We’ve all heard it before:
“My cousin earns ₹4 lakhs a month in the US.”
It sounds impressive. But before we compare paychecks, let’s ask a more meaningful question: What does that money actually buy in their country?
That’s where Purchasing Power Parity (PPP) comes in — and the results may surprise you.
What Are We Comparing?
Let’s clarify upfront:
We’re referring to a ₹4,00,000 per month salary earned in India.
We’ll compare this Indian salary to equivalent salaries in other countries in terms of what it can buy locally — adjusting for cost of living using PPP rates, not exchange rates.
What is Purchasing Power Parity (PPP)?
PPP is a way to compare the real value of money across countries.
While exchange rates tell you how much one currency is worth in another, PPP tells you how much stuff your money can actually buy in each country. It’s used by economists and policymakers to compare standards of living.
A Fun Example: The Big Mac Index
The Big Mac Index, created by The Economist, uses the price of a McDonald’s Big Mac burger to explain PPP in real terms.
- In India, a Big Mac costs around ₹240
- In the US, it costs about $5.69
If you convert ₹240 to USD at the exchange rate (~₹83/USD), it’s about $2.89. But that same burger costs $5.69 in the US — meaning the rupee buys more in India than the dollar does in the US.
This is a simple but powerful way to illustrate the difference in purchasing power.
How ₹4 Lakhs/Month in India Compares Globally (PPP-Adjusted)
Here’s a comparison of what a ₹4,00,000/month salary in India is equivalent to in various countries based on IMF’s PPP data.
| Country | Currency | PPP Value per ₹1 | Equivalent Foreign Salary | Equivalent INR Value (at FX Rate) |
|---|---|---|---|---|
| India | INR | 1.00 | ₹4,00,000 | ₹4,00,000 |
| United States | USD | 0.0484 | $1,936/month | ₹1,60,688 |
| United Kingdom | GBP | 0.0512 | £2,048/month | ₹2,13,000 |
| Germany | EUR | 0.0484 | €1,936/month | ₹1,72,304 |
| Australia | AUD | 0.0485 | A$1,940/month | ₹1,06,700 |
| China | CNY | 0.1700 | ¥68,000/month | ₹7,82,000 |
| Japan | JPY | 0.0096 | ¥3,840/month | ₹2,112 |
| Russia | RUB | 0.0377 | ₽15,080/month | ₹13,717 |
| Brazil | BRL | 0.4630 | R$18,520/month | ₹3,14,840 |
| South Africa | ZAR | 0.1416 | R5,664/month | ₹24,921 |
Note: INR values in the last column are based on average March 2025 exchange rates.
Flip the Script: What If Your Cousin Earns $5,000/Month in the US?
Let’s say your cousin earns $5,000/month in the US. What’s that worth in Indian terms using PPP?
- $5,000 ÷ 0.0484 = ₹10,33,058/month
That’s right — they’re living a lifestyle similar to someone earning over ₹10.3 lakhs/month in India.
So if someone claims they’re earning ₹4 lakhs/month in the US, it’s not equivalent to ₹4 lakhs/month in India. It’s more like ₹1.6–1.7 lakhs in Indian lifestyle terms.
Key Insights
- ₹4 lakhs/month in India buys a very comfortable lifestyle: a good home, food, travel, savings, and more.
- The same amount in the US or Europe barely covers rent and utilities in many cities.
- PPP gives you a realistic picture of living standards, not just currency conversion.
Frequently Asked Questions
Why is PPP better than exchange rate comparison?
Because exchange rates are affected by trade, speculation, and capital flows — they don’t reflect how much goods/services cost in each country.
Is ₹4 lakhs/month in India a high salary?
Yes, in most Indian metros, this is a top-tier salary and provides a quality lifestyle far above the average.
Should I still consider working abroad?
It depends on your goals — exposure, citizenship, or specific industry experience. But if you’re looking purely at money, don’t ignore the power of PPP.
Final Thoughts
Next time someone says,
“My child earns ₹4 lakhs a month in the US,”
remember: that might not mean what it sounds like.
In terms of what money can actually buy, your ₹4 lakhs/month salary in India could go a lot farther.
It’s not just about how much you earn — it’s about how far your money takes you.
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