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He alone deserves to be called an inmate of the Ashram who has ceased to have any worldly relation - a relation involving monetary interests-- with his parents or other relatives, who has no other needs save those of food and clothing and who is ever watchful in the observance of the eleven cardinal vows. Therefore he who needs to make savings, should never be regarded as an Ashram inmate.

- M. K. Gandhi

Founding of Ashram

Since Gandhiji wanted to live like a simple peasant and to serve the nation through constructive and rural re-construction work, he emphasised the need of Ashram where the workers could be trained for bringing his dreams into reality. He had been thinking of moving to a village in order to engage himself directly in the work of rural reconstruction. In the mean time Jamnalal Bajaj suggested him for establishing the Ashram in a village, about four miles from Wardha. Most of the land of this village belonged to jamnalal bajaj Gandhiji accepted the proposal and decided to move to Sevagram from Maganwadi. The " Ashram had been set up under the direction of Bapu in the village "Segaon" in 1936, which has latter been named as "Sevagram Ashram" (Service village).
It was hinted that his shifting to Sevagram during the summer heat may be deferred for some months so that a few huts may be constructed in the meantime. But Gandhiji was adamant and decided to walk to Sevagram on 30th April, 1936 along with Mahadev Desai and Jamnalal Bajaj and other associates, like Shriman Narayan and Balwant Sinha. There was no road but only a cart track to the village. Since there was no cottage on the proposed site of the Ashram Gandhiji rested under an improvised bamboo hut in the midst of guava trees near a well.
A cottage, now called Adi Niwas, was soon constructed by Jamnalal Bajaj for Gandhiji. For several months, one corner of the cottage was occupied by him, the second by Kasturba, the third by Mahadev Desai and the fourth by an important guest who happened to be in Segaon to meet Gandhiji. Badshah Khan stayed in this fourth corner for several months. It was only after a year or two that a separate cottage was constructed for Kasturba. Subsequently, Gandhiji also shifted to another hut which was originally prepared by Miraben for her own use in the village. It is this hut which is now known as Bapu Kutir and where Gandhiji lived most of the time till 1946 when he left for Noakhali and never returned to Sevagram. In fact many a fateful decision which affected the destiny of India was taken in this little hut of Gandhiji at Sevagram Ashram which was aptly spoken in the words of late Shri J. C. Kumarappa, "the de facto capital of India since service of the country is the function of a capital city".
The original name of the village was Segaon. After about a year, it was changed into 'Sevagram' by the Government because of a practical difficulty. There was another town called Shegaon in Khandesh, Maharashtra, on the main Bombay-Nagpur Railway line. A good number of letters addressed to Gandhiji were by mistake, being sent by postal authorities to Shegaon which was confused with Segaon near Wardha. The Government had informally consulted Gandhiji about the new name which literally means 'the village of service' (Sevagram).