Dollar dream vs reality: Why Rs 80 lakh in US salary not as big as it sounds

India Today

2 days ago

Have you ever felt tempted by the big paycheques your relatives or friends boast about after moving abroad? A recent LinkedIn post by a Shubham Chakraborty, an upcoming author, has sparked a fresh conversation about whether those impressive-sounding dollar salaries are really worth it when compared with life in India.He wrote, "Next time your cousin/friend who has settled in the US says he makes Rs 80 lakhs a year, tell them you only need Rs 23 Lakhs to match their lifestyle in India. This is how Purchasing Power Parity (PPP) works."
advertisementHe argued that one needs only Rs 23 Lakhs in India to match the lifestyle of someone earning Rs 80 Lakhs in the US, thanks to the concept of Purchasing Power Parity (PPP). This perspective challenges the common notion that higher salaries abroad automatically translate to a better lifestyle.UNDERSTANDING PPP
PPP is a method used by economists to compare what money can actually buy in different countries. Instead of just converting currencies using exchange rates, PPP looks at local costs, like rent, food, internet bills, and other everyday expenses.For instance, PPP compares what you can buy for a certain amount of money in India versus what the same amount can get you elsewhere, like in the US.Chakraborty further wrote, "Many people don't think about PPP when considering job offers or moving to another country. But it can be helpful. For example, if you have two job offers - one for 30 Lakhs rupees in India and another for 80 Lakhs rupees in the US - PPP can help you compare them fairly."advertisementHe shared everyday comparisons to explain the idea. For instance, a restaurant meal costing Rs 300 in India would cost Rs 1,700 in the US, while internet bills might increase from Rs 700 to Rs 6,000. Similarly, rent for comparable housing can jump from Rs 50,000 to Rs 1.6 lakh. These comparisons reveal how costs can significantly vary, affecting the real value of a salary.LIMITATIONS OF PPPWhile PPP offers valuable insights, Chakraborty acknowledged its limitations. He noted, "Developed countries often have better public services, technology, and opportunities. They may also offer better social security." Thus, while PPP is a helpful tool, it is not the sole consideration when evaluating job offers or contemplating moving abroad.He concluded his post by saying that while PPP is a handy tool to understand real earnings, but it's not the only thing to think about. Before deciding to move abroad or pick a job offer, look at the full picture, including lifestyle, family needs, savings, and future goals.