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BW Businessworld

India Cheapest Major Economy

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India remains the cheapest major economy in the world with a weaker exchange rate compensating for higher inflation (except for a few items like fuel), while China is still cheaper than most of the world but the gap appears to be gradually narrowing.

The second edition of “Mapping the World’s Prices” by Deutsche Bank uses models like Purchasing Power Parity and Cost of Living, though the problems differ from the choice of baskets of goods and services to the suitable weighs that work throughout the countries and applications as well as continue to be meaningful over time. The three new indices used this year are  “The Weekend Getaway Index”, “The Cheap Date Index” and “The Graduate Recruitment Index.”

The cross-country comparison of prices and price indices by Deutsche Bank analysts has been used by economists for various purposes ranging from measuring export competitiveness to gauging welfare or poverty. According to new indices depending on relative costs of different locations, Delhi as the cheapest place to go out on a date, while Hong Kong is the most expensive place to position a graduate recruit. Head for Kuala Lumpur if you are looking for the cheapest city for a weekend gateaway and Sydney if you are looking for the most expensive.

Incidentally, Indian cities like Mumbai and Delhi are the cheapest but Kuala Lumpur is just as affordable.

As per the data, developing countries with the exception of Brazil, were relatively cheaper than developed countries. While Australia consistently remained very expensive. London and Hong Kong were also found to be very expensive places to rent an office with New York being significantly inexpensive than other major financial hubs after adjusting for taxes and other additional charges. Additional interesting aspect was that Singapore became the most expensive place to purchase either a car or a beer, though it is cheap place to do an MBA or watch a movie.

The data also showed many of the idiosyncrasies of prices at each location. Hong Kong is exorbitantly expensive if you want to rent office space but cheap if you want to buy a Big Mac or a Starbuck’s coffee. Singapore is a cheap place to get an MBA but not if you want a car or a pair of Levi’s jeans. Indian cities are usually cheap but pizzas cost the same as in New York. Sao Paulo and Moscow are the most expensive developing country cities in our survey with prices often exceeding those in developed countries, but they are cheap for cigarettes.

Mumbai, Delhi and Johannesburg are the cheapest place for going on a movie-and-pizza date while Australian cities are the most expensive. Even if Sao Paulo is costly for a weekend getaway, it is affordable for a movie date. Singapore and Berlin too are quite reasonably priced. Mexico City is the cheapest major city in the world to hire and deploy a MBA graduate. Berlin and Singapore also seem attractive for deploying a graduate. Indeed, they are not just cheaper than major global financial centers like New York and Hong Kong but even compared to Mumbai.