Formation of Gurmukhi character/akshara from the recognized strokes in online handwriting recognition systems is a challenging task. In this paper, the task of character and akshara formation in an unconstrained environment have been addressed. After the recognition of online handwritten strokes the Gurmukhi akshara is formed using a hybrid approach. Two classifiers, namely, Support Vector Machine (SVM) and Recurrent Neural Network (RNN) have been experimented in this study. The classifier, yielded the maximum cross-validation accuracy has been utilized for stroke recognition. A total of 52,500 word samples have been collected from 175 writers in order to train the classifiers. Three post processing algorithms have been proposed in this article for improving the character and akshara recognition accuracy. The proposed methodology when tested on a dataset of 21,500 aksharas, written by 50 new writers, achieved average the accuracy rate of 97.1% and 87.1% for base character and akshara recognition, respectively.