A Horse and Two Goats is a collection of short stories. The book, written by R. K. Narayan, illustrated by his brother R. K. Laxman and published in 1970, includes five stories. 

The title story features a poor Indian couple living in Kitram (South India) and an American businessman. 

Muni was, in the past, a rather successful herdsman, but his flock is now composed of only two goats, as the rest have died. Despite having only two goats, Muni takes them every day to graze near the highway. As they graze, he sits by an old clay statue of a horse rearing next to a warrior.

One day, as he is watching the world go by, a strange car suddenly appears and runs out of gas right in front of Muni. An American steps out of the car and, enraptured by the clay horse statue, decides he wishes to buy it. As the American speaks in English and Muni in Tamil, the negotiation is hilarious and full of misunderstandings. Muni is in fact convinced that the American wishes to arrest him!

In the end, the American offers one hundred rupees for the horse; Muni accepts happily but is convinced that the American is actually buying the two goats. For this reason, he runs home to show his wife the money but leaves his goats with the American. His wife, however, thinks that Muni has stolen the money, especially since his two goats follow him home. She does not believe he has legitimately earned the money, and she is scared of the consequences of theft. 

In the end, however, despite the difficulties and the language barrier, both parties achieve their aims. Muni has the money which is essential for his survival, and the American has acquired the statue he loves, despite not knowing where to put it and having absolutely no idea of its history and cultural meaning!