(This weekly column will explore the relevance and application of Principles and Strategies discussed in the 3rd Century BC treatise, Kautilya’s Arthashastra, in Today’s Corporate World)

The term ‘budget’ signifies estimation and organisation of revenue and expenditure of an organization or state. A strong financial foundation is necessary for an organization or state to be sound and stable. Good budgeting is the basis of creating a strong financial architecture. Hence financial management plays a prominent role in the development of any organization or country.

“All undertakings are dependent first on the treasury. Therefore, he (the leader) should look to the treasury first” (2.8.1)

It is an advice to the CEO of an organization to focus on the increase of the revenue and cash flow into the treasury. He also recommends a good management system on budgeting. Forecasting details of financial management are nothing but the exercise of budgeting.

Kautilya emphasises that the officer-in-charge of finance – the CFO in today’s corporate world – should put all his efforts into increasing the income and reducing the expenditure.

Details of each financial activity, including record keeping, types of income and control of expenditure and taxation is given in the 6th chapter of the second book of Arthashastra in detail.


“He (leader) should check the accounts for each day, group of 5 days (a week), fortnight, month, four months (quarterly) and a year” (2.7.30)”

The leader is expected to maintain a system of daily, weekly, monthly and yearly accounting systems to keep a regular check on income and expenditure.Thus he can make required corrections at any given point of time and have control over expenditure.


“ He should check the income and expenditure with reference to the period, place, time, head of income / expenditure , source, bringing forward, quantity, the payer / paid, the person causing payments to be made, the recorder and the receiver”

Kautilya has recommended maintaining financial transactions with all their minute details. He has suggested putting limits on withdrawal from the treasury.  In short, the state should regulate its finance in such a way that it can easily manage calamitous times.

Kautilya as an economist has balanced his budgets well and has always preferred surplus budgets to deficit budgets.


However, while filling up the treasury he was conscious of the economic structure of the people.

Several sections of society such as old people, crippled persons and widows were exempted from taxation.

Kautilya took several steps to ensure that a king got taxes from people as a person picked up ripe fruits from a tree. He should not cause anger to the people by over-burdening them with taxes, just as one should not pick up unripe fruits as it effects the growth of the tree.

(The author is the director of ATMA DARSHAN, a company that provides spiritual services, including management consultancy and tours. He can be contacted at radhakrishnan@atmadarshan.com)

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