Rs 23 Lakh In India Equals Rs 80 Lakh In The US? A LinkedIn Post Stirs Conversation

Purchasing Power Parity, or PPP, is an economic tool used by global institutions like the IMF to compare living standards across countries

To support his point, Chakraborty listed everyday expenses

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A Delhi-based researcher has started a debate on social media by challenging how Indian professionals perceive high overseas salaries. In a viral LinkedIn post, Shubham Chakraborty urged people to reconsider comparing paychecks without considering the cost of living and purchasing power differences.

“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,” Chakraborty wrote, highlighting the concept of purchasing power parity (PPP).

Understanding PPP

Purchasing Power Parity, or PPP, is an economic tool used by global institutions like the IMF to compare living standards across countries. It adjusts for local price levels to determine what income is worth on the ground. Based on current IMF data, the PPP ratio between India and the United States is estimated to be over 3:1, making Chakraborty’s example a rough but illustrative comparison.

To support his point, Chakraborty listed everyday expenses. A casual meal that costs Rs 300 in India might be priced around Rs 1,700 in the US. Internet services that cost Rs 700 at home could rise to Rs 6,000 abroad. Rents for comparable housing reportedly leap from Rs 50,000 to over Rs 1.6 lakh in American cities.

The Caveats: PPP Isn’t a One-Size-Fits-All Tool

While his post resonated with many, Chakraborty also acknowledged the limitations of such comparisons. “Developed countries often have better public services, technology, and opportunities. They may also offer better social security,” he noted.

One LinkedIn user commented, "Splendid! People often talk about gdp (gross or nominal) while comparing incomes, even though how it's calculated is a mess in itself as well as being a poor indicator for accurate growth comparison. PPP is a relatively accurate metric to compare, especially due to its dynamic nature. However, things change when it comes to remittances, considering the fact that we receive the highest (>$100B) of it."

Experts agree. Economists caution that PPP doesn’t always account for quality differences in healthcare, education, or legal systems. Additionally, individual needs and preferences, like proximity to family, job type, or personal goals, can greatly influence what constitutes a "better" standard of living.