The second volume of the Arthashastra deals with the duties of various government superintendents. Those persons who possess
the required qualifications shall be appointed as the superintendents of government departments - in accordance with their individual capacities.
A government officer, not caring to act upon the information available, and neglecting to supervise the work in his own department may cause a loss of revenue to the government. The school of Manu holds that a fine equal to the loss of revenue should be imposed upon him; but Kautilya says that the fine should be proportional to the guilt. An officer who causes loss of revenue should make good the loss; but the king may forgive an offence when it is trifling and be satisfied even when the revenue is scanty.
On the other hand, the king should honor with rewards those of his superintendents who are highly beneficial to him.
Kautilya says that all undertakings depend upon the availability of finance; therefore primary attention should be paid to the treasury.
In the case of corruption (by government servants), a public proclamation should be made to the effect that whoever has suffered at the hands of the offender may make their grievances known to the king. Those who respond to the call shall receive compensation that is equal to the loss that they have sustained.
Kautilya says that it is difficult to ascertain the activities of corrupt government servants. Only those who increase the king's revenue - instead of eating it up - and are loyally devoted to the king should be made permanent in service.
Kautilya concludes by saying that negotiations are based upon five basic principles:
- praising the qualities (of an enemy),
- narrating the mutual relationship,
- pointing out mutual benefit,
- showing vast future prospects,
- identity of interests.