Is ₹84 Lakh In America Poor??? | Purchasing Power Parity Explained

Varun-”It’s recording right? ” So it all started when a tweet went viral recently about India v/sAmerica price parity. A lot of people were saying that, you know, getting a 30 lakh salary in India is equivalent to getting $120k, which is roughly about a crore in America.

Another person posted this. People who were living in America got angry and were like, you cannot put a price on fresh air. Honestly, it's been a decade long heated debate and I started questioning, are these figures true?

How much does it actually cost to live in America? How much really is $100k worth in the US? How much is that worth in India?

Is it ₹30 lakhs? Is it ₹40 lakhs? Or is it ₹80 lakhs?

What would the equivalent lifestyle be? So to get an accurate answer. I decided to make a video.

I traveled to the top American cities last month and found the answer myself. In this video, I've created comparisons that provide the one video you need to answer your questions about price parity in America. With examples by the way.

I went there. I am a testament to this. And I'll also show you what America, San Francisco, New York was like.

Let's begin. We start with the basics first. Let me explain something called Purchasing Power Parity.

So Purchasing Power Parity or “PPP” is simply the ratio of the price of a basket of goods at one location, divided by the price of the basket of goods at a different location. But why is it important? You see, prices of goods and services differ between countries, and it can be difficult to compare how much your money will buy in different places.

Let me give you an example. $3 can get you one can of soda in America, but three cans in India. And this is where “PPP” or Purchasing Power Parity comes in.

It basically lets us compare the real value of money between different countries, and also helps us adjust GDP to show how an economy is doing. Now, you know, every time it comes to this U. S.

versus India comparison, people will say that PPP is too simplistic. It doesn't take into account a lot of things, which is also a fair argument, because your basket of goods or spending habits may not be similar to other person's basket of goods. For example, if you're a fresher, your needs would be very different from a family of four who will probably need car, schooling for their children, etc.

Based on the current calculation, though the OECD says that $100k is ₹23 lakhs in India. The world Bank says it's ₹21 lakhs. But if you stick with me till the end, I'll tell you what I learned from my experience.

So from the very moment I stepped in American soil, I started doing my research. The very first person we met was a driver sent by Google, who came to pick us up in San Francisco. He was from Brazil, had moved to America to work, and he was just the right candidate because guess what?

He was making $100,000 a year. Yes. Let that sink in.

A driver making $100,000. That's basically 84 lakhs. Honestly, I thought he was lying.

But over ten days, I asked, “How much do you make? ” to every single driver, every person I met across San Francisco, L. A.

, New York. And all the drivers we met were making 7-8 thousand dollars per month. Yep!

It blew my mind too. It also made me question, does everybody starting out in America make like $100,000? Is it more like making 5 LPA salary in India?

Because drivers back home make that much? Also, does it mean that all our friends in US getting a one crore package are actually just making entry level salaries? So it's obviously a little more nuanced than that.

But before we talk about that, I want to quickly thank our partner for this video, Odoo. Odoo is an enterprise resource management planning software, which you can use to manage all your business needs like sales, accounting and CRM. Now, if you are looking to streamline your operations and stay on top of the tasks, Odoo’s open Source project management tool is just what you need.

You can organize your task using different views like. Visualize your workflow with Kanban, that shows all the tasks as cards with main info at front. Or get a bird's eye view of your project timeline with Gantt chart to spot potential roadblock and spot key metrics, or a list view to simplify or make batch changes.

You can easily schedule activities, add all the info as log notes, see the emails and conversations with clients or team at the chatter, put hours worked in the timesheet, and much more. And you know the best part? All of this is for free since Odoo’s first app is free for life with unlimited support and hosting.

So check out Odoo from the link in description below. Now back to the video. This was my very first candidate, so I was also a little apprehensive of recording him because I didn't want him to get angry.

But I also casually asked him, so how do you spend your $100,000? That's a lot of money, you must be saving a lot, right? He was like, “No, $100,000 is nothing in San Francisco, you know” “I live an hour north of San Francisco and I pay like, $3,000 rent.

” “I've got a kid, so it's kind of tough. ” This specific day will be a rent of $3,000. Living an hour away north of San Francisco.

$3,000 is ₹2. 5 lakhs. He mentioned it was impossible to find a home for his family of three, even an hour north of San Francisco, for less than $3,000.

That is quite a lot, right? Was he sure about this? I opened Craigslist right away to check the rent.

$3,000 for a one bedroom. That sounds insane. Now, I also realize the Bay area is actually made up of small pockets of different-different areas.

So there's Palo Alto, there's Woodside, Atherton, Menlo Park, where a lot of rich founders stay. but then there are also the cheaper areas. And I'll tell you what, the cheaper areas also cost $2,000 minimum for a one bedroom apartment.

This is Silicon Valley, by the way. Wait till you guys see New York. So this was Sandeep, another driver we spoke to in New York, Varun-”Including all of that?

” Sandeep-”5000 plus. ” And he was also telling us how his monthly expenses were $4,000 per month. That's around ₹3.

3 lakh. So he didn't actually stay in the city. He stayed outside of the main city.

And he said with gas, insurance, everything included, his expenses were $65,000 a year. That is ₹54 lakhs. That's just mind boggling.

By the way, I also want to show you guys my room that we got in New York. There was literally no space for me and Varun to walk and cross each other at the same time. But I'll tell you what, that's not surprising part.

Take a wild guess how much this shoe-box costed us. ₹10,000? ₹15,000?

Nope! It was ₹30,000 per night. This is also when I realized that, you know, even if I pay $2000 or $3000 to get a 1 BHK apartment here, there's a significant difference in a 1 BHK here, versus back home.

Basically in India, a 1 BHK is more like 700-800ft². That's probably something as big as this. But in America it could also mean like 200-300ft², which is probably something like this.

Especially in the big cities. Essentially, what I realized was that the price per square feet rental in America is much, much higher. Now there is some good news.

You don't need to be living in the big cities, downtown. You can also probably go stay an hour away and commute to work, or stay in smaller towns, where you can get mansions as big as this. But then, you know, you could also go missing out on networking opportunities, events like these.

Or just really experiencing America like the movies and TV shows we've grown up watching shows us. And I also found out some scary details that I'll tell you right after we cover all the good stuff, that's the American food and the American cars. Aren't you hungry?

This is pretty good. You’ve gotta be loosing money on this. America’s pizzas, America's burgers, all taste really, really great.

Now, let me show you how much they actually cost. So this is my very first meal, it was two burgers, two fries, two drinks, and one tiny avocado, which cost us $46. That's close to ₹3,800.

In fact, every meal we had after this, was a minimum of $30 for two people going up to $60-$70 in nicer places. Now, I want to show you something odd. I want you to observe this bill and notice an anomaly.

Did you spot it? No? Can you see this $5 tip on the bill?

$5, that's nearly ₹417. Now, did you know? That in America, tipping is not just expected, but it's practically mandatory.

I literally couldn't wrap my head around this. So every meal that you eat out will actually cost you an extra 10-15%. Thanks to this peculiar gratuity culture that they have.

Dora. Doru! *UwU* Come here.

Sit. Good girl. *^_^* And I’ll tell you what, it gets weirder.

Because even self-service kiosks demand tips at checkout. Which is strange, because what exactly are you tipping for when it's self-service? Because there is no service there.

You are doing all the work. I ask “Have you lost your rabid ass minds? ” And you know what?

If anybody's around and they see that you're not tipping them, they'll actually get mad at you. Now, I realize the whole issue is that the FNB industry in America, they don't pay the helpers and waiters well. Most of these helpers are paid minimum wages.

So a lot of these folks make most of the money from tips. By the way, a New York local was telling me that if you don't dip them, the waiters will literally record a video of you and put it on TikTok, or put it online saying that “Look at this terrible customer who only paid us like a 5% tip. ” Delivery Man-“I just want to say the nice house for a $5 tip.

” Lady-”You're welcome. ” Delivery Man-”F*ck You. ” Now let's talk about roads.

I- Love- Roads! I know it’s a strange thing to say. But, I love studying roads, I love urban infra, and I love how good roads have a multiplier effect on the economy.

Highways of the future. We have to have these roads to meet the economic growth. The population shifts.

In fact, I’ve done a whole video about this. You can check it out here. So I basically really enjoyed American Roads.

It was my favorite part about the whole trip. We in fact did a road trip driving all the way from San Francisco to Los Angeles. And you know, while you're driving, on one side you've got the ocean and the other side you've got the grasslands.

I'm not going to lie, it literally feels like a scene right out of a movie. Also, the lane discipline was very interesting to observe because for somebody who loves things being super organized, this was a treat to the eyes. Now, what does it cost to experience these amazing roads?

Well, we paid around $700 for this car for three days. The public transport system kind of sucks in California. It's not like New York, where you have subways.

So we had to rely on Ubers, until we got a car of our own. You can check some of my bills out. Take a closer look.

Because Uber is really, really expensive in America. It also kind of makes sense why Uber drivers make so much money here. Because for even the tiniest of distances, you're literally paying $20-$30, which is close to ₹2000-₹3000.

By the way, cars are much cheaper in America than in India. Check these out. These are some old cars that you can get for ₹8-₹9 lakhs and ₹16 lakhs, and they look So- Damn- Good!

By the way, talking about commute, I cannot not show you guys this. So we took a driverless cab, Waymo, in San Francisco. AI-”This experience may feel futuristic.

” And I've literally never experienced anything like this. I was honestly kind of confused whether to marvel at how far technology has come or be scared. So it comes, you open it, sit, put a code, and it starts driving to the destination.

You think we'll ever get this in India? Let me know in the comments. Anyway!

Remember I told you I found out some pretty disturbing details about San Francisco? While we were in this Waymo. I was watching some videos about this self-driving Waymo cab on my phone, okay?

And I stumbled upon this one video of a Waymo burning! Now while I was in San Francisco, I would often see these signs saying, don't leave things in your car or people will break it open. So I got curious, like, what is going on?

I didn't know how bad it was. Did you know? that vandalism, breaking into cars, burning down cabs, it's actually pretty common in San Francisco.

20,550 car break ins last year in SF That's almost 59 car Break-Ins every single day. I was questioning some locals about this, and they told me about this very interesting law in California, which is called prop 47. This law basically says that theft of property with the value of less than $950 is considered petty theft and called a misdemeanor.

It's not a felony. So you can literally just break open cars, make sure that the theft is under $950 and walk away. Even the cops were like, the people know the law, one of the first things they ask us is, “Can I just get a ticket and be on my way?

” if they get caught. This is wild. But then I saw it happen right in front of my eyes at target.

So there were these two men who looked absolute normal. Okay. They walked in.

picked up a bunch of things and walked off. And not a single person stopped them. So I was like, what is going on?

Why is nobody stopping these people? And the person at target told me, you are not allowed to touch people or you can be charged for assault. So you just have to let these people walk away.

I was like, what? You know, they also cannot put people in jail for petty crime because the cost of locking up someone in California is around $132,000. So locking up a California state prison for one year cost nearly twice as much as tuition at the state's top private universities.

In fact, even New York loses $4. 4 billion to theft every year. If you are a store owner in America, you're basically screwed.

You know, every time the argument of purchasing power parity comes up, people start arguing. Saying that you can't put a cost on fresh air. And I agree, you can't.

But you also cannot put a cost on all of this. You cannot put a cost on safety. You cannot put a cost on the whole fentanyl crisis that's going on in Silicon Valley, and people who become addicted to substances because there's so readily available and no one's going to stop you from taking it.

There are literally so many homeless people in San Francisco, and no, they are not like the homeless people you see in India. These people look normal. They're dressed normal.

Except they're on all sorts of drugs. Look at this video, okay. This is a random homeless person on the street casually talking to herself.

And on this very same day, by the way, something very scary happened. So I wanted to get coffee, and I didn't know that literally nothing, nothing is open on a Sunday in San Francisco. So the only place that was open was Starbucks, which was like 15 minutes away.

So I walked in and it was very, very crowded, okay. Now, while I was standing in the row, there was a person standing right behind me, and he started whispering something in my ear. So I suddenly turned around.

I was like, what's up? And he looks at me and he goes like, “Hey- -do you have a dollar? ’ “Can you buy me a coffee?

please? ” “I'm hungry and I have no money. ’ That is when I stopped and I looked around the whole Starbucks and I realized that most of the people there, they were not customers waiting to buy coffee from Starbucks.

They were all homeless people who were standing there inside Starbucks because it was too cold to be outside, and this was the only place open on a Sunday, so they were actually inside for shelter. This was very-very eerie. So I literally just ran because think about it, they won’t be charged anything if they take less than $950 from me because it's not a felony.

Right? Now New York, L. A.

, Palo Alto, Mountain View, a lot of the other areas in Silicon Valley were not like this, but something is just very off with San Francisco. You know, the halo effect. When you've heard so many good things about a place, you feel like it'll be a good place.

The buildings looks so good, so do the roads. How can it be unsafe if it feels so developed? That's when I realized, it's not always the truth.

I don't think you can understand the ground reality of any place until you visit it yourself. And I keep thinking about this quote again and again. That, “Hard times create great men” “Great men create good times” “Good times create weak men” “Weak men create hard times” And I feel like somewhere this is what's going on in America, particularly San Francisco, because from what I could see, the infra, the tech, everything they’ve built is insane, incomparable to India.

They did have good leaders. That's why I was so confused. Why is there so much homelessness?

Why the drug crisis? The current state of it did not match how I had imagined it to be. You know even New York for that matter, the skyscrapers, Absolutely magnificent.

They made me marvel at what us humans can build. I've never seen anything like that in my life. Beats Tokyo I’ll say.

But, you know, as soon as I landed and reached the area and got out to get to my hotel, taking in the fresh New Yorker, I was like, wait, what the heck? It literally smelled like piss. Everything above me was great, but the minute you look down, you're like, what's going on?

And I honestly wish I was exaggerating because I wanted to visit New York all along. I wanted to be pleasantly surprised, but this was exactly my first impression. Insane buildings.

What a vibe. But why is there piss? Why are there so many rats?

And why is there so much garbage on the street? Now, before you folks say, “Have you been to Bombay? ” “Seen the slums?

” Yes, I have, and we are fully aware of what it's like. It's not made out to be anything else in media. We know where we stand.

We know where we lack. We have a long, long way to go. But, you know, America is branded very differently.

Differently than its actual on ground reality. And I'm not refuting the good stuff. In America, you can literally get promoted much faster and reach a $250k salary in less than 3 to 4 years, which you cannot do in India.

You also don't have to work 10-12 hours every day. You have fixed timings and you paid for all the extra hours, your weekend are off. None of these are also discussed in the whole purchasing power parity arguments.

But also, on the other side, getting a job in America comes with a whole lot of anxiety or dealing with H-1b lottery. That's basically you can work hard, get a job, but at the end of the day, it's a lottery that decides if you get your work visa. And more than seven lakh applicants for less than two lakh work visas.

We did a whole breakdown of it here. By the way, I interrupt this segment to share some news with all of you. So around one and a half years ago, we started a video editing cohort because we had this thesis that we are moving towards a world where it's becoming easier and easier to build products, but harder to get users.

So distribution is going to become the mode. And, you know, somewhere that thesis was right? Because if you look at companies, founders, everybody is creating content right now.

And honestly making compelling videos, understanding the algorithm is now a legitimate long term career. We at Aevy also are now in the middle of our 7th cohort, and we have trained over 1800+ video editors who are now working with companies like Blinkit, Zerodha, Zoho, and folks like Ali Abdaal, Nikhil Kamath, Tanmay Bhat. you know, 80% of students who applied for placements have got jobs with average salaries of 4.

5 lakh per annum. And I don't know if I can legally say this, okay. But honestly, anybody and everybody who joins the cohort is willing to finish the cohort, get their portfolios ready.

We have a job for you, and we have worked very, very hard to create this recruiter network of 500 companies. Who are all hiring multiple video editors from us, by the way. You know, while we have so many people complaining about not getting jobs on the internet, I keep telling them, come to our cohort, we can help.

But then they say, oh, it's video editing. But honestly, that's what the demand is right now. And you need to be okay with a job that's not software engineering.

And I'm not exaggerating. We have more recruiters than students sitting for placements as of now and getting packages higher than engineering colleges. You know what?

Don't take my word for it. Come experience it firsthand. We're doing a free masterclass where you can learn how to edit videos like AevyTV, understand content better, get to know our instructors, know what our community is like and see some of the work that our cohort students have done before.

And more than anything, knowing content, knowing editing will help all of you build leverage for yourself. So come watch it even if you don't want to join the cohort because you might just end up learning something new. I’m putting the masterclass link in description.

See you there. We also don't discuss the cost of living away from family. The emotional cost of being alone, and feeling a little bit scared because you're not in your homeland.

We don't discuss how in India, a person earning even like 20 lakhs can easily afford a cook, maid and even a babysitter for that matter. Is that possible with $150,000 in USA? It’s not.

The air quality, pollution, yes, it's much better. Civic sense is much better. You do lead a healthier life, but when and if you fall sick or get chronic illness, the cost of healthcare in America is absolutely bonkers.

Health care spending in the U. S is estimated to be $3. 5 trillion.

They build our insurance company over $3 million for the cost of transplant. $200 for a blood test, $20,000 for one single stent. Just exorbitant.

I mean yeah, people say it's broken. But, broken is one thing, making it so expensive that it's practically inaccessible is another. You know, that's also when I realized, most of the arguments made on Twitter, around this, are by young folks who have actually never faced any health anomaly.

I got to experience it firsthand. So let me share my experience. So it's a blood test I've been wanting to get for the longest time, which is only available in America.

Kudos to America for being way ahead in medical R&D, but access to these medicines quite a task. So firstly, to get this test we required a prescription from a doctor in America because they didn't accept the Indian doctor prescription. So for that we needed an appointment with the doctor.

This was literally impossible in San Francisco because, doctors don't seem to want to see patients. They all leave by 4-5 p. m.

So after days of trying to find a doc, we finally got an appointment with the doctor in Los Angeles. It was very professional, good doctor. But guess what the consultation costed us?

This consultation of half an hour costed us $652 That's ₹54,000 for a half an hour consultations. I just- I just couldn't wrap my head around this. Now, finally, after the most expensive consultation of our lives, we got the prescription.

Next, we had to get the blood test done. Guess how much the test costed us? Take a wild guess.

$2,000, which is ₹1. 67 lakhs for blood test. And you know what?

If you go to the emergency or ER, the cost of everything doubles. So God forbid you have a medical emergency, you are screwed. You literally cannot survive in America without health insurance.

Anchor- “A teddy bear appeared on someone's medical bill. ” Anchor- “As a cough support device for $57. ” My friend was telling me how she had a ligament tear, and she had to pay $3,000 for a cast.

Her insurance covered $1,500, but the remaining $1500 she had to pay out of her pocket. So based on my experience, everything I learned, I’ve created a whole chart for you guys. I added my inputs.

So you can take a screenshot of this when you're comparing. $100,000 salary, is actually like an entry level salary in big cities like New York, but in states like Ohio, it could be considered a substantial income. So if you make $100,000 salary in S.

F. , and live in S. F, and if you want to save ₹1.

5 lakhs a month, you need to be living below your means. But to save ₹1. 5 lakh in Bangalore in India per month, this is what you need to be earning.

How much you save in America will be subjected to where you live, the state taxes and your needs. For example cars, electronics much cheaper in America, but house is significant, more expensive. So when you're older and you need to buy a house for your family, and the cheapest you can get is a tiny house for $1 million in the valley.

That's when the numbers and the ratios go bonkers. And that's why I say, numbers never tell the full story. In fact, I met a few Indians at Google I.

O. event, who were making decent salaries, but they were not living in the main city. They lived an hour away, in single rooms, paid very little rent, save money, paid off their student loan, work double shifts and sent money back home.

And when you do that, this “PPP” doesn't matter because you're saving are actually in absolutes. As in, you're earning in dollars and sending that $2,000, the full amount, back in India to be saved in India as Indian rupee. So that's a saving of nearly 1.

6 lakh per month. And many Indians do that, you know. In fact, India is the largest recipient of remittances, with inflows of about $125 billion in 2023, or 3.

4% of our GDP. So, yes, if you can go to America, get your H-1b sorted, spend very frugally pay off your loans, and get multiple promotions to reach that $400K-$500K salary. At that point, none of these arguments even matter.

Your savings are going to be subjective to you, your lifestyle. If you are somebody who likes living life king size, then even $500,000 is not going to be sufficient for you in a big city in America. Hence, in my opinion, Purchasing Power Parity, only captures a narrow slice of reality.

And after speaking to many Indians there, I realized one thing. You know we Indians, we can survive and thrive anywhere in the world if we put our minds to it. I feel like working hard is literally in our DNA.

We leave our country because we feel like we can get more for the same amount of hard work there. Higher returns. And it make sense.

But I think Indians working anywhere will beat their peers because that's how we are raised. If we decide we want to save two lakhs a month, we live below our means and save that amount. But that's also why I want to stay here, because I realize how much talent we have and all this talent, all these people, all they're looking for is an opportunity.

And that's what I want to do here. I want to build here and create those opportunities for people, so they don't have to go chase the American dream, but feel like they've got a shot at social mobility here as well. And that's what we are trying.

I want people to feel like they can get out of the rat race and build a good life here as well, and I know India has shortcomings and lots and lots of them, and we've got a long, long way to go. But if you don't take a shot at improving things, who will? Right?

So yeah, that's all for today's video. This was a slightly different video than what we usually do on AevyTV. Let us know what you thought about it, what you took away from it.

And if you have any experiences about America to share with us, please drop them in the comments below as somebody else might learn something from you. That's it for today's video. My name is Achina Maya.

And please don't forget to hit the subscribe button. See you in the next video.