ARTICLES : Gandhian view on Economics

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Relevance of M. K. Gandhi’s Ideal of Self-Sufficient Village Economy in the 21st Century

By Dr. Anil Bhuimali
Dean of Studies, Institute of Gandhian Studies, Wardha

Economic Development of a country depends on the proper utilization of resources (both human and non-human). India, at the time of her independence, had an economy with a low level of economic and technological development, low per capital income, slow pace of development of economic and social institutions and outdated methods of production techniques. Our objective then was to attain and accelerate the economic development of the country. At the time while India started formulating planning strategies in 1951-52 there was debate on India’s development problems. The debate centered around the Gandhian approach and the Nehruvian approach. Nehru adopted modernizing approach of the planning i.e. socialist framework of economic policy. He also viewed planning as a way of avoiding the unnecessary rigorous industrial transition. He believed that this way would affect the people living in the rural areas. He also learned lesson from Gandhi and accordingly initiated policy which centered around the rural masses.
Gandhian approach has always said about the voluntary wants, the need for self-sufficient village communities and the issues relating to better balance between man and nature. Gandhi wanted to have an ideal society of his own imagination and his economic ideas are a part and parcel of his philosophical and sociological ideas. He was interested in the growth of human beings and more significantly the growth of the deprived and underprivileged group of people. He was, in fact, the supporter of the maximization of social welfare and he had a belief that the growth of an economy is relied on the development of the totality of human personality. According to him, an increase in personal income is an indication of the growth of national income. But the opposite may not be true i.e. the growth of national income may not always benefit every man in society.

Gandhian View Of Self–sufficient Village Economy

Gandhi holds the view of the maximization of social welfare and for this he gives prime importance to the welfare of the individuals by reducing inequalities in income and wealth. According to Gandhi every person should be provided with bare minimum necessaries i.e. food, shelter, and clothing. Concentration of wealth to a few groups of people certainly will shatter the dream of a society which will be socialist in nature. Gandhi is in favour of the self-sufficient village economy where the villages will be the independent economic units. In agriculture that techniques will be adopted, which will not deplete the soil and pollute the environment. For this farmers should use eco-friendly production technique by using lesser and lesser amount of fertilizers, insecticides and pesticides. He prefers well irrigation instead of large hydro-electric projects since this will lead to exploitation. As regards the ownership of land holding, Gandhi is against the zamindari system and ownership of land should go to the actual tillers of the soil. He also viewed that there should be communal ownership of land for balanced cultivation and the surplus land, if any must be distributed to the rest of the village communities. 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 then there will not be the problem of poverty and starvation in the rural areas. Only this can help eradicating poverty and thus people can be happy and self-reliant. Agricultural sector alone cannot solve the problem of rural poverty and unemployment. That’s why Gandhi gives stress 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 production creates conflicts between labour and capital. Here capital takes upper hand over labour. Such conflicts may not occur in the case of rural industries. Rural industries are the symbols of unity and equality. In India large-scale industries have been concentrated in a few big cities like Mumbai, Kolkata, Ahmedabad, Jamshedpur etc. Rural areas are without big industries. Concentration of these industries in few cities has led to a number of problems. The major problem is the problem of overpopulation in the industrialized areas. With this there arises pollution in the air and water. In addition, large-scale industries promoted monopolistic trends and unequal distribution of income. Rural industries, on the other hand, help decentralization of economic activities and a large proportion of income generated in these industries gets distributed among the workers and among a very large number of people. Gandhi is not in favour of large-scale industries in the sense that these industries are not related to a vast population living in rural areas. Thus industrialization, according to Gandhi, does not help the growth of the personality; contrarily it helps only the material progress of a few. Our handicrafts were destroyed by the use of machinery by the English rulers. Machinery, being capital-intensive, displace 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 welfare of a large section of rural population.

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 some other states are backward. Even within a state 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 which supports the attainment of self-sufficiency level of industrialisation or 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 eco-friendly. ,
In line with Gandhi's dream of expanding village industries, industrial policy resolutions of 1948, 1956 and 1977 have offered a special favour 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 3970000 in 1973-74. This rose to 12980000 in 1991-92. According to Economic Survey, 2000-2001 the estimated employment of the cot­tage and small-scale sector again rose to 17850000. The growth rate of this sector during 1991-92 to 1999­2000 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 group of people. These industries have spread in about 250000 villages out of total 581000 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 very fact has been supported among others by S. Valla of JNU. Naturally stress should be provided 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 slightly decreased 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 ratio of poverty 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 review seriously the rural anti-poverty programmes in the light of lapses noticed and in the context of formulating the tenth five year plan (2002­-2007).


Gandhi is of the view that full employment of human resources is the basic need of a country. It is true that national income will increase if each and every persons (whether skilled or unskilled) is employed fully. This cannot be possible only with the development of large-scale industries because of their labour-saving nature. Agricultural sector too cannot solve the problem of unemployment or underemployment due to its seasonal nature. Therefore mechanization and large scale production cannot provide the solution to the problem of poverty and unemployment. Self-sufficient village economy is an alternative solution and in this context the role of institutions in the rural sector like the village panchayat and rural multipurpose co-operative can play a vital role. We cite here an example of multipurpose co-operative society located at Sridharpur village of Burdwan district of West Bengal. The society is formed with the unlimited liability. It perform multipurpose activities like deposit mobilisation, credit supply, sale of inputs like fertiliser, HYV seeds, to the farmers, purchase of agricultural goods, cloth business! and ration shop. In addition to the above activities the society set up grain gola (grain warehouse) in 1951 The bye-laws of the society require members to purchase a share of the grain gola valuing three maund of paddy. The grain gola gives paddy loan up to six maunds per member in the off season. The grain gola helps the marginal and small farmers and landless labourers by providing paddy loans for consumption purposes at a reasonable rate of interest saving them from the hands of private hoarders who had been charging a very high rate of interest. The society has constructed a cold store in 1977 which gives preference to the members. After meeting the needs of the members the farmers of the locality are preferred. The society also gives loans to the people against their utensils pledged at a very low rate of interest. This saves them from the clutches of the private money lender who had for a long time been charging an interest so higher that people could not repay loans and thus ultimately bound to sell their utensils to them at a much lower price. The society also provides irrigation facilities to the farmer members. For this twenty-one mini deep tube-wells were installed. This covers 80 percent land under irrigation throughout the year. This society has set an example in the sphere of performing society welfare activities. The statutory bye-laws providing for welfare and charitable activities are given successful shape of results, as a result of harmonious relation among members, the board of directors, and the members of the staff. All the welfare activities are so designed, identified and implemented that nobody is a loser and that everybody living in the villages emerges gainer. The society is able to create a benign atmosphere all around and members legitimately feel that it is their society upon which their development depends.
We therefore plead for Sridharpur type society which is free from political interference. This can fulfill Gandhi's dream of self-sufficient village economy.

Source: Sarvodaya, Vol. 1, No-5, Jan-Feb, 2004