This research paper investigates the profound interdisciplinary relationship between Education (Shiksha) and Literature (Sahitya), positing that the integration of literary arts is essential for a truly transformative pedagogical experience. In an era dominated by utilitarian, STEM-focused curricula, this study argues for a return to a "literary-centric" model to foster cognitive, emotional, and ethical growth. By synthesising historical traditions with modern psychological frameworks, the research demonstrates that Sahitya is not merely a passive subject of study but an active pedagogical laboratory that prepares students for the complexities of the 21st century. The paper begins by tracing the Historical Perspective, from the ancient Guru-Shishya tradition where oral literature was the primary vehicle for knowledge to the colonial frameworks that created a divide between "useful" skills and "aesthetic" wisdom. Moving into Cognitive and Psychological Dimensions, the study utilizes contemporary research on Theory of Mind (ToM) to show how narrative immersion improves empathy and cognitive flexibility. Furthermore, the paper aligns with the National Education Policy (NEP) 2020, emphasizing the role of regional and vernacular literature in decolonizing the Indian mind and promoting multilingualism. Through the analysis of Value-Based Education, the research highlights how the social realism of writers like Munshi Premchand and the universalism of Rabindranath Tagore serve as a moral compass for students. Despite modern challenges such as digital distractions and exam-centric assessment models, the findings suggest that literature-based pedagogy is the most effective way to achieve Holistic Development. The study concludes that for education to fulfill its "Man-making" mission, it must move beyond literal instruction to embrace the profound human insights offered by Sahitya.