This statement is reflective of the historiography that has been propounded by nationalist schools of thought in Indian historiography, for the last 70-80 years. Historians like K.P Jayaswal and A.S Altekar in attempting to illustrate the nature of ancient polities that emerged in the Indian subcontinent, in a response to contemporary assertions about Indian history which asserted that despotism was the only form of governance that the "natives" were familiar with, constructed narratives and works that brought attention to such polities that broke this mould. However, in doing so, there were tendencies towards exaggeration and questionable assertions which despite having been challenged in academia, sustained their control of popular imagination and therefore, are reflected to this day in popular historical consensus.
For example, in his work Hindu Polity : A Constitutional History of India in Hindu Times Parts I And II, 1943, K.P Jayaswal made the following assertions :
One of the terms which had first attracted my attention was the word Gana. In the Acharanya-Sutra of the Jain branch of Hindu literature, I came accross the term Do-rajjana and Gana-rajjana (II. 3.1.10)which struck me as defining constitutions. Do-rajjana were states ruled by two rulers
It is necessary to ascertain what was exactly meant by Gana. It means "numbers" : ganda-rajya will therefore mean the rule of "numbers", "the rule of many"
He further quotes multiple sources, variously defining gana and sangha as republics and assemblies. In another instance he refers to ganas as parliaments of 5,000 members based off of Greek sources, and mentions that it wasn't a direct assembly and only those were entitled to sit there who could furnish the state with an elephant. "This was the qualification, and a seat in the Gana was based on qualification. The population was composed of good agriculturalists and men brave in war". He further adds that although all such men weren't part of the assembly, they must have been represented.
It should be clear that the above attempt by Dr. Jayaswal, comprehensive and elaborate though it may be, is also encumbered with problems of projection, exaggeration and positivism. The comparisons drawn with democracies and assemblies or a representative form of government are prime examples of such exaggeration and projection, since the ascription of nomenclature more suited for modern day systems of state organisation and contemporary Roman and Green systems, lacks any solid foundation outside of questionable and/or literal interpretation of given sources.
Upinder Singh and Romila Thapar tackle this subject with considerable emphasis on this problem of interpretation, and while addressing the problems with previous attempts and acknowledging the political realities which gave way to such interpretations, they provide a more rationalised picture of these polities. For Thapar and Singh, in their works Early India : From The Origins To AD 1300 and A History Of Ancient And Early Medieval India From The Stone Age To The 12th Century respectively, the terms gana and sangha are reflective of tribal organisation, rather oligarchial or corporate in nature. These tribal organisations could have been either A) a single clan, B) it's various branches such as the Sakyas or the Koliyas or C) a confederation of several clans, such as the Vajjis and the Yadavas. Ganarajya is interpreted as he who rules over many, implying a tribal chief, and power in such ganas and sanghas rested in the aristocratic assemblies and councils of stakeholder chiefs or rajas. Primary sources mention as many as 7,707 or 168,000 if these rajas in polities such as the that of the Lichchhavis of Vaishali. Such bloated numbers are not to be taken literally but rather, there must be some rationalisation of these exaggerated numbers, perhaps these imply that the Lichchhavis had a large assembly constituted by the patriarchs of leading Kshatriya families, who each took the title of raja. Furthermore, these polities were closely associated with Kshatriyas, and it was this rejection of contemporary Brahminical orthodox power which saw patronage in neighbouring monarchical polities, which eventually reduced ganas to subservience, insignificance and subjugation, which is further evidence of their self-conscious poltical identity as tribal or clan oriented societies which were averse to varna stratification. To further ensure this state of affairs, these Kshatriya clan and tribal confederations, made sure to deny rights to property, political participation, and the right to associate themselves with their clans by using the clan name to those non-Kshatriya groups that occupied these territories and were governed by the aristocracy.
In a similar criticism of State And Government In Ancient Times, From Earliest Times To c. A.D 1200 by A.S Altekar, A.L Basham brings attention to problems of literal interpretation of primary sources, problematic interpretations, projection and questionable assertions. For example, Barsham draws attention to Altekar's conviction for the idea that Kalidas' historical sense was so well developed that his Malavika-agnimitra of the Gupta period (between the 4th to 5th century CE), could be used as a source for the study of administration of the Shunga era. He also draws attention of Altekar's dating of historical texts, such as dating the Rig Veda to 2500 BCE, or the Brahamanas to 1000 BCE, and his usage of vague and shaky excerpts from various texts to say that "all-round welfare of the public was clearly regarded as the chief aim of the state during the Vedic and Upanishadic ages". As Basham states, Prof. Altekar's deep love for his country's past may here and there have led him to make doubtful assertions. You may find this review helpful to acquaint yourself with the typical problems of interpretation and narrative construction which produced these incorrect notions in popular history today.
Basham, A. (1950). State and Government in Ancient India, from Earliest Times to c. A.D. 1200. By DrA. S. Altekar, M.A., LL.B., D.Litt. pp. viii 261. Motilal Banarsi Dass, Banaras, 1949. Rs. 15. Journal of the Royal Asiatic Society, 82(3-4), 200-203. https://doi.org/10.1017/S0035869X00104010