People in India certainly can afford that. In fact many teenagers these days buy $250-300 (average) smart phones. Also keep in mind I am talking about rural India.
If you assume a phone gets replaced every 3 years -- with service -- that's about $110 per year, or close to 7% of a person's total income.
In the US, median income is ~$32k -- $26k after taxes. If you make the same assumptions, a phone would cost about $580, or close to ~2% of a person's total income.
So it seems like not so big of a deal, especially for something so valuable.
But the teen part is what piqued my interest. India is MUCH younger than the US. Women participate in the workforce at a MUCH lower rate. And household size is MUCH larger. If you factor all of those things together, it means that for like 60% of families with children, you have a single earner with a spouse and 2.9 children. If everyone's got a phone, that's more than 40% of your household income. THAT seems insane.
On the topic of teens affording smartphones, either they come from relatively well to do families so their parents can spare the money, or they're older and make some money on the side by running errands, etc.
But still I don't think everyone replaces their phones in just 3 years. The younger generation does that (they replace their phones even faster). But the older generation who use a smart phone like a phone keeps their phones for lot more then 5 years.
And these days due to population control awareness most couples limit themselves to only 2 children.
If I had to, I would spend 10% of my income on a smartphone / laptop / whatever without even thinking. It simply pays for itself.
Whether you're rich or poor, people spend INSANE amounts of money commuting. I get it that our public transit is garbage. I just don't get how much people pay to commute instead of moving somewhere that makes better economic sense (even within the same metro, where you can keep all your roots -- your family and friends and eat at your favorite restaurants and all that).