The following points highlight the top fifteen economic ideas of Mahatma Gandhi. The economic ideas are: 1. Economic Laws 2. Non-Violent Economy 3. Decentralisation: Cottage Industries 4. Khadi Industry 5. Use of Machines 6. Regeneration of Villages or Village Sarvodaya 7. The Trusteeship Doctrine 8. Law of Bread Labour 9. Food Problem 10. Population.

Economic Idea # 1. Economic Laws:

According to Gandhi, economic laws which aim at material progress as well as social harmony and moral advancement, should be formulated according to the laws of nature. There is no conflict between the laws of nature and laws of economics. The laws of nature are universal.

The laws of economics, which deal with practical problems, are not universal. The economic laws of a country are determined by the climatic, geological and temperamental conditions of that country. Hence they vary with the conditions of the nations.

Economic Idea # 2. Non-Violent Economy:

Gandhi advocated non-violence and hence his economics may be called economics of non­violence. The principle of non-violence is the principle of Gandhian philosophy. As there was no industry and no activity without certain violence, he wanted to minimize it. He believed that violence in any form breeds greater violence.


He defined a non-violent occupation as one “which is fundamentally free from violence and which involves no exploitation or envy of others”.

The solution to Indian basic problems lies in the practice of non-violence. Gandhiji opposed capitalism as it resulted in exploitation of human labour. He believed that nature produced enough for the satisfaction of the people’s wants and there would be no pauperism and starvation if everybody took only that much that was sufficient to him.

Economic Idea # 3. Decentralisation: Cottage Industries:

Gandhi was not in favour of large scale industrialisation, as it was responsible for many socio­economic evils. He believed that large scale use of machinery led to drudgery and monotony. He was in favour of decentralised economy.

In such an economy, exploitation of labour would be nil. His belief was strong in the context of the Indian economy. India has plenty of human resources but capital supply was poor, therefore labour intensive technology should be followed. Gandhiji advocated a decentralised economy.


Production should be organised in a large number of places on a small scale. As Gandhiji was for the development of cottage and rural industries, he suggested delocalization of industries. Gandhiji believed that decentralisation was essential for the survival of democracy and for the establishment of a non-violent state.

Gandhi preferred the decentralisation of small units of production to the concentration of large scale units in few places. He wanted to carry the production units to the homes of the masses, particularly in villages. Cottage and village industries help increasing employment. Commodities can be produced cheaply as there is no need for a separate establishment; very few tools are needed. There is no problem of storage. Transport cost is negligible.

There is no overproduction and wastes of competition. All these factors make the production by the small units economical and thus, provide logic to the Gandhian scheme of decentralisation of village and cottage industries, Integration of cottage industries with agriculture provides work to the farmer in their spare time and thus harnesses “all the energies that at present run to waste”.

In fact, these industries are best suited to the rhythm of rural life. These industries increase the income of the villages and satisfy their basic requirements. They not only remove poverty and unemployment from the villages but also make them self-sufficient economic units.

Economic Idea # 4. Khadi Industry:


Every Indian needed at least 13 yards of cloth per year. Gandhiji believed that multiplication of mills could not solve the problem of cloth supply; therefore he stressed the development of Khadi industry. For Gandhiji, khadi was the “symbol of unity of Indian humanity of its economic freedom and equality”. Khadi means the decentralisation of production and distribution of the necessaries of human life. Khadi movement began only after Gandhiji’s return from South Africa.

He believed that Khadi industry would save millions of people from starvation and would supplement the earnings of poor people. To him, the music of the spinning wheel was sweeter and more profitable than harmonium. Gandhiji advocated the use of charkha due to its advantages. Charkha requires a small amount of capital; it is simple in operation. It is a source of steady income; it does not depend upon monsoon; it helps in solving the problem of unemployment. Charkha was considered to be the symbol of non­violence. His slogan was “swaraj through spinning”.

His khadi scheme included the following:

1. Compulsory spinning in all primary and secondary schools.

2. Cultivation of cotton in areas where it was not grown.

3. Organisation of weaving by the multipurpose co-operative societies.

4. All employees in the department of education, co-operation, municipalities, district boards and panchayats should be required to pass a test in spinning, otherwise they may be disqualified.

5. Control of prices of handloom cloth woven of mill yarn.

6. Imposition of a ban on the use of mill cloth in areas where the hand woven cloth was in abundance.


7. Use of hand-spun cloth in all Government and textile and weaving departments.

8. The old cloth mills should not be allowed to expand and new ones should not be opened.

9. Import of foreign yarn or cloth should be banned.

However Gandhiji’s belief in charkha as a means to solve the problem of poverty was criticised as stupid, and childish. Some people criticised Khadi as a non-economic proposition because its roughness caused it to soil more quickly than the mill made cloth.


It required more frequent washing and its thickness used up more soap and therefore khadi wear was not economic but expensive. Further the wages paid to spinners were low. Khadi arrested the forward march of prosperity.

Economic Idea # 5. Use of Machines:

Gandhiji described machinery as ‘great sin’. He believed that the modern technology was responsible for human frustration, violence and war. It was also responsible for the multiplication of material wants. The use of machines created a class of wealthy people and led to unequal distribution of wealth. Gandhiji was not against machinery.

He says “the spinning wheel itself is a machine; a little toothpick is a machine, what I object to is the craze for labour saving machinery. Men go on saving labour, till thousands are without work and thrown on the open streets to die of starvation”. But he was against all destructive machinery. He welcomed such instruments and machinery that saved individual labour and lightened the burden of millions of cottage workers.

Gandhiji emphasised that he was against large scale production only of those things which villages can produce without difficulty. He believed that machinery was harmful when the same thing could be done easily by millions of hands. He wrote “mechanisation is good when the hands are too few for the work intended to be accomplished. It is an evil when there are more hands than required for the work, as is the case in India”.


In 1938 in ‘Harijan’ he wrote, “If I could produce all my country’s wants by means of 30,000 people instead of 30 million, I should not mind it, provided that the 30 million are not rendered idle and unemployed.” In short, Gandhi was aware of the menace of technological unemployment. He emphasised the need for labour-intensive methods of production in a country with surplus labour. Gandhiji’s ideas on machinery are still relevant. In spite of more than six decades of planned, machine using and power driven economic development unemployment is still there and is still growing.

Economic Idea # 6. Regeneration of Villages or Village Sarvodaya:

Gandhiji evolved the ideal of Village Sarvodaya. Speaking about the old village economy, Gandhiji said, “Production was simultaneous with consumption and distribution and the vicious circle of money economy was absent. Production was for immediate use and not for distant markets. The whole structure of society was founded on non-violence.”

Gandhiji wanted the revival of ancient village communities with prosperous agriculture, decentralised industry and small scale co-operative organisations. He also wanted that there should be the participation of people at all levels.

He declared that the real India was to be found in villages and not in the towns and he accepted the remark that an Indian village was “a collection of insanitary dwellings constructed on a dunghill”. His desire was that every Indian village may be converted into a little self-sufficient republic.

His ideal of village sarvodaya implied that an ideal village must fulfill the following conditions:

(i) There should be orderliness in the structure of the village;


(ii) There should be fruit trees;

(iii) It should have a dharamshala and a small dispensary;

(iv) It should be self-sufficient in matters of food and clothing;

(v) The roads and lanes should be kept clean;

(vi) The places of worship should be beautiful and clean;

(vii) There should be gutters for draining of water in every lane;


(viii) The village should be well protected against robbers and wild animals;

(ix) It should have a public hall, a school and a theatre hall;

(x) It should have an efficient water supply;

(xi) It should have a play-ground, cattle sheds, etc.,

(xii) If space permits, cash crops excluding tobacco and opium may be grown;

(xiii) Adequate education up to the basic standard must be made compulsory;


(xiv) Rural activities may be organised on co-operative basis;

(xv) Rural administration and government should be in the hands of panchayats, consisting of 5 members duly elected every year by the adult villagers;

(xvi) The village panchayats would enjoy judicial, legislative and executive powers;

(xvii) A system of village guards must be made compulsory for every village;

(xviii) The caste system should be abolished.

He was confident that if all the villages in India are regenerated along these lines, there would not be any worries for her. But Gandhiji knew that it was not easy to establish ideal villages and, therefore, he emphasised the revival of village industries.

Economic Idea # 7. The Trusteeship Doctrine:


Gandhiji remarked that the capitalist who had amassed a large sum of money was a thief. If a person had inherited a big fortune or had collected a large amount of money by way of trade and industry, the entire amount did not belong to him. It belonged to the entire society and must be spent on the welfare of all. He wanted to avoid a violent and bloody revolution by gearing a permanent stability of economic equality. He wanted the capitalists to be trustees and he enunciated the doctrine of trusteeship.

All social property is meant for all people—rich or poor. Capitalists being trustees would take care of not only themselves but also of others. The workers would treat the capitalists as their benefactors and would keep faith in them. In this way there would be mutual trust and confidence with the help of which the remarkable ideal of economic equality could be achieved.

His entire ideology is summed up as follows:

(i) “Trusteeship provides a means of transforming the present capitalist order of society into an egalitarian one. It gives no quarter to capitalism, but gives the present owning class the chance of reforming itself. It is based on the faith that human nature is never beyond redemption.

(ii) “It does not recognise any right of private ownership of property except in as much as it may be permitted by society for its welfare.

(iii) “It does not exclude legislative regulation of the ownership and the use of wealth.

(iv) “Thus, under state-regulated trusteeship, an individual will not be free to hold or use his wealth for selfish satisfaction or in disregard of the interest of society.

(v) “Just as it is proposed to fix a decent minimum living wage, even so, a limit should be fixed for the maximum income that could be allowed to any person in society. The difference between such minimum and maximum incomes should be reasonable and equitable and variable from time to time so much so that the tendency would be towards obliteration of the difference.

(vi) “Under the Gandhian economic order the character of production will be determined by social necessity and not by personal whim or greed”.

Economic Idea # 8. Law of Bread Labour:

The Law of Bread Labour was propounded by T.M. Bondaref and popularized by Ruskin and Tolstoy. This law emphasises that man must earn his bread by his own labour. To Gandhiji the law of bread labour related to agriculture alone. But as every-body was not a cultivator, he could earn his bread by doing some other work.

If all people labored for their bread, there would be enough food and clothing for all, they would be healthier and happier, and there would be no problem of food shortage, no disease and no misery. He strongly believed that without physical labour no one was entitled to get his food. He advised the rich also to do bodily labour for the bread.

Economic Idea # 9. Food Problem:

Gandhiji had seen the worst famine of his life during 1943-44, when Bengal suffered heavily owing to the country-wide shortage of food. To start with, Gandhiji thought that this scarcity of food had been artificially created. But after visiting Madras, Bengal and Assam, he arrived at the conclusion that the shortage of food was real and not artificial.

He suggested the following measures for solving the problem of food shortage in India:

(i) Every individual should curtail his or her requirements of food to the minimum and as far as possible the consumption of food grains and pulses should be reduced to the minimum by substituting vegetables, milk, fruits, etc., for them;

(ii) Every flower garden should be utilised for cultivation purpose;

(iii) The consumption of food grains and pulses by the army personnel should be economized;

(iv) Black-marketing should be stopped;

(v) Deep wells should be sunk by the government so as to provide irrigational facilities;

(vi) Export of oil seeds, oil cakes, etc., should be stopped. Gandhiji was against food controls, because he thought that it not only created artificial scarcity, but made the people to depend upon others. They become spoon-fed. That is why, in November, 1947 he asked the Government of India to remove food controls.

Economic Idea # 10. Population:

The most important problem which attracted the attention of Gandhiji was the rapid increase in population. Gandhiji opposed the use of contraceptives as its use in India would make the middle class male population imbecile through abuse of the creative functions. Gandhiji was in favour of birth control through self-control or brahmacharya and not through the use of artificial methods. He considered self-control as the “infallible sovereign remedy”.

He wanted the propagation of sex passion. He criticised those who argued that birth control was needed for solving the problem of overpopulation. He said, “In my opinion, by a proper land system, better agriculture, and a supplementary industry, this country is capable of supporting twice as many people as there are to-day”. Gandhiji was against the sterilisation of women, as it was inhuman. But he was not against vasectomy, especially in the case of those men who suffer from chronic diseases, because he thought that it were men who were the aggressors.

Economic Idea # 11. Prohibition:

According to Gandhiji, the use of coffee, tea, tobacco, and alcohol was detrimental to the mental, physical, and moral development of an individual. In his opinion, the use of liquor was a disease rather than a vice. He had no objection to the use of liquor if taken under medical advice. He would have preferred India to be reduced to a state of pauperism than have ‘thousands of drunkards in our midst’.

In one of his articles, he wrote that if he were appointed dictator of India, only for an hour, he would, in the first instance, close all the liquor shops without compensation, and compel the mill- owners to start refreshment rooms to provide harmless drinks to the workmen. He thought that the evil of drinking liquor could not be eradicated by legislative measures alone.

Other measures suggested by him are as under:

(a) Public opinion should be educated;

(b) Refreshment rooms should be opened for selling harmless drinks;

(c) The income derived from the sale of intoxicants should be used for cultivating public opinion in favour of prohibition. He did not agree with those who contended that by prohibition, the revenue of the government will fall and it would not be able to incur expenditure on nation- building activities like education. He said that if the evil was removed, other resources of revenue could be developed without much difficulty.

Economic Idea # 12. Labour Welfare:

One of the important fields where Mahatma Gandhi extended his right for economic equality was the factory. He saw that workers were subjected to gross injustice and the treatment meted out to them was below dignity. To him, the employment of children was a national degradation. He always pleaded for shorter hours of work and more leisure so that workers might not be reduced to the condition of beasts. He also demanded safety measures inside factories.

Mahatma Gandhi laid emphasis on the welfare of the worker, his dignity and proper wages. In the Harijan dated June 9,1946 he wrote that all useful work should bring to the worker the same and equal wages. Until then, he should be paid at least that much which could feed and clothe himself and his family.

In order to improve the condition of the worker, first of all he laid claims on a minimum living wage so that a family of 4 to 6 members might live a human life. He wrote as far back as 1920 that the worker should get more wages, and should be given less work to do so that the following four things might be guaranteed to him — clean house, clean body, clean mind and a clean soul.

In so far as the relation between labour and capital is concerned, Mahatma Gandhi always suggested harmony between them. He argued that if the distinction of high and low disappeared, it would have a healthy reaction on all aspects of life. Consequently, the struggle between labour and capital would come to an end; and would give place to co-operation between them.

According to him, “capital should be labour’s servant, not its master”. Moreover, he believed in the formation of labour unions. If the rights of workers were not conceded, they could go on a strike which should be based on non-violence and truth.

Economic Idea # 13. Simplicity:

Mahatma Gandhi was against the multiplication of human wants. In order to lead a simple life — a life untouched by immorality, untruth and political gain, he did not want many things. He eventually succeeded in complete renunciation. He firmly believed that Western materialism and industrialisation had increased human wants. He always pleaded for a simple life, life of plain living and high thinking, so that the requirements of such a life could be satisfied easily.

To Mahatma Gandhi, happiness lay in the curtailment of wants, and not in their multiplication. As he observed — “The less you possess, the less you want, the better you are, better not for the enjoyment of this life but for the enjoyment of personal service to one’s fellow beings, service to which you dedicate yourself, body, soul and mind”.

Economic Idea # 14. Exchange Economy:

Gandhian idea on exchange economy is based on the swadeshi spirit. Every Indian village should be a self-supporting and self-contained unit exchanging only necessary commodities with other villages where they are not locally producible.

The person who has accepted the discipline of swadeshi would not mind physical discomfort or inconvenience caused by the non-availability of certain things which he has been using. He would gradually learn to do without those things which up to this time he has been regarding as necessary for his life.

Mahatma Gandhi asked people not to worry about the non-availability of such things as pin and needle, because these were not manufactured in India. He was prepared to buy from other countries those commodities (like watches from Switzerland, surgical instruments from England, etc.) which were needed for his growth; but he was not prepared to buy an inch of cotton of the finest variety from England or Japan or any other country of the world because the importation of cloth had caused the ruin of the home industry – it had harmed the interests of the millions of inhabitants of this country.

The guiding principle that he laid down in respect of all foreign goods was that those things should not be imported which were likely to prove harmful to the interests of the indigenous industry.

Mahatma Gandhi recognised money as a token of exchange only. In the economy envisaged by him, commodities were to be exchanged with commodities. The part played by money was insignificant. It became instrumental in the exploitation of the weak by the strong. To him, money was as useful as labour. He suggested that in order to make khadi universal, it should be made available in exchange for yarn, i.e., yarn-currency.

Economic Idea # 15. Untouchability:

Gandhi believed that untouchability was a sin against God and man. It was “like poison slowly eating into the very vitals of Hinduism”. It degraded both the untouchables and the touchables. He felt that Swaraj had no meaning if about 4 crores of people were kept under prepetual subjection; and were deliberately denied the fruits of their labour and national culture.” To him, untouchability was not only part and parcel of Hinduism but a plague which every Hindu should try to combat.

Mahatma Gandhi admitted that untouchability was an old institution; but as it was an evil, it could not be defended on this ground. He held that if some shastras had given sanction to it, it was a sin committed by Hinduism; this sin must be removed.

Once he went to the extent of saying:

“If this is Hinduism, O lord, my daily prayer is that the soonest it is destroyed, the best.”

When he came to know that there was untouchability even among the untouchables, he concluded that the evil was all- pervading; and suggested that cultured Hindus should try to get rid of that curse as soon as possible.

Mahatma Gandhi laid the entire blame for the cancer of untouchability on the Hindus. To him, the removal of untouchability meant fighting against the impurity found in man. It meant also love for, and service of, the whole world. It would remove the barrier between man and man.