What $1 gets you in India, Vietnam, Mexico, beyond: Purchasing power parity explained

A single US dollar looks the same everywhere, but what it buys can be worlds apart. In some countries, it gets you a meal; in others, it barely covers a candy bar. This stark contrast is what economists call Purchasing Power Parity (PPP)—a way to measure and compare how far money stretches across different countries.

CA Nitin Kaushik summed it up aptly in a recent post on X: “That crisp US$1 looks the same everywhere, but what it can buy? Totally different story.”

Consider these real-world snapshots of what $1 can get you around the globe:

> India – A hearty thali with rice, dal, veggies, and roti can cost just ₹80–₹120 ($1–$1.50). One dollar almost covers a full meal.

> Vietnam – Street-side vendors serve bowls of pho for as low as $1. Comfort food on a budget.

> Mexico – Street tacos range between 10–30 pesos ($0.25–$0.75). For $1, you’re walking away with at least two tacos.

> Thailand – A plate of pad Thai or mango sticky rice costs $1–$2. Street food heaven.

> USA – A dollar doesn’t buy much anymore—perhaps a candy bar at a discount store.

> Switzerland – $1 won’t get you far. Prices are so high that it doesn’t cover even a bite.

In Mumbai, you might eat like a king for a dollar. In New York, you may still be hungry.

How economists use PPP

The International Monetary Fund (IMF) and the World Bank use PPP to compare living standards globally. Unlike simple currency exchange rates, PPP adjusts for cost-of-living differences.

Take this example: If a burger costs ₹100 in India and $20 in the US, the PPP exchange rate is 5. That means $1 in America has the same purchasing power as Rs 5 in India.

India, thanks to its lower cost of living and massive population, is ranked as the third-largest economy in the world by PPP, behind only China and the US.

IMF data shows that while India’s per capita income is still much lower than the US, it has been growing at a faster pace. This has steadily boosted the real purchasing power of individuals in India.

Why India feels affordable

For foreigners living in India, PPP isn’t just a theory—it’s daily life. Kristen Fischer, an American content creator in New Delhi, recently went viral for explaining why “India feels more affordable.”

“$10 in the US might get you a simple meal, but Rs 800 ($10) in India can buy several meals,” she said in one video.

She gave another striking example: “A haircut in India might cost Rs 100 ($1.25). In the US, the same service could be $40. That means you can get 34 haircuts in India for the price of one in America.”

Fischer acknowledged that salaries are higher in the US, but so is the cost of living. “Sure, incomes in India are much lower, but so are the costs of goods and services,” she noted.

The bigger picture

The Indian rupee is trading close to record lows against the US dollar, despite a steep decline in the greenback this year. So far in 2025, the rupee has slipped 2.3 per cent, even as the dollar index — which measures the US currency against six majors including the euro, yen, and pound — has fallen 9.53 per cent.

Analysts say the rupee remains under pressure due to weak capital inflows and persistent external risks. Fresh US tariff hikes of up to 50 per cent on Indian exports have intensified trade tensions, shaken investor confidence, and triggered foreign portfolio outflows.

PPP underscores one crucial reality—money doesn’t have the same value everywhere. It’s not just about exchange rates, but about what you can actually buy with the currency in your hand.

For India, PPP paints a story of affordability and growing economic power. While per capita income remains behind advanced economies, the value-for-money quotient is far higher. For many, it explains why life in India feels richer on fewer dollars.

In the end, that humble $1 is more than just a note—it’s a mirror reflecting the world’s unequal cost of living, and a reminder that context matters as much as currency.