Circular Rural Economy and Economic Leakage Reduction: Insights from a Community-Based Resilience Framework from Rural India

Rural communities across the Global South are increasingly exposed to a convergence of climate variability, geopolitical instability, supply-chain disruptions, and economic volatility. While conventional rural development approaches have primarily focused on agricultural productivity, market integration, and income enhancement, these strategies often overlook structural vulnerabilities associated with economic leakage, external dependency, and limited adaptive capacity. This paper proposes the Circular Rural Economy (CRE) framework as an integrated approach to strengthening rural resilience through local value retention, economic diversification, and collective enterprise development. Drawing upon resilience theory, circular economy principles, sustainable livelihoods, and local economic development literature, the study introduces the GLIDE (Group Livelihoods for Development) Framework as an operational model for translating Circular Rural Economy principles into practice. Using evidence from GLIDE pilot interventions across multiple Indian states, the paper demonstrates how economic leakage analysis can identify opportunities for local production, wealth retention, and community-led enterprise development. Findings suggest that significant proportions of village expenditures are directed toward externally sourced goods and services that can potentially be produced using local resources, skills, and institutions. The paper further develops the concept of Economic Leakage Resilience Theory (ELRT), which posits that resilience increases as communities retain a greater share of locally generated wealth and reduce dependence on external supply chains. To support measurement and policy application, a Rural Resilience Index (RRI) is proposed, integrating economic, social, ecological, institutional, and adaptive dimensions of resilience while explicitly incorporating economic leakage as a key indicator. The study argues that Circular Rural Economy should be viewed not only as a livelihood promotion strategy but also as a climate adaptation, economic localization, and geopolitical resilience framework. By strengthening local production systems, collective enterprises, and community institutions, the GLIDE framework offers a scalable pathway toward resilient, self-reliant, and sustainable rural development. The findings contribute to emerging debates on rural resilience, localization, and adaptive development, while providing practical policy insights aligned with India's Atmanirbhar Bharat agenda and the Sustainable Development Goals.