As per evidence the state in ancient India confined itself to the constituent functions. Citizens were protected from foreign aggression. Internal law and order was maintained by enforcing respect for the traditional law. The Vedic monarch was dharmapati or the protector and enforcer of law, morality and dharma. Even the civil and criminal cases were decided by accepted bodies.
As per Mahabharata and the Arthashastra the sphere of the state activity was very extensively extended between the Vedic and the Mauryan age. The activity of the state relates to social, economic and religious life of the people. The state was not considered as a necessary evil. The laissez faire theory advocates that the sphere of the state activity should be reduced. The state was to embrace the whole of human life. The state was supposed to offer facilities to religions and sects to develop and foster and inculcate piety, ethics and virtue. This would improve the social order and encourage learning, education and art by extending patronage to scholars and artists. Rest houses, charity halls and hospitals were maintained in order to relieve the distress due to floods, locusts, famines and earthquakes. It was ensured that the population is evenly distributed and colonisation of fresh lands was encouraged.
It was the state's duty to enrich the resources of the country by developing forests, working mines and constructing dams and canals in order to make agriculture independent of rain. State offered help to trade and industry as well as protected the population against capitalistic egocentricity. State regulated the vices of the community by appointing its own officers to supervise over wine booths, gambling houses as well as prostitutes.
Well-organised governments in ancient India like the kingdoms of the Maurya and the Guptas discharged most of these functions. There is a possibility that the smaller states may have confined themselves to a restricted sphere of state activities. State jurisdiction extended over almost all the spheres of life. The state did not discharge its diverse functions through its own bureaucracy completely. The market superintendents and trade officers belonged to the state bureaucracy but they worked in close co-operation with trade guilds and Brahmana or Sramana assemblies. The state and its officers tried to harmonise the divergent interests after consultation with the guilds and local assemblies, which were stable institutions than the state itself thereby enjoying considerable prestige and confidence.
The state encouraged education by liberal grants to colleges and universities. Grants were made available to Hindu temples and Buddhist monasteries too. Decentralisation was practiced to a great extent. Powers were delegated to the village Panchayats, city councils and trade guilds.
For a long time the ancient Indian State used to enforce laws which were not approved by any limb of its body politic. The scheme of taxation was the one approved by the usage of the land as codified in the Smritis.
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