(a) "Ethics in Public services has been the main concern of Kautilya's Arthashastra." Examine the statement. (10 marks) (b) "The…

(a) Ethics in Kautilya's Arthashastra

Kautilya’s Arthashastra embeds ethics deeply within statecraft, balancing normative ideals with rigorous administrative realism. At the apex, Rajdharma mandates that the ruler’s ultimate duty is public welfare ("Prajasukhe sukham rajnah"), establishing governance as a moral enterprise. Kautilya designed elaborate institutional ethics for public functionaries (Amatyas), mandating character testing through Upadhas (integrity trials) prior to appointment and codifying distinct service rules. To counter administrative corruption—famously noting that officials handling public funds naturally resemble fish drinking water undetected, and listing forty ways of embezzlement—he deployed strict accounting protocols, periodic audits, and an undercover surveillance network of spies to enforce civil service accountability.

However, Kautilya maintains a clear dichotomy between personal ethics and state survival. In matters of external statecraft and internal security, encapsulated in the Mandala theory and Koota Yuddha (covert warfare), pragmatic realism overrides conventional morality, justifying deception and expediency for the preservation of the state. Kautilyan ethics is therefore utilitarian and institutional: individual virtue in public officials is rigidly enforced to safeguard the treasury and public trust, while statecraft remains guided by sovereign pragmatism.

(b) Centralisation in Mughal Administration

The Mughal administrative apparatus operated fundamentally as a centralised bureaucratic structure backed by military authority. Centralisation was operationalised through the Mansabdari system introduced by Akbar, which integrated all civil and military officers into a single imperial hierarchy directly appointed, graded, and transferred by the Emperor. Financial centralisation was secured via the Jagirdari system and the Zabt (dahsala) revenue settlement associated with Todar Mal, wherein land revenue assessments and assignments flowed under the direction of the Diwan-i-Kul, while the Mir Bakshi managed the mansabdari establishment; frequent transfer of jagirs prevented officers from building local bases.

Nevertheless, total centralisation was tempered by spatial realities and administrative deconcentration. The empire was systematically divided into Subahs (provinces), Sarkars (districts), and Parganas (sub-districts). At the provincial level, institutional checks were instituted through dual authority: the Subahdar (law and order) and the provincial Diwan (revenue) reported independently to the central court, preventing regional hegemony. Furthermore, at the grassroots, hereditary Zamindars and autonomous village councils (Panchayats) maintained decisive control over agrarian disputes and customary law. Akbar’s administrative syntheses institutionalised a dynamic equilibrium where strong central oversight accommodated local power structures to ensure operational sustainability across a vast subcontinent. Historians differ on the degree: the Aligarh school (Irfan Habib, Athar Ali) stresses a centralised, bureaucratic state, while scholars such as Muzaffar Alam and Stephen Blake see a more negotiated, patrimonial order, especially after Aurangzeb. The statement is thus broadly valid for the design of the system, less so for its practice.

(c) Autonomy of Public Sector Undertakings (PSUs)

The assertion that PSU autonomy is a myth stems from pervasive structural and political controls. Public enterprises frequently face intrusive ministerial interference in day-to-day operations and strategic board appointments. They are subject to a triple layer of accountability: audit by the Comptroller and Auditor General (CAG) under the CAG (DPC) Act, 1971 and the Companies Act, 2013, constant scrutiny by the Parliamentary Committee on Public Undertakings (COPU), and writ jurisdiction under Articles 32 and 226, since PSUs are ‘State’ under Article 12 (Ajay Hasia, 1981). Additionally, pricing restrictions and mandated socio-economic obligations often constrain their commercial agility and market responsiveness.

Conversely, reforms since the mid-1980s have diluted departmental control. The Memorandum of Understanding (MoU) system, introduced in 1986-87 following the Arjun Sengupta Committee (1984), established a performance-based paradigm, shifting oversight from ex-ante process control to ex-post result evaluation. Furthermore, after 1991 the categorisation into Navratna and Miniratna (1997) and Maharatna (2009) companies delegated substantial financial and operational autonomy, allowing PSUs to sanction large capital expenditures, execute international joint ventures, and raise market debt without prior ministerial clearance. While full autonomy remains constrained by public accountability, PSUs have evolved from subordinate departmental arms into corporatised entities operating with significant commercial flexibility within an overarching framework of democratic accountability. The statement is therefore an exaggeration: autonomy is real but conditional, and it varies sharply between listed Maharatnas and loss-making units dependent on budgetary support.

(d) Democratic PMO vs. Personalised PMO

The evolution of the Prime Minister’s Office (PMO) demonstrates an institutional tension between personalized, concentrated executive authority and citizen-centric democratic governance. Historically, particularly from the 1970s onwards under Prime Minister Indira Gandhi, when the Prime Minister’s Secretariat under P.N. Haksar became the hub of policy (it was renamed the PMO in 1977), the office expanded into an all-powerful apex secretariat, often centralising policy formulation, overshadowing line ministries, and subordinating the Cabinet Secretariat. When functioning as a "Prime Minister's PMO," it risks creating an insular, command-and-control bureaucracy that undermines cabinet collegiality and institutional checks. The PMO has no constitutional or statutory status of its own; it is a department under the Allocation of Business Rules, 1961, while Article 74 vests advice in the Council of Ministers collectively.

In a constitutional democracy, the PMO must transition into a "People's PMO" by acting as an institutional conduit for transparency, public accountability, and responsive governance. Modern administrative mechanisms have sought to democratise this interface: the PMO-monitored PRAGATI platform fast-tracks developmental infrastructure projects affecting citizens, direct public grievance redressal through CPGRAMS holds line ministries accountable, and policy inputs are crowdsourced alongside strategic advisory bodies like NITI Aayog. Transforming the PMO into a People's PMO requires de-concentrating discretionary power while institutionalising open data, participatory policy-making, and seamless public interface, ensuring the apex executive remains directly responsive to citizen welfare.

(e) GST and Centre-State Relations

The implementation of the Goods and Services Tax (GST) through the 101st Constitutional Amendment Act marks a decisive structural realignment of Indian fiscal federalism. Financially, states surrendered substantial fiscal sovereignty by subsuming major sub-national revenue sources—such as sales tax, entry tax, and state VAT—into a unified, national tax architecture. While this eliminated interstate trade barriers and established a single market, it significantly curtailed states’ independent capacity to mobilise revenues during economic downturns, making them reliant on the pooled tax pool.

Politically and institutionally, the creation of the GST Council under Article 279A established a formal arena for pooled sovereignty. Its voting mechanism allocates one-third voting weight to the Centre and two-thirds collectively to the states, requiring a 75% majority for all decisions. This grants the Centre a de facto veto over any resolution (and states acting together can likewise block), while compelling states to forge collective coalitions. The friction witnessed over the end of GST compensation in June 2022 highlighted emerging fault lines between cooperative and coercive federalism, and in Union of India v. Mohit Minerals (2022) the Supreme Court held that the Council’s recommendations are persuasive rather than binding, preserving legislative space for both levels. The GST 2.0 rationalisation of September 2025, which moved to two main slabs of 5% and 18% while winding down the compensation cess, again required consensus on revenue risks for states. GST has transformed Indian fiscal federalism from an era of autonomous legislative taxation to one of institutionalised collective bargaining and negotiated interdependence.