate soils of a middling or inferior quality, nor of those who are of great assistance to the State in the construction of forts, irrigation works, trade routes, colonisation of waste lands, exploitation of mines, preservation of forests, nor of border tribes, nor of those who had no means of subsistence." Bk. V. ch. 2. Also, Sukranīti, IV. 2, 10.

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² The King's share of the produce of the land was regarded as his pay for the services he rendered to the State. Vide Bodhāyana's Dharma-sūtra, and cf. ante, Ch. VII.

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The principles on which the tax-system was based were sound and reasonable. To use the language of modern Economics, ability and least sacrifice were the guiding principles of the framers of the financial regulations of ancient times. "The King," says the Mahābhārata, "should act in such a way (in collecting his revenues) that his subjects should not feel the pressure of want."¹ Arbitrary exactions were strongly condemned by law-givers as well as by political teachers. Vasistha, one of the early law-givers, for instance, says: "Let him not take property for his own use from (the inhabitants of) his realm."² "Never desire to fill thy treasury by acting unrighteously or from covetousness" is the advice given in the Mahābhārata to the King. And, again, the King is thus admonished in the Great Epic against indulging in exactions: "That avaricious King who through folly oppresses his subjects by levying taxes not mentioned in the Sāstras brings ruin upon himself."³ Kautilya condemns the conduct of over-zealous revenue officials in these words: "When an officer realises double the usual amount of revenue, he drinks the life-blood of the people. The King should prevent such exactions.”

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¹ Sānti Parva, Sec. 71, sl. 13.

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² Vasistha, X. 14.

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³ Cf. Āpastamba, "Dharmyam śulkam avahārayet." II. 10, 26, 9.

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These were the principles. In practice, while there were many rulers who followed a righteous and wise policy in their collection of taxes, there were others whose love of luxury and ostentation prompted them to fill their empty treasuries by despoiling their subjects. Under weak governments, royal officials often enriched themselves at the expense of both the State and the people.

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Public welfare was—in theory at least—the guiding principle in the expenditure of the public revenues. Kālidāsa, the greatest of Indian poets, says: “Just as the Sun takes moisture from the earth to give it back a thousandfold, so the King gathers taxes from the people only to provide for their welfare.”¹

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¹ “Prajānām eva bhūtyartham sa tābhyo balim agrahīt: Sahasraguṇam utsrashṭum ādatte hi rasaṁ raviḥ.” Raghuvamsa.

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The main heads of expenditure, according to Kautilya, were: sacrifices, worship of ancestors, charity, expenses of the royal household, charges of the civil departments, expenses in connection with the maintenance of foreign missions, the expenses of the army and the army supply services, public works expenditure, and the expenses for the preservation of forests.²

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² Bk. II. ch. 6.

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The allocation of funds to the various items of expenditure depended upon the respective needs of the departments. In order to provide against contingencies, wise financiers of old always considered it prudent to budget for a surplus after meeting all expenditure. Some of them, perhaps, were over-cautious in this respect. The views of such financiers are expounded in the Sukranīti, according to which only one-half of the State revenue was to be spent for the six purposes of administration in the following proportions: (1) the salaries of headmen,—one-twelfth; (2) the army,—three-twelfths; (3) charities,—one-twenty-fourth; (4) expenses incurred for works of public utility,—one-twenty-fourth; (5) salaries of officials,—one-twenty-fourth; (6) personal expenses of the King and of the royal household,—one-twenty-fourth.¹ According to the Sukranīti, there was to be enough money in the treasury to cover public expenses for twenty years.²

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¹ Sukranīti, Ch. I. sls. 316-317.

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² Sukranīti, IV. 2, 13.

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The prosperity of the State finances was regarded as a matter of the greatest importance,³ and Kautilya’s views in this regard seem to have been very sound. Circumstances which, in his opinion, tended to keep the treasury full were: prosperity of the people, rewarding of officers for meritorious work, punishment of thieves, prevention of corruption among government officers, abundance of crops, prosperity of commerce and trade, freedom from troubles and calamities, non-remission of taxes, and receipt of revenue in gold. Matters which led to the depletion of the treasury were the following: obstruction (to the realisation of revenue), giving of loans, litigation, falsification of accounts, loss of revenue, gains made by officials, adverse exchange, and defalcation.

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³ According to Kautilya, the best treasury is that “which is justly acquired by either inheritance or self-acquisition, which is full of gold, silver, pearls and gems of various kinds, which is capable of withstanding calamities for a long time.” Bk. II. ch. 1.

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The control of the department of Public Finance was vested in two officials, namely, the Collector-general (Samāhartā) and the Treasurer-general (Sannidhātā). The former was in charge of the collection of the revenues, while the latter was the custodian of the finances and was responsible for their proper disbursement. It was the duty of the Collector-general to divide the country into several districts for revenue purposes, and to classify the villages, according as they (i) were exempt from the payment of taxes, (ii) supplied soldiers for the defence of the country in lieu of taxes, (iii) paid their taxes in gold, (iv) paid taxes in kind, that is to say, in grains, cattle, raw products, or dairy produce, or (v) supplied free labour.² The Treasurer-general, as the custodian of the funds of the State, was expected to acquaint himself with the income and expenditure of the State over the period of a century, so that he might be able to frame accurate budgets and to show a good balance at the end of each year.

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¹ Arthasāstra, Bk. II. ch. 7.

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² Ibid.

c16.47

For the proper control and administration of the finances of the realm it was considered necessary to have a good system of keeping accounts, and this important department was placed under the control of one of the Chief Superintendents. It was the duty of this official so to arrange the business of his department that everything relating to the finances was entered in the books. He was required not only to show the net revenue that remained at the end of a year, but to cause to be entered in the books all details of expenditure, mentioning whether an item was incurred for a purpose, internal or external, public or private, important or unimportant. The account officers had also to enter in their books the names of departments; the description of the work carried on and the results obtained in the several manufactories; the amounts of profit, loss, expenditure, and interest of each factory; the number of labourers engaged, and their wages; the values of different kinds of gems, and of other commodities; presents made to the King's officers and courtiers; remissions of taxes granted; allowances, pensions, and gifts of lands or money to the King's wife and children; and receipts from or payments to foreign Kings. The annual accounts of every department were regularly submitted to the Accounts Department, and after they had been examined by the Superintendent they were audited by competent auditors. They were then submitted to the Ministers in charge of the different departments, and considered by them sitting together as a cabinet.¹

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¹ Arthaśāstra, Bk. II. ch. 7.

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