India's household and its poverty decline: The asset others are paying to rebuild

The World Bank's India Poverty and Equity Brief for October 2026 made headlines by highlighting the dramatic reduction in poverty in India. According to the report, between 2011 and 2023, the share of Indians living below the lower-middle-income poverty line of $4.20 a day (2021 purchasing power parity) fell from 57.7% to 16.1%. Thus, about 496 million people moved out of poverty during these years. Extreme poverty in India, measured at $3.00 a day, declined from a staggering 27.1% to a mere 2.6%.

The real story behind these numbers offers a larger lesson for both policymakers and society. To understand it, we need to examine how India achieved the remarkable progress highlighted in the report.

The World Bank estimates that about 134 million more Indians found work between 2017 and 2023, almost twice the growth in the working-age population. A large number of these new workers were women in rural India. Food subsidies and social transfers, meanwhile, left families with more money to spend on other needs.

Put these facts side by side, and a pattern emerges. The gains came through the household. There were more earning hands under one roof, while social transfers reached the family kitchen. Textbook economics usually focuses on an individual worker responding to market incentives. India's experience worked differently.

India's poverty decline is, at its core, a household story. Japan, China and South Korea are now spending heavily to rebuild the family units they allowed to weaken. India still has this asset largely intact. It is also the unit the Rashtriya Swayamsevak Sangh (RSS) has always placed at the centre of its thinking. For the Sangh, the basic unit of society as well as the economy is the kutumb (family), not the individual.

The family as an economic institution

Western economics recognised the importance of the household relatively late. When Gary Becker won the Nobel Prize in Economics in 1992, the Royal Swedish Academy noted that he viewed the household as "a small factory", producing services for its members using time and purchased consumer goods as inputs. The latter were regarded as intermediate inputs in the household's production process. For Western economists, this represented a new school of thought. For an Indian family, it is simply how life has traditionally been lived.

A leading RSS ideologue, Dattopant Thengadi, put the difference in plain words: "The West made the individual the centre; for India, the family was always at the centre." Thengadi described the family as the bridge connecting an individual to society and culture. Thus, for the RSS, a robust economy is one whose foundations are firmly rooted in the family.

The numbers also lend support to this economic worldview. McKinsey estimates that family-owned businesses contribute more than 75% of India's GDP, one of the highest shares anywhere in the world. Morgan Stanley estimated in October 2025 that Indian households held about 34,600 tonnes of gold, worth roughly 88.8% of GDP. For an Indian family, that gold represents savings, insurance and inheritance rolled into one, passed down from one generation to the next.

RSS Sarsanghchalak Mohan Bhagwat made the same point in Kolkata on 21 December 2025. "Our economic activity also happens through family; the country's savings happen in families. The gold is in families," he said. The RSS has repeatedly emphasised that it views the family as a cultural, economic and social unit all at once.

The family as India's social security system

The family is also India's own social security system. A study published in the International Journal of Sociology and Social Policy found that about 85% of older Indians lived with their children, while only 2% lived alone. Researchers at the International Institute for Population Sciences, working with data from the Longitudinal Ageing Study in India, found that older people living with a spouse and children, and in larger families, were better protected against depression.

What an Indian family provides without charge, many other countries now have to purchase through state-funded welfare systems.

What a thinning household costs

East Asia illustrates the other side of the picture. Japan recorded 671,236 births to Japanese nationals in 2025, the lowest number since records began in 1899. Its fertility rate fell to 1.14, while deaths outnumbered births by 918,253. China's population declined by 3.39 million in 2025, marking its fourth consecutive annual fall, as births dropped to 7.92 million.

Yi Fuxian, a demographer at the University of Wisconsin-Madison, pointed out that this was roughly the number of children born in China in 1738, when the country had a population of only about 150 million.

In South Korea, the trend is visible at the level of young couples themselves. Statistics Korea found that 46.4% of couples in their first five years of marriage had no children in 2022, a record high. This is the 'DINK' model: double income, no kids. It may increase a couple's earnings today, but the household stops renewing itself as an economic unit. The cost comes later, in the form of fewer workers, more pensioners and diminishing family support for older people.

The alarm bells are now ringing at the highest levels. "Japan is standing on the verge of whether we can continue to function as a society," then Prime Minister Fumio Kishida told Parliament in January 2023. The American demographer Nicholas Eberstadt wrote in

Foreign Affairs that "humans are about to enter a new era of history". Populations will now shrink because of the choices people make about marriage, family and living arrangements, rather than because of any calamity.

The price of rebuilding the family

Having allowed the household to weaken, these governments are now spending heavily to put it back together. South Korea spent more than 360 trillion won, about $270 billion, on childcare subsidies and related schemes between 2006 and 2023. Yet its fertility rate continued to fall. Japan has committed about 3.6 trillion yen a year from fiscal 2026 towards child allowances, fertility treatment and workplace reforms. China introduced its first national childcare subsidy in 2025, offering 3,600 yuan a year for each child under three, with the central government setting aside about 90 billion yuan in the first year.

Money alone has not brought families back. Philip O'Keefe of the University of California, Irvine, told The New York Times that he knew of no country whose fertility rate had fallen as low as China's and subsequently recovered to the replacement level.

However, South Korea does offer a clue about where recovery begins. Its fertility rate rose to 0.80 in 2025, up from 0.75 in 2024. This followed a 14.8% increase in marriages in 2024 and a further 8.1% rise in 2025. Births picked up only after households began forming again.

India's opportunity: Protecting the family

Bhagwat has drawn a lesson for India from these developments. "Our national population policy recommends 2.1 children, which means three," he said in New Delhi on 28 August 2025, urging every Indian couple to consider having three children.

The Sangh has made the family one of the five themes of its Panch Parivartan programme. It also has a separate organisational vertical called Kutumb Prabodhan, or family awakening, which seeks to strengthen the family system in India as the foundation of social stability and national strength.

The household as the foundation of national prosperity

India's poverty decline is, at its core, a household story. Japan, China and South Korea are now spending heavily to rebuild the family units they allowed to weaken, and the results remain uncertain. India still has this asset largely intact.

The lesson is clear: economic progress cannot be measured solely through individual earnings, employment figures or government transfers. The strength of the household, its ability to pool resources, support dependants, create livelihoods and pass on wealth across generations also matters.

Protecting this institution will cost far less than rebuilding it, as East Asia is now discovering.

The author is an Indian writer

Source: Money Control