Raja-niti refers to the politics of party and power ("raja" means king and "raj" means rule). It is the common word used for "politics" in India. In contrast to it, the Sarvodaya philosophers, especially Vinoba Bhave, in the Gandhian line promoted what they called as "Loka-niti", i.e. the politics of people. For the Gandhians, centralization of power in any form (dictatorial or "democratical") is a threat to swaraj (self-rule).
"...any state, with separated and strongly developed organs of legislation, execution, and judiciary in well organised large societies, cripples the free-play of individual's faculties and curbs his initiative by enlarging the regions of state control. Progressively it attains the position only next to air in its all-pervading nature. No matter whether such government is an elected representative of its people or a dictatorially established one against the will of the people, it unfailingly produces the evils of centralization and hence necessitates its own eradication for the sake of real democracy.... When the modern centralised state threatens the liberty of individual, of which it professes to be the guardian, it becomes the symbol of violence and a tool of exploitation, and as such loses its right to existence. That is why, according to Vinoba "power must pass into the hands of the people at all levels. Government must continually recede into the background or wither away." (Indu Tikekar, Integral Revolution: An Analytical Study of Gandhian Thought, 1970, p.102)
The philosophical basis of such a concept is a strong belief in goodness within man, in humanism, in the human spirit which is free, individualism, and a leaning towards communism. Of course, communism everywhere has only led away from "community-rule" to more dictatorial and totalitarian regimes - its tragedy. Indian thinkers may ascribe communism's failure to its fundamentalist anti-religious and its dialectical materialist understanding of people and politics. In contrast, "Sarvodaya" (well-being of all, which includes all living beings) begins from freedom of the spirit and rejects deterministic materialism. But, how does that justify Lokaniti?
"Sarvodaya exhorts the people to accept Lokaniti--the ethic of the people in social life--by eschewing Raja-niti. In his "Last Will and Testament" Gandhi had expressed a wish to transform the National Congress that stood "as a propaganda vehicle and parliamentary machine" into a Loka-Sevak-Sangh--an organisation for the service of the people. He believed that it would attain the democratic goal in India by the avoidance of "unhealthy competition with political parties and communal bodies." This remained merely an unfulfilled dream.... Vinoba's Land-gift and Village-gift movements have been conceived to fulfill Gandhi's dream of village-republics (Grama-Swaraja). Through this movement Vinoba hopes to bring political liberty along with the legislative and executive powers from Delhi to the small five hundred thousand villages of India. It can be achieved through the transformation of Raja-Niti into Loka-Niti.
"Loka-Niti in contrast with Raja-Niti strives to establish the real values of democracy. It is the respectable and equal position of every citizen that constitutes the core of democracy. His liberty irrespective of caste, class and sex, is the life-breath of its successful rule. It is the fact of 'humanity' and not the ability, either physical or intellectual, that guarantees the right to security in every sense of the term, under its domain. But the model of democracy has the other and even more valuable side, namely, that of obligations. Every conscientious citizen is alert in shouldering his responsibilities and abhors external compulsion of every kind. Loka-Niti acknowledges the fact that more the citizen become vigilant about the interest and rights of his neighbours, the less the need of a third intervening agency to set order in human relationships and the better for the mutual co-operation of citizens. Then no coercion need spoil the harmony of the corporate life. Naturally, wakeful self-reliance and willing service, instead of grim authoritarianism and the alluring power, will prove the advancement on democratic lines. For this Gandhi had warned--"Swaraj government will be a sorry affair if people look up to it for the regulation of every detail of life." He also detected the dangers of increased governmental power: "I look upon an increase in the power of the state with the greatest fear, because, although apparently doing odd by minimising exploitation, it does the greatest harm to mankind by destroying individuality which lies at the root of all progress." It is for the same reason that Vinoba Bhave warns the people against reliance on State, time and again. The shower of help by government, animated by welfarism should be a cause of anxiety for a real democrat since it blunts the sharpness of critical consciousness and tightens the knot of external authority, thus working for 'illfare' of the people. To the Sarvodaya thinkers the remedy lies in self-control which alone ensures self-rule.... In the society of self-ruled individuals, needless to say, no electioneering and struggle for power with the whole paraphernalia of propaganda machinery and machiavellian machinations can find any place." (Indu Tikekar, Integral Revolution: An Analytical Study of Gandhian Thought, 1970, pp.100-102)
Loka-Niti tries to balance self-rule with community-rule in a way that a citizen can both be self-aware and neighborly-aware, and is able to "love his neighbor as himself". Citizens don't look to the state for welfare, but themselves practice welfare conscientiously, mutually, and liberally.
Of course, the quest doesn't end here, though the ideal looks certainly sublime. There are psychological questions regarding the individual human by himself and in society that the philosophy needs to address. There are theological questions as well, regarding God, world, sin, and salvation that need to be addressed. In any case, a political theory can't hang on thin air; it must address the issues relevant to the individual, rational, moral, social, and spiritual man.