Sri Sathya Sai elaborates on Management Lessons from Chanakya - Part 2

Chanakya (371 - 283 BC)


CHANAKYA’S TENETS OF ADMINISTRATION

Circulation of Capital

Chanakya propounded that out of total income, one fourth should be saved for the future and three-fourths should be used for the five life forces of the business. Many of today’s business leaders like the Tatas, Birlas and Kirloskars, etc., started their business by managing small companies. With the progress of time, they have become owner-leaders. However, we should understand the transformed mind-set of people over time. For each company, there are shareholders. The leaders (as promoters) invest money along with the other shareholders. Nevertheless, the very moment they get back the money they have invested with profits, they lose interest in that business of that company. As a result of this, the company’s performance may plummet, and the company would incur losses. While these eminent business leaders were committed to their company, there are owner-leaders who display the knack to take back their capital and later do not show the keenness to improve the business further. Many businesspersons act in this manner because of which business may not grow in the desired way. Chanakya’s principle was different. His principle was that of ‘Circulation of the Capital’. Just like blood, money has to be circulated in order to ensure safety and protection. This is the most important principle of Chanakya. 

Centralisation vs. Decentralisation

People at higher levels in the organisation should be aware of the happenings at the grass root level. They should not ignore the state of affairs at the shop floor level by keeping themselves too busy with the concerns of the people at the higher level. It may not be possible for key people in an organisation to do everything themselves, but they should be kept posted with developments and the day-to-day happenings on a regular basis.

Financial Management

Chanakya stated that out of the total earnings or crops produced, one-half of the total produce has to be set aside for the future contingencies. During times of emergency, one should be self-reliant and not dependent on others. Out of the remaining, one half has to be used for the welfare of the nation and the other half for defence. He also provided principles for business. Nowadays, banks pay a lower rate of interest on deposits they receive but charge higher rate of interest on the advances they give to the customers. Chanakya opined that such a practice was incorrect. According to him, if a loan of INR 100 were given now, the borrower need not pay interest at periodic intervals but pay back INR 200 say after 10 years, which would thereby cover both the principal and the interest. This was followed so that the borrower would not be subjected to frequent hardships. Again, in case the borrower died before the loan repayment, the loans were fully waived and not charged to his family. Today if the borrower expires, his property is attached or his dependents or the people who signed as surety are made liable. Chanakya felt that the debt was an individual transaction and not related to the family. Thus, Chanakya used Artha Shastra in those days with a different viewpoint. Today, however, times have changed as a result of which there is also a change in the business principles and practices.



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