Donald Trump and the missing maids at my in-laws house.

"Nobody knows the business of LPG cylinders like me"

— (presumably) Donald Trump

Maids, or rather the lack of them, have always been the topic of discussion at my in-laws. Somehow most "progressive" women today can't seem to be able to get anything done without maids. Independence, it turns out, often comes with a dependency clause.

One evening at my in-laws was particularly insightful. Amidst tea and fritters, the women of the house joined in unison in cursing Donald Trump and the crisis he has created across the world.

For the benefit of those who may read this article in the future: Trump in 2026 managed to shoot himself and the rest of the world — including America — in the foot by starting a war with Iran and creating a global energy crisis. The side effects are many, but the ones particularly affecting my in-laws are that maids are starting to leave work and shift back to their native towns, a phenomenon often seen during crises like Covid-19. Most of the quitting happens without notice and in cases where they do inform, it is simply: "I need to go back to my village, it's become difficult here."

"Many are leaving as they cannot sustain here. They are not getting gas. Cylinders are costing ₹3,000 plus per month," said my mother-in-law. "Cylinder prices have not gone up by that much. The government has raised the price by ₹200 only," I protested.

This somehow irked my mother-in-law who, in classic Trump style, quipped: "No one knows the business of getting gas cylinders better than me!" She had run a food business and paid bribe-money to procure gas from the black market — often three to five times the official price — just to keep the kitchen running. What followed was a 45-minute monologue comparable to a lecture from the Delhi School of Economics. At the end of it, I was quite convinced that she knew the LPG gas cylinder business better than most people — least of all Trump himself.

The central idea she was trying to put across was this: the poorest people often live in the most high-cost informal economies.

The price of living in Dharavi

Take their maid, for instance. She lives in Dharavi, one of the largest and most densely packed informal settlements in the world. Between seven to ten lakh people live within just 2.1 square kilometres. It is a place that constantly surprises you — dense, chaotic, but also deeply industrious and adaptive. But that resilience often masks a harsher truth: being poor in India is expensive.

Start with cooking gas. Households with access to piped natural gas (PNG) typically pay lower, metered rates over time. But for many low-income households, especially in informal settlements, that option does not exist. They rely on LPG cylinders, which require upfront lump-sum payments and often involve higher effective per-unit costs. Even when subsidised, the refill cycle and cash constraints make LPG more expensive in practice than PNG for comparable usage.

Water tells a similar story. A formal household connected to municipal supply might pay ₹5–₹20 per cubic metre. In Dharavi, where many depend on private vendors, the effective price jumps to ₹50–₹200 for the same quantity.

Healthcare is another recurring shock. A basic illness — something like a stomach infection — can cost ₹500–₹3,000 per episode for a low-income household, whereas preventive or subsidised care might cost ₹100–₹500. What adds up here are two factors: delayed treatments are expensive, and time costs are prohibitive. The difference is not just financial; it determines whether treatment is delayed or avoided entirely.

Food is slightly more nuanced but follows the same pattern. Staples like rice sell for ₹25–₹40 per kg in open markets, while government schemes offer grains at ₹1–₹5 per kg. But outside those schemes, small purchases — daily buying instead of bulk — mean paying 10–30% more per unit.

Even in mobile data, where prices have fallen dramatically, poorer households often end up paying more per unit simply because they cannot access bundled or long-duration plans.

Credit is perhaps the most understated example. Informal lenders charge anywhere from 3% to 15% per month — roughly 40% to 180% annually, and in extreme cases beyond 200–300%. Even microfinance institutions, which are considered more formal, charge 18–30% annually. Compare that with bank loans for salaried or asset-backed borrowers at 8–15%. In simple terms, the poor often pay two to six times more just to borrow money. Microfinance institutions charging 30% per annum are considered a godsend by many residents, because the alternatives are either 300% interest or zero credit. These loans, despite their cost, enable small-scale income generation that would otherwise be impossible.

The Poverty Premium

What ties all of this together is something economists call the poverty premium: the idea that the poor systematically pay more for the same essentials.

This is not accidental. It emerges from how systems are structured. When you are excluded from formal markets, you rely on informal ones. When you do not have savings, you buy in smaller quantities. When information is uneven, you overpay. And when providers face uncertainty — irregular payments, weak enforcement — they price that risk into everything.

There is no comprehensive research at a national level on poverty premiums in India. The figures below are compiled from various regional studies. As usual, the actual numbers would be much larger than what is being estimated, as most of the issues go undocumented.

The scale of this premium, when you add it up across categories, is staggering. A low-income household in urban India is likely paying upwards of ₹69,800 more annually than a formal-economy household for identical essentials — gas, water, healthcare, credit.

What the above numbers share is not just the magnitude but the design. None of these premiums are accidental market failures. Each one persists because someone benefits from it — the informal lender, the water mafia, the black-market cylinder supplier — and sitting quietly above it all is the political class, which has every incentive to keep the pressure just high enough to make relief feel like generosity.

Regulator's Role

In other words, this structure persists partly because it is politically convenient. Politicians love it: the poverty premium creates a large, visible group of people who are continuously under financial pressure. Policy responses — subsidies, loan waivers, cash transfers — tend to address immediate distress but leave the underlying system intact. They constitute the easily swayable vote-bank.

In practice, many schemes are designed less to solve structural problems and more to appeal to specific voter segments. Cash or in-kind transfers framed around family roles (such as "ladki-behan" or "ladka-bhai" schemes), or subsidies tied to livestock, milk, or fodder, are common examples. These interventions can generate short-term relief and political goodwill, but they rarely reduce the deeper inefficiencies that make basic goods and services persistently expensive for the poor. In fact, most of them are "legal" substitutes for the "Biryani Packet + ₹150 per person" campaigns that ensured the victories of erstwhile regimes.

And yet, after all this discussion about credit, water, rice, and vote-bank politics, I could not help but glance at my mother-in-law.

It struck me that what she had described, in her own unstructured way, was not just a complaint about rising costs. It was a lived understanding of how informal economies actually function. She had dealt with black-market LPG, paid multiples over official prices, worked her way through bribes and extortion, and navigated supply constraints long before these became talking points in policy papers. What sounded like exaggeration at first was, in fact, a grounded account of the poverty premium in action.

That, perhaps, is the more uncomfortable takeaway. Much of what we describe today in policy language has long been understood intuitively by those who manage scarcity on a daily basis. Running a household under constraint is, in many ways, an exercise in applied economics: managing cash flow, arbitraging prices, dealing with unreliable supply, and constantly optimising trade-offs. The women who ran households a generation ago did not talk about empowerment. They practised it. And somewhere between policy language and lived reality lies the real economics of this country.

Lastly, while the "modern" woman may speak endlessly about empowerment and equality, if she has abstracted away all constraints by outsourcing to maids and apps, she is missing the real lessons of economics that the women of the past mastered simply by engaging with the issues. It also raises a fundamentally different question — about dependence, not empowerment. But that is a topic for another day.