India pulled 500m people out of poverty many of them still barely survive

[Michael]

I'd be interested to understand how this social safety net works in practice, how widely it covers the population, and what impact it has had on living standards and poverty.

Simply put, matters concerning the basic livelihood security of the Chinese people are all controlled by the government or state-owned institutions.

For example:

The supply of staple foods—such as rice and flour—is under the absolute control of a few massive state-owned enterprises. Meanwhile, the market for higher-quality varieties, such as Thai rice or other imports, is open to private-sector participation.

Consider express delivery and postal services: China Post is a state-owned enterprise tasked with ensuring that mail and parcels can be sent to any location in the country. It also handles official state correspondence and shipments—including the transport of national college entrance examination (gaokao) papers, which require the highest level of security. While there are numerous private express delivery companies in China, none can truly compete with China Post. In fact, China Post is not permitted to generate a profit from its postal and delivery operations; it is effectively mandated to operate at a loss.

Such arrangements are quite common in China. For enterprises that provide essential living necessities to the Chinese population, their relevant business activities are strictly regulated by law; in many cases, these activities are prohibited from generating profit, and the enterprises are not permitted to abandon them.

 

[vasanthm]

The improvements are pretty obvious to anyone living in India, especially rural areas. I've mentioned this before on these forums and got mocked for it, but now you can see the data for yourself.

I don't really care much about inequality as long as people at the bottom are making good progress. I'd rather have Indian companies capturing this growth and producing Indian billionaires than letting foreign multinationals take all the profits.

And forget billionaires, just look at the differences between Indian states. Tamil Nadu grew at over 11% last year, with per capita income around $4,200. Visit villages there and you'll find TVs, fridges and two wheelers in pretty much every house, plenty of cars too, and kids going off to study engineering and medicine.

My own housemaids son finished engineering, now works for an MNC and recently bought himself a car. My watchmans daughter graduated and now works for the postal service. These arent some rare success stories, its the sort of things you see happening around you all the time.

Ofcourse India still has plenty of poverty and a long way to go. But I'd rather see the poor getting richer even if the rich are getting richer faster, than have everyone equally poor.

 

[vasanthm]

Simply put, matters concerning the basic livelihood security of the Chinese people are all controlled by the government or state-owned institutions.

For example:

The supply of staple foods—such as rice and flour—is under the absolute control of a few massive state-owned enterprises. Meanwhile, the market for higher-quality varieties, such as Thai rice or other imports, is open to private-sector participation.

Consider express delivery and postal services: China Post is a state-owned enterprise tasked with ensuring that mail and parcels can be sent to any location in the country. It also handles official state correspondence and shipments—including the transport of national college entrance examination (gaokao) papers, which require the highest level of security. While there are numerous private express delivery companies in China, none can truly compete with China Post. In fact, China Post is not permitted to generate a profit from its postal and delivery operations; it is effectively mandated to operate at a loss.

Such arrangements are quite common in China.

Can we stick to topic, yes china is great and we already have a lot of threads discussing that

 

[Krptonite]

Simply put, matters concerning the basic livelihood security of the Chinese people are all controlled by the government or state-owned institutions.

For example:

The supply of staple foods—such as rice and flour—is under the absolute control of a few massive state-owned enterprises. Meanwhile, the market for higher-quality varieties, such as Thai rice or other imports, is open to private-sector participation.

Consider express delivery and postal services: China Post is a state-owned enterprise tasked with ensuring that mail and parcels can be sent to any location in the country. It also handles official state correspondence and shipments—including the transport of national college entrance examination (gaokao) papers, which require the highest level of security. While there are numerous private express delivery companies in China, none can truly compete with China Post. In fact, China Post is not permitted to generate a profit from its postal and delivery operations; it is effectively mandated to operate at a loss.

Such arrangements are quite common in China. For enterprises that provide essential living necessities to the Chinese population, their relevant business activities are strictly regulated by law; in many cases, these activities are prohibited from generating profit, and the enterprises are not permitted to abandon them.

That's genuinely interesting. I hadn't appreciated the extent to which the Chinese state takes responsibility for ensuring access to essential goods and services, even where doing so may not be commercially viable.

It also got me thinking about how different countries approach this. India, for instance, has its own mechanisms through subsidised food distribution, public services and various social welfare programmes. Other countries have their own approaches too.

I wonder whether what we're seeing in China is a fundamentally different model, or whether it is a particularly distinctive combination of levers that governments across the world use to address poverty and improve living standards. It would be interesting to compare how these approaches work in practice.

 

[retaxis]

India recategorizes a lot of things. For example Indian middle class is completely different from what the world classifies as middle class which ends up tricking the numbers and people.

India's "middle class" often differs from global definitions because domestic income and consumption thresholds are set much lower, meaning a large portion of those classified as middle-class in India would be considered low-income or vulnerable by international standards. [1, 2]

1. The Income and Purchasing Power Gap

• • Global Benchmarks: International organizations like the World Bank often define developing-world middle-class thresholds around $10 to $100 per day in Purchasing Power Parity (PPP). Under strict global or comparative frameworks (such as economist Nancy Birdsall's model), anyone earning above $10 a day in India places them heavily in the upper tier (top 5%) of the country rather than a broad, comfortable middle. [1, 2, 3]
  • India’s Lower Tiers: A massive segment of self-identified or statistically grouped Indian "middle class" actually survives on $2 to $4 or $2 to $10 a day, which places them only slightly above global poverty lines or deep into economic vulnerability. [1, 2]

2. The Vulnerability and "Precarity" Problem

• • Proximity to Poverty: Organizations like the National Commission for Enterprises in the Unorganised Sector (NCEUS) have historically categorized a huge majority (up to 77%) of India’s population as poor and vulnerable. [1]
  • Shock Exposure: Unlike Western middle classes with substantial social safety nets, accumulated wealth, or steady formal employment, a large share of India's middle-income earners remain one medical emergency, job loss, or market disruption away from falling back into poverty. [1]

3. Subjective Self-Identification vs. Material Reality

• • Aspirational Identity: Studies by institutions like the Carnegie Endowment for International Peace note that a massive share of Indians—spanning low-income to upper-bracket groups—subjectively identify as "middle class". In India, calling oneself middle class is often an aspirational social marker meaning "not destitute and not ultra-wealthy," rather than an objective measurement of disposable income or lifestyle matching Western standards. [1, 2, 3]

4. Extreme Economic Polarization

• • The "Hole" in the Middle: Economists point out that India’s economic structure features a sharp contrast: a very wealthy top tier (sometimes called the "Octopus Class" or high earners) and hundreds of millions of low-income or aid-reliant citizens, leaving the true middle-income bracket compressed compared to the broad, bell-curve distribution seen in developed nations. [1, 2]
  • Tax and Income Realities: Official data shows that a relatively small fraction of households (roughly 40 million tax-paying or higher-earning households) shoulder the core of formal income tax and middle-to-upper consumption, while the median Indian income remains close to global baseline poverty thresholds. [1, 2]

On online platforms like Reddit, opinions are mixed: some users argue that India’s urbanized, tech-enabled, and tax-paying segments genuinely enjoy a modern middle-class lifestyle, while others agree that extreme wealth disparities and widespread financial vulnerability mean India's middle class looks vastly different from—and more fragile than—the global standard. [1]

 

[Krptonite]

The improvements are pretty obvious to anyone living in India, especially rural areas. I've mentioned this before on these forums and got mocked for it, but now you can see the data for yourself.

I don't really care much about inequality as long as people at the bottom are making good progress. I'd rather have Indian companies capturing this growth and producing Indian billionaires than letting foreign multinationals take all the profits.

And forget billionaires, just look at the differences between Indian states. Tamil Nadu grew at over 11% last year, with per capita income around $4,200. Visit villages there and you'll find TVs, fridges and two wheelers in pretty much every house, plenty of cars too, and kids going off to study engineering and medicine.

My own housemaids son finished engineering, now works for an MNC and recently bought himself a car. My watchmans daughter graduated and now works for the postal service. These arent some rare success stories, its the sort of things you see happening around you all the time.

Ofcourse India still has plenty of poverty and a long way to go. But I'd rather see the poor getting richer even if the rich are getting richer faster, than have everyone equally poor.

I actually agree with much of what you're saying. I'd certainly rather see people becoming wealthier, even if the gains are unevenly distributed, than have everyone remain equally poor.

Where I would exercise some caution is in treating progress at the bottom as sufficient reason to overlook the wider picture. The examples you've shared are encouraging, but we also need to consider how sustainable that progress is, how secure these newly improved living standards are, and how widely the opportunities are being distributed. I don't think acknowledging those caveats takes anything away from the progress itself.

On China, I wouldn't consider the comparison off-topic. If we're discussing poverty alleviation at this scale, China's experience is arguably one of the most interesting examples to examine. Not because we should replicate its model wholesale, but because understanding how different countries have approached the same challenge can tell us a great deal about the choices available to India.

 

[Krptonite]

India recategorizes a lot of things. For example Indian middle class is completely different from what the world classifies as middle class which ends up tricking the numbers and people.

India's "middle class" often differs from global definitions because domestic income and consumption thresholds are set much lower, meaning a large portion of those classified as middle-class in India would be considered low-income or vulnerable by international standards. [1, 2]

1. The Income and Purchasing Power Gap

• • Global Benchmarks: International organizations like the World Bank often define developing-world middle-class thresholds around $10 to $100 per day in Purchasing Power Parity (PPP). Under strict global or comparative frameworks (such as economist Nancy Birdsall's model), anyone earning above $10 a day in India places them heavily in the upper tier (top 5%) of the country rather than a broad, comfortable middle. [1, 2, 3]
  • India’s Lower Tiers: A massive segment of self-identified or statistically grouped Indian "middle class" actually survives on $2 to $4 or $2 to $10 a day, which places them only slightly above global poverty lines or deep into economic vulnerability. [1, 2]

2. The Vulnerability and "Precarity" Problem

• • Proximity to Poverty: Organizations like the National Commission for Enterprises in the Unorganised Sector (NCEUS) have historically categorized a huge majority (up to 77%) of India’s population as poor and vulnerable. [1]
  • Shock Exposure: Unlike Western middle classes with substantial social safety nets, accumulated wealth, or steady formal employment, a large share of India's middle-income earners remain one medical emergency, job loss, or market disruption away from falling back into poverty. [1]

3. Subjective Self-Identification vs. Material Reality

• • Aspirational Identity: Studies by institutions like the Carnegie Endowment for International Peace note that a massive share of Indians—spanning low-income to upper-bracket groups—subjectively identify as "middle class". In India, calling oneself middle class is often an aspirational social marker meaning "not destitute and not ultra-wealthy," rather than an objective measurement of disposable income or lifestyle matching Western standards. [1, 2, 3]

4. Extreme Economic Polarization

• • The "Hole" in the Middle: Economists point out that India’s economic structure features a sharp contrast: a very wealthy top tier (sometimes called the "Octopus Class" or high earners) and hundreds of millions of low-income or aid-reliant citizens, leaving the true middle-income bracket compressed compared to the broad, bell-curve distribution seen in developed nations. [1, 2]
  • Tax and Income Realities: Official data shows that a relatively small fraction of households (roughly 40 million tax-paying or higher-earning households) shoulder the core of formal income tax and middle-to-upper consumption, while the median Indian income remains close to global baseline poverty thresholds. [1, 2]

On online platforms like Reddit, opinions are mixed: some users argue that India’s urbanized, tech-enabled, and tax-paying segments genuinely enjoy a modern middle-class lifestyle, while others agree that extreme wealth disparities and widespread financial vulnerability mean India's middle class looks vastly different from—and more fragile than—the global standard. [1]

I think there's merit to this argument, particularly the distinction between moving out of poverty and achieving genuine economic security.

Perhaps we sometimes conflate poverty alleviation, upward economic mobility and the emergence of a financially secure middle class. They are related, but they aren't the same thing.

That said, I wouldn't want us to diminish the significance of someone moving from extreme poverty to a position where they can afford better housing, education, healthcare and consumer goods simply because they don't meet an internationally defined middle-class threshold.

I suppose my position is that we should celebrate the progress while remaining honest about the distance still to be travelled. Getting people out of poverty is one milestone; building a society where they can sustain and improve their standard of living across generations is quite another.

 

[vasanthm]

How India's poor went on a 'durable' shopping spree

India's poorest households are now buying more durable goods like bikes, cars and fridges. Mobile phones are almost everywhere. This shows a narrowing gap between the rich and the poor in owning key assets. Spending on food has decreased as non-food items, especially durables, take up more of...

m.economictimes.com

The improvements in rural India are pretty obvious to anyone who actually spends time there. Nearly half of the poorest 40% of rural households now own a bike or car, compared to less than 10% a decade ago. Thats a massive change in living standards.

 

[313Ghazi]

The improvements are pretty obvious to anyone living in India, especially rural areas. I've mentioned this before on these forums and got mocked for it, but now you can see the data for yourself.

I don't really care much about inequality as long as people at the bottom are making good progress. I'd rather have Indian companies capturing this growth and producing Indian billionaires than letting foreign multinationals take all the profits.

And forget billionaires, just look at the differences between Indian states. Tamil Nadu grew at over 11% last year, with per capita income around $4,200. Visit villages there and you'll find TVs, fridges and two wheelers in pretty much every house, plenty of cars too, and kids going off to study engineering and medicine.

My own housemaids son finished engineering, now works for an MNC and recently bought himself a car. My watchmans daughter graduated and now works for the postal service. These arent some rare success stories, its the sort of things you see happening around you all the time.

Ofcourse India still has plenty of poverty and a long way to go. But I'd rather see the poor getting richer even if the rich are getting richer faster, than have everyone equally poor.

I don't really care much about inequality as long as people at the bottom are making good progress

This is the real measure of success to focus on. Imran Khan made this point too.

I'd rather have Indian companies capturing this growth and producing Indian billionaires than letting foreign multinationals take all the profits.

Another good take. The only risk is, if you don't watch the other end of the scale carefully, you'll find yourself in the position western countries are in. Trickle down is a lie. What wealth the billionaire class hoover up, doesn't get re-distributed, it gets hoarded, thats how they become billionaires in the first place. Too many of them - and you'll eventually find not enough money for the salaried class and standards of living of Doctors, Engineers etc falling generation by generation. We are living that in the UK right now.

I don't know tax laws in India, but you now have a large middle class, the students movement showed you have a living democracy. Make sure you have some sort of wealth tax and protect the salaried classes from stuff becoming out of their reach.

 

[vasanthm]

I don't really care much about inequality as long as people at the bottom are making good progress

This is the real measure of success to focus on. Imran Khan made this point too.

I'd rather have Indian companies capturing this growth and producing Indian billionaires than letting foreign multinationals take all the profits.

Another good take. The only risk is, if you don't watch the other end of the scale carefully, you'll find yourself in the position western countries are in. Trickle down is a lie. What wealth the billionaire class hoover up, doesn't get re-distributed, it gets hoarded, thats how they become billionaires in the first place. Too many of them - and you'll eventually find not enough money for the salaried class and standards of living of Doctors, Engineers etc falling generation by generation. We are living that in the UK right now.

I don't know tax laws in India, but you now have a large middle class, the students movement showed you have a living democracy. Make sure you have some sort of wealth tax and protect the salaried classes from stuff becoming out of their reach.

One thing I've noticed in India is that states where power keeps changing hands often do better in the long run than those ruled by one party for decades. Tamil Nadu and Karnataka are good examples. Voters regularly throw governments out, even when they've done a decent job. So parties are constantly competing with new policies and trying harder to please voters.

Ofcourse corruption is still there. In TN, govt tenders reportedly have around 20% padding for kickbacks, but atleast the work gets done. Not ideal, but I can live with that to some extent. I think the fear of being voted out keeps politicians on their toes.