Thirty years ago Siddharth Dube, a writer, visited a small village in northern India near the site of a historic peasants’ revolt. He found plenty that remained enraging: mud huts, primitive ploughs, “barefoot old men” and “bone-thin children”. One older villager, Ram Dass, recalled the bitter deprivation of his younger years, when he would work long days on someone else’s land for the meagre reward of 1.5kg of grain. On cold nights, the poor stuffed rice stalks into old clothes to keep warm. “What did we know what a quilt was?” A man was lucky to own a single pair of shoes from his wedding to his death.
At the time of Mr Dube’s visit in 1995 almost half of India’s population still lived below the international poverty line, according to the World Bank. Mr Dube lamented India’s lack of progress: the number of poor people in the mid-1990s exceeded India’s entire population when it escaped British rule five decades before.
How has India done in the three decades since? The last official survey incorporated into World Bank reports was for the year ending in June 2012. A survey taken in 2018 was never officially released. But after a long wait the detailed results of two surveys have come all at once, released in June 2024 and January 2025.
The most recent survey, which covers the year to July, shows that only 1% of India’s households fell below the international poverty line in 2024, according to an analysis of the data by Surjit Bhalla, a former executive director of the IMF, and Karan Bhasin of the State University of New York, Albany. Heir to the famous “dollar a day” poverty line, the international poverty line now stands at $2.15 a day at purchasing-power parity. India has, therefore, all but eliminated the most extreme forms of poverty.
This is wonderful news in its own right. But India’s success also calls into question a common assumption about development: that the eradication of poverty requires a manufacturing miracle, drawing masses of peasants out of the farms and into the factories. More than 40% of India’s workers are still employed in agriculture. Perhaps people can leave poverty without leaving the land. That is also one conclusion of a new paper by Vincent Armentano, Paul Niehaus and Tom Vogl, all of the University of California, San Diego, which examines some of the paths out of poverty taken by five big emerging economies—China, Indonesia, Mexico and South Africa, as well as India—from 1984 to 2017.
Their paper is distinctive in its focus not on time periods (such as the 1980s) or age groups (such as the elderly), but on generations (such as people who were young in the 1980s and are now elderly). The trio are interested in how particular cohorts, all born in the same year, fared over the course of their life, as well as the progress a country makes as older cohorts give way to their successors. They track these groups by taking advantage of the simple, immutable law that people get a year older with each year that passes. Thus they can confidently predict that anyone who was 40 in a 1990 survey will be 50 in a survey taken ten years later.
The economists find that people become better off as they get older, since they acquire, say, land and experience. Their paper also confirms that today’s young are better off than yesterday’s young, perhaps because they have benefited from better education and nutrition. The researchers then show that these two trends tend to offset each other, so that in any given year, young and old adults have similar rates of poverty. Each generation has a better life than their parents did at the same age. But they do not have a better life than their parents do in the same year.
Mr Dass, for example, improved his lot by moving to Mumbai, where he worked sweeping coal ash from a rail engine (“we would look like black ghosts”) and then in dyeing factories (it was so noisy, “we would communicate by gestures”). When he returned to his village, he bought some land. Meanwhile, his eldest son finished school, albeit a few years late, and landed a job as a state-school teacher earning a steady wage in his village. Poverty fell over the course of Mr Dass’s life. It also fell from father to son.
Surveys that follow the same people over time show that many were able to escape destitution without leaving agriculture. Of the people who left poverty in the Chinese surveys, some 37% moved from farming into something else. That figure was only 13% for Indonesia, 10% for Mexico and 7% for South Africa. Part of the reason is that the $2.15 line is so low that a modest improvement in landholdings, crop yields or rural wages can be enough to clear it. Migration to the cities may also have helped indirectly by increasing the scarcity value of rural labour, raising wages for the people who remained in the countryside.
Started from the bottom, now we’re here
Messrs Bhalla and Bhasin argue that, in India’s case, the lowest international poverty line of $2.15 has now outlived its use. Since almost everyone is now above it, the measure will fail to capture future progress. India has plenty of scope to grow and develop, but not much room to reduce poverty below 1%. Messrs Bhalla and Bhasin therefore recommend a new poverty line set high enough to capture the bottom quarter or third of the population.
Although the poor, by this definition, might have shoes, quilts and enough to eat, they would not be free from deprivation. Mr Dass and his son escaped extreme poverty in their lifetimes. Still, they did not escape financial hardship. “Money is a kind of obsession,” his son told Mr Dube. “One’s desires are endless, however much one gets.” He borrowed money for his wife’s medical treatment and his daughter’s marriage. He also paid for his own son (Mr Dass’s grandson) to go to university. “I’ve tried to ensure that the children develop as much as they can,” he said. “Their future should be better than what I have lived.” Such dreams are ultimately what produce prosperity, even in the absence of industry. ■
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