Ever gone abroad and felt poor despite your Indian riches? Welcome to the world of Purchasing Power Parity (PPP) — the reason your ₹200 biryani at home turns into a $25 struggle meal overseas.
Let’s break it down — with a burger, of course.
🍔 The Burgernomics of PPP
- India: Burger meal = ₹200
- USA: Same burger = $5 = ₹400 (assuming $1 = ₹80)
That means what costs ₹200 in India costs double in the US. So your money buys less abroad — because the purchasing power isn’t equal.
💵 So what exactly is PPP?
Purchasing Power Parity is an economic theory that compares the value of currencies through the cost of a standard “basket of goods” across countries.
It’s why economists say India’s GDP is $3.7 trillion nominally but over $11 trillion in PPP terms — because things cost less here.
🧳 Why it matters for you:
- Salaries: An Indian earning ₹10L/year in Bangalore lives better than someone making $50k in New York.
- Travel: Your ₹1,000 can get you a full-course meal in India or a coffee and muffin abroad.
- Investments: When comparing global stocks or returns, PPP helps understand real value.
🧾 Real-world impact:
- IMF and World Bank often use PPP-based GDP to compare nations.
- PPP affects minimum wage debates, cost-of-living indexes, and even crypto purchasing guides (yes, seriously).
- Burger King’s global pricing can become a macroeconomic case study — known as the Big Mac Index.
💬 EduPPP-takeaway
PPP isn’t just economist gibberish. It’s the reason you can be a king in Kanpur and a broke backpacker in Berlin. So the next time you’re comparing foreign salaries, remember: it’s not what you earn — it’s what you can buy.
