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Economic impact of Gandhi's models
By Prajakta Desai & Sunil Sonawane
Gandhi had an innate sympathy for the poor and deprived. This coupled with a direct observation of the predicament of the poor and the oppressed both in India and in South Africa led him to design an economic model that would alleviate the condition of the poor and the deprived. Gandhi believed that the high capitalist endeavors were at the root of all suffering. He believed that business without ethical considerations was fundamentally evil. This led to discrimination, oppression and exploitation. Gandhi also held that there is enough in this world to feed and clothe all. However, there is poverty and deprivation because one group of people thrives on the labor put in by others. Gandhi strongly believed in the ethics of hard work and that one is entitled to take from the system only as much as he is capable of producing. This according to Gandhi, was the only way to fight poverty.

Gandhi's Understanding of the Indian Conditions:
Gandhi came back to India after his successful South African initiative to find the Indian economy in a state of absolute disarray. He was pained by the way the rural economy was broken down and debased beyond redemption by the British authorities. He took up a twofold action. First, he had to instill in India the moral courage to be economically self-sufficient, producing and fulfilling its own primary needs in home-grown, indigenous ways. This would not only revive the rural economy of India, it would also break down the British economic motives that led them to stay in India. This was indeed an uphill task. He knew it would be difficult for him to make the Indian elite, groomed to a system of caste-based economy for centuries to truly accept the dignity of labor and work. Gandhi had only one way out and he immediately embarked on that. He turned his life into a living example of his ideals and led every resident of his Sabarmati ashram to do the same. Soon, the ideals of economic self-sufficiency were accepted throughout India. The death knell of the British economic interests in India was sounded and the British authorities soon realized that by attacking their economic interests, Gandhi had successfully isolated their rationale behind their rule of India.

Gandhi's Ideal of Self-Sufficient Village Economy:

India lives in villages. Naturally the development of the country depends on the development of villages. All the goods and services necessary for the village members should be grown within the village. In a word, every village should be a self-contained republic. If every village distributes its surplus produce to the poor villagers the problems of poverty and starvation in the rural areas would be solved. Only this can help eradicate poverty and people can be happy and self-reliant. Agricultural sector alone cannot solve the problem of rural poverty and unemployment. That’s why Gandhi gives importance on the growth of the rural industries like khadi, handlooms, sericulture and handicrafts. He opines that large-scale industries make people lazy and help concentration of wealth in the hands of few. On the contrary, rural industries are based on family labour and required less amount of capital. Raw materials are also collected from local markets and the goods thus produced are sold in the local markets. Therefore, there is no problem of production and market. Large scale capital-intensive production, displaces labour and naturally augments employment and under-employment. Machinery creates a Pareto optimum situation in the sense that it improves the economic conditions of a few at the cost of many unfortunate rural people leaving them unemployed and exploited. Therefore it is a situation of two-person zero sum game. But what is disappointing is that it reduces well-being of a large section of rural population.

A Review of Gandhi's Economic Models:
Relevance of Gandhi's Economic Ideas
For attaining smooth development of the economy, it is imperative to develop all the regions of the country simultaneously. The overall progress of the entire economy depends on the balanced development of all the regions. In India there exists a huge regional disparity. In relative terms some states are advanced economically and others are backward. Within a state to some districts are more backward than the rest. In West Bengal, for example, the northern part of the state popularly known as 'North Bengal' comprising six districts are relatively backward than the 'South Bengal' districts in terms of productivity in agriculture, industry, educational development, health facilities, etc. Even within the South Bengal region of West Bengal state, there are some districts like Purulia, Bankura etc. which are underdeveloped if we compare them with some districts like Burdwan and Hughly. In this context, Gandhian economics is relevant for it supports the attainment of self-sufficiency level in industrialization and uniform economic pattern for each region. The Gandhian economics is of the view that every man should increase his personal income and standard of living by exploiting the existing natural and human resources fully in an eco-friendly manner.
In line with Gandhi's dream of expanding village industries, industrial policy resolutions of 1948, 1956 and 1977 were specially favourable for the development of small scale and village industries. The village and small-scale industries have been playing an important role in Indian economy in terms of employment generation and poverty alleviation. This is due to fact that these industries are labour-intensive and capital saving. The total employment created by these industries, for example were 39,70,000 in 1973-74. This rose to 1,29,80,000 in 1991-92. According to Economic Survey, 2000-2001, the estimated employment of the cot­tage and small-scale sector again rose to 1,78,50,000. The growth rate of this sector during 1991-92 to 1,99,9­2,000 was around 4 per cent. This sector's contribution towards exports during the same period in value term has increased from Rs. 9,100 crore to Rs. 36,470 crores. This shows a growth rate of over 300 per cent. In the post-reform period, khadi and village industries play an important part in providing employment opportunities to disadvantaged groups. These industries have spread in about 2,50,000 villages out of total 5,81,000 villages of India in 1997-98. In order to be more competi­tive in the world market the Khadi and Village Industries Commission has introduced Khadi denim jeans and Sarvodaya brand. These are eco-friendly and bio-de­gradable natural products and have high demand in the world market. Mechanization in agriculture has increased productivity but at the same time reduced employment opportunity. This fact has been supported, among others, by S. Valla of JNU. Naturally stress should be laid on the creation of rural employment opportunity in the non-farm sector.
The Gandhian view of self-sufficient village economy is also relevant in the context of reducing poverty and unemployment in rural India. In 1972-73, 54.1 per cent people lived below the poverty line in rural India. This decreased slightly to 51.2 per cent in 1977-78. In 1983-84, it again fell down to 45.7 per cent. In 1993-94 this rate again came down to 37.3 per cent. In 1999-2000 it was roughly 30 per cent. The data presented here about poverty in rural India have been gath­ered from various issues of Economic Survey and Planning Commission. Although the poverty ratio has been declining, roughly one-third of the rural people still live in abject poverty. In order to improve the conditions of the rural poor it is necessary to expand rural industries further at a rapid rate. At the same time, it is essential to seriously review the rural anti-poverty programmes in the light of lapses noticed and in the context of formulating the Tenth Five Year Plan.

7 Criteria to Test Performance of Gandhi's System
These are:
  1. Eradication of poverty and minimization of affluence.
  2. Self-sufficiency of every unit in basic needs.
  3. Identification of human needs and their fulfillment.
  4. Agro-centric economy as the basis to create economy of permanence.
  5. Need-based production as far as possible through small-scale units.
  6. Check on distortions through basic education and skill formation, and
  7. Curtailment of concentration of economic power
The value-judgment of Gandhian system is quite clear. Here the criteria of performance are different from mainstream criteria. In Gandhian criteria, what is produced is to be judged along with how it is produced. Its buoyancy depends upon restructuring the rural economy. Gandhi observed: "You cannot build Non-violence on a factory civilization, but it can be built on self-contained villages... You have, therefore, to be rural minded. You can be non-violent, and to be rural-minded you have to have faith in the spinning-wheel."
Gandhi is one of the pioneers of interdisciplinary approach to economics. In his thought economics cannot be separated from health, and health cannot be separated from sanitation, and sanitation cannot be isolated from nutritious food, etc.
Those who call themselves pragmatic feel that there is an overtone of idealism in Gandhi. So, it is thought, that his system has a doubtful applicability. His hypothesis is never tested. There is a tendency to reject it without verification. The fact is the present system of economy is dominated by vested interests. Whether Gandhi's ideas will be accepted or rejected largely depends on availability of raw material. To call Gandhian economy an ideal system is to ignore what is real. Reality changes with the necessity of life. Without entering into a philosophical polemics, it can be said, reality is not always real. The system which cannot be sustained is not real. The permission of global competitive economy generates optimism of Gandhian economy.

Foundation Stones of Gandhian Economics Thoughts: Truth and Non-violence
According to Gandhi, work is not only an economic activity. It’s necessary for spiritual growth. He wanted that India should have its own economic policy. It should not follow any foreign countries policy.
In this paper I would be highlighting on six points:
  1. Swadeshi
  2. Mechanization
  3. Industrialization
  4. Trusteeship
  5. Villagism
  6. Decentralization

Swadeshi literally means 'of one's own country'

Swadeshi is defined as that spirit within us which restricts us to use the service of our immediate surroundings to the exclusion of the more remote. It aims at the removal of unemployment and poverty. It doesn’t advocate rejection of foreign trade, in fact it advocates a healthy and non-exploitative form of trade. Swadeshi is not just good, it comprises of our culture, tradition and values. He wanted that people in India should have sufficient demand for their produce; therefore, he pleaded for the use of Swadeshi goods. However, its wrong to assume that he was altogether against foreign goods. It is clear from his words: “It is criminally foolish to produce the goods which are not profitable to be produced in our country, instead of producing them we should import them.”

Gandhiji had no objection to mechanization of production if it doesn’t hurt the dignity of man and self-reliance of villages. He believed that mechanization is good when the hands are few for the work to be done. In a country like India, here lab is abundance maximum industries should be labor intensive and not capital intensive.

Gandhian economics is not based entirely on handicraft and cottage industries. Gandhiji visualized that electricity, ship building, iron works etc. should exist side by side with village and cottage industries. Industrialization leads to maximum exploitation of man and nature. Industrialization is based on large scale and highly sophisticated technology which leads to unemployment, poverty, urbanization, deforestation, desertification, pollution etc. Large scale industries should be owned by the state and administrated wholly for public good.

According to Gandhi, capitalists and the rich should consider themselves as trustees of society and make use of their wealth to benefit society which is known as trusteeship. Gandhiji wanted the development of a co-operative system.

Village Economy
Gandhiji always said that India can't be developed unless we develop the village of India. There has to be grass root development. In his opinion, the process of development in India should being from village level. Gandhiji always propounded that agriculture should be supported by some subsidiary occupations like bee keeping, animal husbandry, khadi, paper making, mud utensils making etc. Gandhiji advocated that women should contribute in agriculture and subsidiary industries or by playing charkha. He wanted every home to possess a charkha which will enable the use of local productive resources and manpower in villages.

Gandhi strongly advocated decentralization of economic system. He believed that centralization is the root cause of exploitation which leads to unemployment and poverty in India as the powers are concentrated in the hands of a few because of centralization. There is a wide gap between the haves and have nots. i.e. is rich are become richer and the poor are becoming more poor.

Implementation in India
During India's freedom struggle as well as after India's independence in 1947, Gandhi's advocacy of homespun khadi clothing, the khadi attire (which included the Gandhi cap) developed into popular symbols of nationalism and patriotism. India's first Prime Minister, Jawaharlal Nehru totally differed with Gandhi, even before Independence and partition of India. Gandhi did not participate in celebration of Indian independence. He was busy controlling the post-partition communal violence.
Gandhian activists such as Vinoba Bhave and Jayprakash Narayan were involved in the Sarvodaya Movement, which sought to promote self-sufficiency amidst India's rural population by encouraging land re-distribution, socio-economic reforms and promoting cottage industries. The movement sought to combat the problems of class conflict, unemployment and poverty whicle attempting to preserve the lifestyle and values of rural Indians, which were eroding with the advent of industrialization and modernization. Sarvodaya also included Bhoodan, or the gifting of land and agricultural resources by the landlords (call Zamindars) to their tenant farmers in a bid to end the medieval system of Zamindari. Bhave and others promoted Bhoodan as a just and peaceful methodof land re-distribution in order to create economic equality, land ownership and opportunity without creating class-based conflicts. Bhoodan and Sarvodaya enjoyed notable success in many parts of India, including Maharashtra, Gujarat, Karnataka and Uttar Pradesh. Bhave would become a major exponent of discipline and productivity amongst India's farmers, labourers and working classes, which was a major reason for his support of the controversial Indian Emergency (1975-1977). Jayprakash Narayan also sought to use Gandhian methods to combat organised crime, alchoholism and other social problems.

Courtesy: This article has been reproduced from the ISBN Publication - Gandhi in the New Millennium - Issues and Challenges' published by Khandwala Publishing House.