Material compassion, lamentation and tears are all signs of ignorance of the real self. Compassion for the eternal soul is self-realization. The word “Madhusudana” is significant in this verse. Lord Krishna killed the demon Madhu, and now Arjuna wanted Krishna to kill the demon of misunderstanding that had overtaken him in the discharge of his duty. No one knows where compassion should be applied. Compassion for the dress of a drowning man is senseless. A man fallen in the ocean of nescience cannot be saved simply by rescuing his outward dress — the gross material body. One who does not know this and laments for the outward dress is called a sudra, or one who laments unnecessarily. Arjuna was a kshatriya, and this conduct was not expected from him. Lord Krishna, however, can dissipate the lamentation of the ignorant man, and for this purpose the Bhagavad-gita was sung by Him. This chapter instructs us in self-realization by an analytical study of the material body and the spirit soul, as explained by the supreme authority, Lord Sri Krishna. This realization is possible when one works without attachment to fruitive results and is situated in the fixed conception of the real self
The distinction between the jiva and the isvara will be explained in the Thirteenth Chapter of Bhagavad-gita. The Lord is kshetra-jna, conscious, as is the living being, but the living being is conscious of his particular body, whereas the Lord is conscious of all bodies. Because He lives in the heart of every living being, He is conscious of the psychic movements of the particular jivas. We should not forget this. It is also explained that the Paramatma, the Supreme Personality of Godhead, is living in everyone’s heart as isvara, as the controller, and that He is giving directions for the living entity to act as he desires. The living entity forgets what to do. First of all he makes a determination to act in a certain way, and then he is entangled in the actions and reactions of his own karma. After giving up one type of body, he enters another type of body, as we put on and take off clothes.
if we accept the Vedic conclusion as stated in the Bhagavad-gita that these material bodies are perishable in due course of time (antavanta ime dehah) but that the soul is eternal (nityasyoktah saririnah), then we must remember always that the body is like a dress; therefore why lament the changing of a dress? The material body has no factual existence in relation to the eternal soul. It is something like a dream. In a dream we may think of flying in the sky, or sitting on a chariot as a king, but when we wake up we can see that we are neither in the sky nor seated on the chariot. The Vedic wisdom encourages self-realization on the basis of the nonexistence of the material body. Therefore, in either case, whether one believes in the existence of the soul or one does not believe in the existence of the soul, there is no cause for lamentation for loss of the body.
One may question here that if Krishna is equal to everyone and no one is His special friend, then why does He take a special interest in the devotees who are always engaged in His transcendental service? But this is not discrimination; it is natural. Any man in this material world may be very charitably disposed, yet he has a special interest in his own children. The Lord claims that every living entity — in whatever form — is His son, and so He provides everyone with a generous supply of the necessities of life. He is just like a cloud which pours rain all over, regardless of whether it falls on rock or land or water. But for His devotees, He gives specific attention. Such devotees are mentioned here: they are always in Krishna consciousness, and therefore they are always transcendentally situated in Krishna.