Good Governance- A Story Told Long Back

Corporate Governance, a concept relatively unknown about two decades ago has now become the most commonly used phrase in the current global business vocabulary. It’s a hot topic across the globe, these days, and in India. The concept gained prominence in the late 80’s and early 90’s when the corporate sector, in a number of countries, was surrounded with problems of questionable corporate policies or unethical practices highlighted through the well-known scams/scandals like Enron, WorldCom, (USA) or Tyco (Ireland). In India Corporate Governance became the most talked about subject after the collapse of Satyam in 2008. Through this article an attempt has been made to explore the concept of Corporate governance found in our ancient Indian Scriptures. In the Indian context the origin of corporate governance can be traced from different ancient scriptures namely the Ramayana, the Mahabharata, and the Vedas.

Introduction:

In layman’s language the term governance can be quoted as “the process of decision-making and the process by which decisions are implemented (or not implemented).” Governance can be used in several contexts such as corporate governance, international governance, national governance and local governance. An analysis of governance focuses on the formal and informal factors involved in decision-making and implementation of decisions made and the formal and informal structures that have been set in place to make and implement the decision. Good governance, for ages, has always been the idea of political thinkers, policy planners, decision-makers and the academics. For any society the emotional well-being of citizens largely depends upon the goodness of the government. For this the systems and sub-systems of governance must be essentially efficient, effective, economical, ethical and equitable. To achieve these qualities of good governance, the machinery of governance must also be accountable and responsible. The recent example of this is the new coronavirus pandemic which is not only wreaking destruction on public health and the global economy but disrupting democracy and governance worldwide. Already, some governments have used the pandemic to expand executive power and restrict individual rights. Yet such actions are just the tip of the iceberg.

Corporate governance in India

The term corporate governance is not of recent origin. However, it gained importance and momentum since the early nineties in the western part of the world. In India the concept got importance after the introduction of voluntary code by the confederation of Indian Industry. A total revamp of our economy was done by the introduction of concepts of liberalization, privatization and globalization that made astonishing changes to the economy. The magical combination of three letters ‘LPG’ facilitated for the establishment of various corporations in the private sector and public sector, besides that the total number of investors who were investing in various corporations was also amplified. Corporate entities are the most important organizations in modern society. They not only satisfy market needs but also provide employment opportunities, creating wealth for the country. Their actions affect the lives of everyone- whether as customers, employees, suppliers, investors in society at large. Given the significance of companies, they clearly need rigorous management and good governance. Corporate governance is essential to evade corporate scams, frauds and irregularities. Major scams like Harshad Mehta’s, Satyam’s, and Kethan Parekh’s shook the confidence of public in corporate investment which indeed called for an exhaustive review of company management. Corporate governance helps companies in strengthening the foundation for long-term economic performance and attractiveness. It is all about balancing individual and societal goals, as well as, economic and social goals. In India lot of studies have been undertaken to simplify the concept of Governance. But very limited studies were undertaken from philosophical and from the ancient perspectives, despite the fact that our ancient Indian literature has enormous potential suggestions of better alternatives for management. Our ancient scriptures, which are beyond mastery, give more information on the type of governance, which existed in ancient period.

Influence of ancient Indian scriptures on governance framework

A. Governance in Ramayana: Rama and Ramayana occupy an important space in the hearts of millions. Ramarajya, as described in Ramayana, has been a part of Indian thinking for centuries. Practically, Ramarajya can be described as a means of putting the idea of good governance at the centre of all governmental activity. It had all the characteristics of democracy.

• In spite of the fact that there was no electoral procedure in those days like the one we have today public opinion was taken into account and was given due importance.
• Notwithstanding, there was no written constitution of Ramarajya, the citizens enjoyed the right of equality and avenues of development were open to all.
• The modern day saying that all are equal in the eyes of law, whether rich or poor, a royal or a beggar, was very much prevalent in the governing system. Everyone enjoyed socio-religious freedom. Every person had a right to speak his or her mind.
• There was all likelihood of getting justice. Where justice is available even to a common man, there will be no possibility of exploitation.
• Moderate taxes were levied on the people.
• According to Rama, a critical factor in good governance is the quality of ministers. Courageous, knowledgeable, strong-willed men with a high emotional quotient as ministers are key to effective governance.
• A decision on a complex issue should neither to be taken unilaterally nor in consultation with too many people. There should be an efficient core group.
• Trade and agriculture were important according to Rama and he wanted rulers to ensure good irrigation facilities rather than being overly dependent on rains. Traders were ensured of a fear-free environment and their grievances were redressed promptly.

That is why, Mahatma Gandhi acknowledged Ramarajya as true democracy. In his own words, “In the Ramarajya the meanest citizen could be sure of swift justice without an elaborate and costly procedure. Even the dog is described by the poet to have received justice under Ramarajya.”. What people expect of a democratic state? Liberty, equality, rights, duties and so on. They are indispensable to democracy and Ramarajya, covered all these aspects of democracy.

The vision of the Ramayana has eternal relevance. Law and justice, finance and business, corruption, framing on innocents for monetary gains, injustice to the poor are all mentioned. Rama’s Ramarajya was in true sense a democracy of the people, by the people and for the people. In short, the concept of governance in Ramayana is “to provide the maximum happiness for the maximum number of people, for the maximum period, based on the principles of Dharma-righteousness and moral values”.  Ramayana is India’s national idea and is a symbol of good-governance, which we lack in the modern societies.

1. Governance in Mahabharata:The ‘Shanti Parva’ a huge interpolation in Mahabharata, in the genre ‘Wisdom Literature’, an elaborate discussion between Bhishma and Yudhishthira about proper functioning of the government, duties of the perfect king towards his subjects etc.

• It states that truth is the sole factor contributing largely to the success of the kings. This means ethics and righteousness/ Dharma play a major role in success of a government. So, what is Dharma? Mahabharatasays: “Dharma has been explained to be that which helps the upliftment of living beings.
• The Mahabharataalso says that “The proper duty of a king [or any ruler or politician] is to rule according to Dharma and not to enjoy the luxuries of life.” The rulers are the leaders chosen to serve the general public. Thus, a politician is not meant to take advantage of his position, but to execute his duties with the welfare of the people in mind, under the guidance of the rules of Dharma.
• This means that Dharma is not the teaching of a religion, but it is the global ethical standard that we all need to learn. It is the very content that forms good character, proper intentions, the means for making fair and just decisions, and good and effective plans for our future.
• According to Mahabharata the major sources of state revenue should consist of the income from land, fines and forceful collection from the offenders. But in collection of taxes the king should always abide by the norms and principles laid down by the relevant sastras. Violation of this may lead to disaster for both the king and the kingdom.
• Taxes should never be imposed without considering the capability of the payee. The economic prosperity of the country depends a good deal on the agriculturists and traders and they should never be oppressed by undue taxes.

In short, we can conclude that, in Mahabharata, the foundation of good governance is righteousness in public affairs. The rulers and the employees who have taken oath of their offices to uphold Dharma/righteousness and to take care of public needs, must not act unethically and unjustly because if they do so, they will not only destroy the moral basis of governance but will also turn a state into a hell.

C. Governance in Arthashastra: Kautilya’s Arthashastra is considered to be an ancient Indian discourse on statecraft, economic policy, and military strategy, written in Sanskrit. The Arthashastra literary means the Science of Material gain, but the book has very wide scope. The scope of the books includes discussion on the nature of government, law, civil and criminal court systems, ethics, economics, markets and trade, the methods for screening ministers, diplomacy, theories of war, nature of peace, and the duties and obligations of a king. For both internal administration and foreign relations, the comprehensiveness of its treatment is almost unparallel. Although Kautilya proposed an elaborate welfare state in domestic politics, he was willing to defend the general good of the state with harsh measures.

• Kautilya said the ruler must aim to conquer other territories and ensure Yogakshemaand Lokasamgraha of his subjects. Yogakshema means to ensure welfare of the state and subjects implying happiness, prosperity, peace and bliss of his people so as to achieve Lokasamgraha which means to do what is beneficial to people.
• Kautilya regarded economic activity as the driving force behind the functioning of any political system. He stressed on a well-managed revenue system.
• Kautilya was a true statesman for whom, good governance was paramount. He suggested built-in checks and balances in systems and procedures for the containment of malpractices.
• Kautilya’s philosophy is based on the principles of “sam, dam, dand, bhed” (persuasion, temptation, punishment, and division) as various different and sequential means to achieve an end.
• Kautilya used the word ‘dharma’ (which in general, means ‘duty’) and righteousness in personal and social conduct. He described the basic ethical values as, “Duties common to all – ahimsa (abstaining from injury to all living creatures); Satya (truthfulness); cleanliness; freedom from malice; compassion and tolerance.
• Good governance in Kautilya’s literature is aimed at fulfilling the welfare of the people. “In the happiness of the King’s subjects lies his happiness, in their welfare, his welfare.
• The jargon related to Human Resource Management was not prevalent then, but its essence was widely practiced in Kautilya’s times. The King must look to the bodily comforts of his servants by providing such emoluments as can infuse in them the spirit of enthusiasm to work. He should not violate the course of righteousness and wealth. Thus, he shall not only maintain his servants, but also increase their subsistence and wages in consideration of their learning and work.
• Kautilya said that good governance and stability go hand in hand. According to him, there is stability if rulers are responsive, accountable, removable, and recallable, otherwise there would be instability.
• Kautilya’s Arthashastra identified the significance of training and learning. It clearly stated that training imparted discipline. Kautilya stated that investment in human capital especially in higher education would have a greater impact on the growth and development of the economy.

The Arthashastra equates political governance with economic governance. The end is economic governance while political governance is the means. But as economic objectives are not realized in the absence of political ones, then political governance becomes an end and economic governance the means. ‘The end justifies the means‘, this is supposed to be the basis of Kautilya philosophy. Political power and material wealth according to Kautilya are the means and ends of governance. And good governance – political or economic – depends upon justifying the ends and means as the socio, economic and political conditions.

Conclusion:

The three models of governance discussed focus on important components of good governance like justice, equality, dharma, non-violence, economic prosperity, welfare state. The models explain in detail about factors like administration, protection of a state, taxation, judiciary, revenue generation and so on. More importantly, the major focus is on the character of the ruler or the king. A king must exhibit virtues like honesty, compassion, truthfulness, courage, devotion towards the state and the people. He should also be merciful to the citizens and patient towards their problems. All these components of good governance and virtues of king are highly relevant for the contemporary world. The major problems of today’s governance is absence/delay in justice to citizens and absence of virtues like honesty and truthfulness. Centuries ago, ancient Indian rulers knew these are the principles to be followed to achieve good governance and welfare state. It is a sad reality that these fundamental features of ancient governance models are totally missing in the present scenario. Time to introspect and revisit history?