On April 19, 1954, Narayan announced in Gaya that he was dedicating his life (Jeevandan) to Vinoba Bhave`s Sarvodaya movement and its Bhoodan campaign, which promoted distributing land to Harijans (untouchables). He gave up his land, set up an ashram in Hazaribagh, and worked towards uplifting the village.

In 1957, Narayan formally broke with the Praja Socialist Party in order to pursue lokniti (Polity of the people), as opposed to Rajniti (Polity of the state). By this time, Narayan had become convinced that lokniti should be non-partisan in order to build a consensus-based, classless, participatory democracy which he termed Sarvodaya. Narayan became an important figure in the India-wide network of Gandhian Sarvodaya workers.

In 1964, Narayan was vilified across the political spectrum for arguing in an article in the Hindustan Times that India had a responsibility to keep its promise to allow self-determination to the state of Jammu and Kashmir. He hit back at critics in a second article, dismissing the Indian version of the "domino theory" which held that the rest of India`s states would disintegrate if Kashmir were allowed its promised freedom. In his graceful if old-fashioned style, Narayan ridiculed the premise that "the states of India are held together by force and not by the sentiment of a common nationality. It is an assumption that makes a mockery of the Indian Nation and a tyrant of the Indian State".

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