The Arthashastra is an ancient Indian treatise on statecraft, economic policy and military strategy which identifies. Kautilya,also known as Chanakya is India's most illustrious political economist.He regarded economic activity as the driving force behind the functioning of political dispensation and went to the extent of saying that revenue should take priority over the army because sustaining the army was possible out of a well-managed revenue system. Kautilya advocated limiting the taxation power of the State,having low rates of taxation,maintaining a gradual increase in taxation and devising a tax structure that ensured compliance.He strongly encouraged foreign trade.