Gandhian economic order in the new millennium

- By Prof. G.S. Shikhare*


The Gandhian Economic Order is based on simplicity, decentralization, self-sufficiency, cooperation, equality, non-violence, human values, self-sufficient village units, and nationalisation of basic industries, Swadeshi and the theory of trusteeship. These, in turn, will solve the problems pertaining to labour, capital, production, distribution and profit etc. Since 1991, we are following market-oriented free economic system but the old problems are yet to be solved and higher growth remains to be achieved and hence there is an urgent need to find out some other alternative solution to present economic problems. “Various economists like Gunnar Myrdal and others are of the opinion that socio-economic problems of India and other developing countries can be solved to a great extent by following Gandhi's guidelines.


  1. To find out the possibility of the applicability of the Gandhian self-sufficient village economy as an alternative to present economy.
  2. To examine the relevance of Gandhian model of self-sufficient village economy in 21st century.
  3. To find out relationship between self-sufficient village economy and balanced economic growth.
  4. To suggest alternative model for balanced economic growth.

The Gandhian thoughts are more relevant even today because both nationalization and privatization have failed to solve many problems like poverty, unemployment, inequality, environment degradation and so on. Growth programmes based on science and technology are material centric and not human centric and hence there is a need of rethink about Gandhian Self-sufficient village economic model to solve all our problems.

Self-Sufficient Village Economy:

Gandhi warned about the dangers of crores of people living in densely packed towns. The growing concentration in towns and cities as a result of urbanisation and the ever widening the gap between the few very rich and very poor has resulted in a milieu in which crime, violence, exploitation are a regular feature of urban life. The Gandhian solution, therefore, is “every village to provide and use all its necessities and in addition produced a certain percentage as its contribution to the requirements of the cities.”


Gandhi believed in small-scale decentralised and small-scale cooperative organization to correct the evils of centralised industries. The decentralisation of economic power through the development of cottage and village industries was a means to eradicate the concentration of economic power in a few hands. He was against the growing income and wealth disparities arising out of the growth of large scale industries. In the stage of development people can enjoy the fruits of development with social justice; everybody has an equal opportunity for capability expansion and enjoyment of full freedom.

Capitalist mode of production :

The present methods of dividing the produce among different factors are also violent according to Gandhi. The technique adopted tries to give a unit of factor the share which is in accordance with the contribution made by it. Naturally it leads to glaring inequalities of income and leaves little share for other less efficient units of production. One leads a luxurious life and the other starves. This method of distribution is violent and should be replaced by a non-violent one, in which such inequalities of income may not exist. Reacting sharply to the evils of machinery, Gandhi said, “I will not have the enrichment of a few at the expense of the community. At present, the machine is helping a small minority to live on the exploitation of the masses.”

He further positively asserted, “I want the concentration of wealth, not in the hands of few, but in the hands of all. Today machinery merely helps a few to ride on the backs of millions.”

Gandhi's view: For an immediate solution to rural India's massive poverty, unemployment and underemployment problems and his socio-economic plans for achieving self-sufficiency, the obvious choice was the labour intensive method of production. The village industries would be dispersed in rural areas; the urban industries might be privately owned, but would not compete with the rural industries, and the heavy, basic and nationally important key industries would be run on no profit no loss basis under the control of the state minor and major industries are to supplement each other. Gandhian alternative was production by the masses through self-employment in village industries.

Relevance of Trusteeship:

The Gandhian concept of trusteeship, unlike the capitalist system, does not permit an owner to misuse his wealth. He is the owner of only that portion of the income which is necessary for his existence, it being fixed by the state. On the one hand, Gandhian economic order keeps the check on exploitation and on the other it strikes at the very root of misery by trying to convert the present man in a self-sufficient and decent man believing in non-violence and dignity of labour. Gandhi was of the opinion that, “the rich people who have accumulated excessive wealth should distribute it for maximising the welfare of the rest of the community. The wealth really belongs to the entire community. Wealthy people should consider themselves to be the trustees. However no force should be used to acquire their wealth. Their wealth should be used properly through their consent as trustees”.

Swadeshi as an Alternative:

Swadeshi thinking is necessary to protect the interest of mass people. The craze for foreign articles among the country's elite has no limit. Their possession has become a status symbol. Such an attitude is not a healthy one; it will hamper the country's progress and development. We lose our individuality and become slaves once again. Therefore we must revive the spirit of Swadeshi and encourage the use of Indian goods, Indian resources and modernise indigenous technology. Swadeshi in consumption is essential for evolving a self-reliant economy. The positive content of Swadeshi should be used as the cornerstone for the reconstruction of our economy. The principle of Swadeshi is not based on narrow and regional consideration. If everyone makes use of locally produced goods all the goods produced in the world will be locally consumed.

According to Dr. Bhole L.M. “Swadeshi is the philosophy of political, economic, administrative and technological decentralistion and diversity. It requires, among other things, the development and use of the simple, soft labour-intensive, non-violent human-faced, small scaled, decentralized, indigenous, local technologies for which international technology transfer is required next to nothing”. The modern development has not been in a position to deal with the problem of unemployment successfully. The problems of underemployment and seasonal unemployment also have become more acute because of the destruction of small allied economic activities. Swadeshi would help in solving the problem of unemployment and underemployments in respect of both the aspects -quantity and quality.


In Gandhian economic order, there are two stages of achievement of the final goal of human development. The first stage is attainment of political independence and second, the economic self sufficiency (the basic needs) through the regeneration of village and cottage industries that can ensure a critical minimum level of income for every family. At the first phase of development, swaraj will, therefore, ensure political independence as well as economic security and independence. The second stage of development is a higher stage marked by a better quality of life and equal opportunities for the development of all (Sarvodaya). In the same line, Jayprakash Narayan writes about Sarvodaya, “what we desire is the establishment of a society in which there will be no exploitation, there will be perfect equality and each individual will have equal opportunities for development. He further added Sarvodaya aims at a classless, casteless and non-exploitative society.”

Sarvodaya is neither dreamy nor idealistic. It is pragmatic and can be put into practice. It aims at reducing inequality in society. Friendship, respect, sympathy for every human being is the path of Sarvodaya.  Sarvodaya wants to create a society, which will be casteless, classless and devoid of exploitation and in which every individual as also community will find scope for its all-round development. Truth and non-violence would make it possible.

According to Sarvodaya material progress is not enough, man must attain spiritual progress also. Social justice, equality and new social structure are the important aspects of Sarvodaya. In this context, Justice Chandrashekhar Dharmadhikari says, "the concept of justice can be basically moral and human only. Man's right to live is his birthright and it includes living with dignity because undignified living cannot be human. For this purpose there will have to be social structure, which will make for justice in all walks of life. This is what Mahatma Gandhi had called 'cent percent Swadeshi.' He has alluded to seven social sins in this respect."

The progress of science, says Justice Chandrashekhar Dharmadhikari, has no doubt provided newer and newer life-saving drugs and instruments; man's life span has gone up. Yet more than 'life-saving' drugs and instruments it is the 'life-taking' - killing - weapons that have been produced. Non-violence is a social value. No one should kill a fellow being for any reason. Hence, Vinoba had worked out an equation:

Science + Violence = Total Destruction.

Science + Non-violence = Sarvodaya. If this equation is considered in relation to the prevalent circumstances, it shows how Sarvodaya is relevant to modern society.

To some people, Sarvodaya appears as an indulgence in a dream or utopia. Dr. InduTikekar has refuted this opinion with various arguments. According to her, “the 'classless' and 'free from exploitation' society that will emerge after Sarvodaya cannot be called an indulgence in dream.”

Growth and development:

Gandhian concept of development was very broad, encompassing not only economic development but also social and human development. Economic growth without human welfare of all is not a development at all and hence the Gandhian concept of development may be stated in a formula as:

Development = Economic Growth + Sarvodaya

Gandhi was of the opinion that human resources should be the focal point of planning and policies. He said that, “I heartily believe that any such policy which uses only raw materials and ignores powerful human resources is merely a waste and human equality can't be established in such manner.”

Gandhi's concept of development is based on the provision of basic needs for all the people in the country. Unless poverty and unemployment are wiped out, Gandhi is not prepared to accept that the country has really attained prosperity and freedom. For Gandhi: "Real wealth does not consist of jewellery and money, but in providing for proper food, clothes, education and creating healthy conditions of living for everyone of us. A country can be called prosperous and free only when its citizens can easily earn enough to meet their needs.”

The Gandhian programme shows three stages of development. In the first stage of rural development, the aim was to reconstruct the villages through the development of village industries and handicrafts (Khadi) to generate more employment and income and to reduce the level of overall poverty. The basic idea was to make village self-sufficient and self-reliant. Gandhi wanted self-reliance in everything.

In the second stage of development under Swaraj, it would be necessary to eliminate the colonial structure and attain Swaraj. This stage also aimed at eliminating the city-village dichotomy through decentralisation. The workers would arm the means of production in this stage. In the last stage there would be Sarvodaya or benefit of all classes of people; their basic physical needs would be provided for, and there would be enough scope for the development of body, mind and spirit. Gandhi's development paradigm follows the principle of balanced development. It would be a stage of holistic balanced development.

The Role of the State:

According to Gandhi, political power means capacity to regulate the life of the nation through its genuinely elected representatives. In course of time it is expected that the national life would become so perfect that it will be self-regulating. But till the perfect state of statelessness is arrived as Gandhi suggested the reorganization of existing political system on the basis of non-violence and decentralization. Gandhi was against assigning any important role to the government. He believed that the society would be just not only when it is casteless and classless but also when it is stateless. He said, “I look up on an increase in the power of the state with the greatest fear because, while apparently doing well by minimizing exploitation, it does the greatest harm to mankind by destroying individuality, which lies at the root of all progress.”

Centralisation of power was a sin and violence to him. Gandhi, therefore, wanted a democratic government based on non-violence and decentralisation of power where man is supreme and the state is only a servant. He called it 'Ram Rajya'.


Most of the contemporary problems are due to capitalist, urban and large industry -oriented economic programmes. The Solution to all these problems lies in adopting Gandhian economic order.

Implementation of economic reforms did not bring substantial changes due to which most of the developing nations are facing many fold economic problems today. This global failure of economic reforms has forced developing countries to search for a new alternative. Gandhian Economic Order seems to be the most probable one .No country in the world has followed this pattern for socio-economic reforms. We need to have Gandhian reforms rather than economic reforms.


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

* Prof. G. S. Shikhare is Associate Professor and Head, Department of Business Economics, Birla College, Kalyan.