The Big Mac index published by The Economist, is based on the theory of purchasing-power parity (PPP), according to which exchange rates should adjust to equalise the price of a basket of goods and services around the world. Companies no longer need to pay expat salaries.”īenchmark: What then should be the broad benchmark?īoth Lakshmikanth and Menon say that while there cannot be a standard formula, the Big Mac Index is a good guideline to calculate salaries. Added to that is the availability of skilled labour within India itself. In the last 10 years, India has become an attractive market for global companies who are not just looking to set up offshore centers here, but also to capitalize on the growing, educated and highly aspirational middle class consumer segment. Seema Nair, Co-Leader India HR Operations of Cisco India explains, “The salary in India (for Cisco employees moving from US to India) is related to local labour market wage rates with a potential premium for critical skill sets.”Īchyut Menon, head of Options Executive Search Pvt Ltd also adds, “In the nineties, people who were posted to India got expat salaries. These factors will determine your India salary. This also means a lower labour cost in India. The cost of living in India is significantly lower than that in the US. has the largest economy.The first thing to remember is that you will not make the rupee equivalent of your US salary in India. The country with the largest GDP adjusted for PPP is China, but when looking at the unadjusted GDP of different countries the U.S. Adjusting for PPP can have a massive effect on how we understand a country’s economy. There are more accurate ways to measure differences in PPP though, which convert a larger range of products into their dollar price. dollar can buy more in some countries than others. The Big Mac index does measure this basic point – that one U.S. Factors like tax rates, wage regulations, whether components need to be imported, and the level of market competition all contribute to price variations between countries. This relationship does not hold in practice. Purchasing power parity (PPP) is the idea that items should cost the same in different countries, based on the exchange rate at that time. Is the Big Mac index a good measure of purchasing power parity? dollars therefore reflect differences in the purchasing power of each currency. Differences in the cost of a Big Mac expressed as U.S. As a Big Mac is a completely standardized product across the world, the argument goes that it should have the same relative cost in every country. dollars using the exchange rate at that point in time. Twice a year the Economist converts the average national price of a Big Mac into U.S. It does this by measuring each currency against a common standard – the Big Mac hamburger sold by McDonald’s restaurants all over the world.

The Big Mac index, published The Economist, is a novel way of measuring whether the market exchange rates for different countries’ currencies are overvalued or undervalued.

Concurrently the cost of a Big Mac was 5.81 dollars in the U.S., and 4.95 U.S.

dollars, Switzerland has the most expensive Big Macs in the world, according to the January 2022 Big Mac index.

How much does a big mac cost in india