Modi made the remarks on Tuesday while hosting the "Leadership Matters: Relevance of Mahatma Gandhi in the Contemporary World" event at the UN headquarters here to commemorate Gandhi's 150th birth anniversary.
In his address, Modi said that democracy has been limited to people electing governments and the governments doing what the people want.
But Gandhi showed people the path of having true independence through a social system not dependent on governments, he said.
At the meeting, leaders spoke about Gandhi's influence on them and their countries.
A stamp commemorating Gandhi's 150th birth anniversary was released at the event.
The leaders also remotely inaugurated a $1 million-solar park that will produce 50 kilowatts of electricity from the roof of the conference building at the UN headquarters and a peace garden at a university campus.
Modi asked the audience to imagine Gandhi being born in a country that was already independent and he would not have to lead a movement for independence.
He would still have led with his ideas of people power and self-help and self-reliance.
It is these ideas that are behind the people leading campaigns like 'Swachh Bharat' and 'Digital India', he said.
Modi recalled that Queen Elizabeth touchingly showed him a small khadi handkerchief that Gandhi had sent to her as a wedding present.
That showed that even though he was fighting the British, he still was able to maintain personal relationships of kindness, he said.
Secretary-General Antonio Guterres said: "Gandhi's ideas drive the work of the United Nations for equality, empowerment and global citizenship every day."
Many of Gandhi's ideas foreshadow the holistic thinking behind the UN's 2030 Agenda for Sustainable Development, he said.
"To take just one example: Gandhi understood the importance of advocacy and action around the issue of sanitation and led campaigns for clean drinking water and hygienic facilities when this issue was still deeply taboo."
Gandhi's ideas drive the work of the UN for equality, empowerment and global citizenship every day.
South Korea's President Moon Jae-in said that Gandhi's ideas were an inspiration for working for peace on the Korean Peninsula with North Korea.
While the Koreans were having their own non-violent independence struggle against the Japanese, they came to know of Gandhi's campaign of boycotting British goods and they started a similar campaign.
Gandhi wrote in support of the Korean freedom-fighters imprisoned by the Japanese, Moon said.
Singapore Prime Minister Lee Hsien Loong said that Singapore wanted to become independent in 1965 inspired by Gandhi's ideals of equality of all races and religions.
Bangladesh Prime Minister Sheikh Hasina said that her father Sheikh Mujibur Rahman took his inspiration for freedom from Gandhi.
Both her father and Gandhi were assassinated, she noted.
Bangladesh sheltering hundreds of thousands of Rohingya refugees from Myanmar was inspired by Mujibur Rahman and Gandhi.
Jamaica's Prime Minister Andrew Holness said that Gandhi's vision of an equitable society was the inspiration for his work.
New Zealand Prime Minister Jacinda Arden said that after the March shootings at mosques in Christchurch that killed 50 people, the Muslims opened their doors for the others to grieve with them.
They were able to break a dangerous cycle of divisiveness, she said.
(Arul Louis can be contacted at arul.l@.in and followed on Twitter @arulouis)
( With inputs from IANS )