In Gandhi’s view village panchayat plays a crucial role in managing the affairs. Sarvodaya centers on the small republic where the mass of people manages their affairs without depending upon the state. People have an informal arrangement for the management of their affairs. Village republics are part of India’s traditions. Many indigenous institutions of Indian society must be used for strengthening democracy. Western democracy can suit India only by adopting to the Indian conditions. He says, “ in the domain of politics, I should make use of the indigenous institutions and serve them by curing them of their proved defects.” Gandhi was conscious of the historical fact that British colonialism had destroyed the basic institutions of a village society. Revival of these institutions in a true spirit may strengthen democracy. Moreover political institutions at the grass root level may be able to restrict the power of state. Gandhi’s concept of state is that of a limited state which does not interfere in the day-to- day activities of the people. As Indian society consists of large number of villages the village republic can be a nucleus of a democratic institution.
Otherwise state as a coercive organization can destroy the vitality of village society. Once village panchayat is formed it is easy to create a Sarvodaya economy. Political institutions can be a means for the management of local resources. Rich people can hand over their surplus land to the village panchayat that can distribute it to the needy. Community can contribute labor to the village fund. The individual remains at the center of political organization. Village panchayat must look after the economy of the village that will help the prosperity of village people. The main idea of Gandhian political programme is the social reconstruction of the society. The village panchayat can take care of education, health; sanitation .It can help in abolition of untouchability and weaving khadi for their needs.
Thus the village economy can turn self –sufficient. Their needs are taken care of by their collective effort without dependence on the urban economy. Individual initiative will create a community bond. According to him, practice of untouchability is an institutional arrangement for creating violence in a society. Gandhi understood the real dynamics of a caste society .By removing the basis on which the ideology of caste system stands; the reconstruction of a society is possible.