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The truth about earning in dollars!
 here
are two ways to look at a foreign salary -- the Catholic and
the Protestant.
The
first is characterised by a missionary zeal to convert using
the rupees-multiplied-by-43.8-times formula ingrained in every
self-respecting Indian head. Which is how $110,000 achieves
the headline-grabbing status of 'Rs 50 lakh!'
But,
protests the economist, how far does that Rs 50 lakh go in
a foreign land?
What
you have to look at, then, is Purchasing Power Parity. The
theory of purchasing power parity says that, in the long run,
exchange rates should move towards rates that would equalise
the prices of an identical basket of goods and services in
any two countries.
Duh.
Despite having acquired, at some point in life, a BA in Economics,
I have no idea what that means. Purely in layman's terms,
how much bang for the buck? Well, says the World Bank, $150,000
fetches you a Rs 50-lakh lifestyle if you reside in India.
In the US, the same $150,000 is actually equivalent to earning
Rs 18.7 lakh.
The
Economist's famous 'Big Mac index' makes it easy to understand.
A hamburger costs $2.90 in the US, but $1.10 in India. Take
that, you dollar-earning desi!
Beyond
economics
Of
course, the real picture is far more complex. Despite
what the Big Mac index might indicate, an 'upwardly mobile'
lifestyle in India is more expensive.
If
your family decides to have Kellogg's cornflakes for breakfast
everyday in India, it will work out to about 4 boxes or Rs
500 a month. An American family, on the other hand, would
spend about $20 a month for the same breakfast.
Given
that a reasonably well-to-do Indian family earns Rs 50,000
a month, it spends 1% on its cornflakes! Whereas the reasonably
well-to-do American family earning $5,000 a month spends only
0.4% from the mahine ka budget. That's way,
way cheaper.
So
despite being a supposedly 'poor' economy, we have higher
relative prices -- dollar prices -- for many commonly
consumed goods. Food and petrol, in particular. Although,
conversely, we can afford bais and drivers, dry cleaning
and nice haircuts. There is always a trade-off!
Living
like a desi
How
much dosh you have stashed away in the bank depends on how
you choose to live. If you are earning a dollar/ pound salary
and your objective is to 'save', you live an Indian lifestyle
in a foreign land.
This
means eating mostly at home/ shopping at Kmart/ Wal-mart;
thinking 10 times before making an impulse buy (out pops the
conversion calculator: 'I can get this cheaper in India. Forget
it!')
This
is an attitude typical of the just-set-foot-on-foreign-shore
worker, especially on an H1-B visa. And there's nothing wrong
with it. Four-five dudes share a cramped apartment,
live frugally and save a pretty packet by the time they head
back home.
And
even though they may have lived in what the Chicago or London
native might consider as Mira Road and eaten at the
US equivalent of Udipi joints, the experience of living in
the First World is reward enough the first-timer. Clean air,
wide roads, 'systems' that seem to work.
But,
should s/he decide to stay on longer, the immigrant
will be tempted to buy in to the host country's way of life. You
shop to 'feel good' about yourself and, eventually, being
the thriftiest shopper in town loses its charm. So one fine
day you decide to buy the Polo shirt costing $100, even if
your mom thinks you are crazy because you could buy five
shirts for the same money back home. Earlier, you moved, geographically.
Now, you have arrived, mentally. That dollar salary will never
feel quite as weighty again.
Resident
Non-Indians
On
the other hand, living in India -- even for the guy with
the Rs 18 lakh salary -- has its own hidden cost. Money
provides some insulation -- but the stress of working in
First World conditions but living in Third World ones
is inevitable. You can fiddle with a Blackberry [suit]
in the backseat of an A/C chauffeur driven car.
But
you are in Saki Naka, stuck in a trademark traffic jam, with
a beggar tap-tapping furiously at your window. The airport
-- which sees more of you early in the morning than your spouse
does -- seriously sucks. As does the fact that a substantial
portion of the taxes the government earns from you end up
as employment guarantee scheme for politicians.
Par
kya karen, yeh hai India. So we 'adjust', grin
and bear it. At least we now have multiplexes and megamalls
to hang out at, no?
The
hidden price
Of
course, living abroad may result in a postcard perfect 'Big
Picture'. But life is made up of a million little things.
And, at that level, regrets remain.
A
friend who has spent most of his post-IIT life in the US --
a good 12 to 15 years -- noted on a recent visit that
he really enjoyed visiting Chinese restaurants in India. "Because
you can taste the food," he said wryly. "Everything
there is so bland... so American." Another friend says
she misses the sights and smells of the sabzi markets
in India. "The veggies there are so fresh, it feels like
abhi zameen se nikle hain." American tomatoes,
she insists, are huge and red, but absolutely insipid.
On a more serious note, there's the issue of parents.
Growing old and lonely, often not in the best of health. Move
here, you insist. But they resist.
The
world is a 'global village' where India is just a mouse click
away. You buy the folks a computer with a broadband connection.
And
life goes on.
The
economics of emigration
Is
where you live about geography, or a state of mind?
Well-known journalist Thomas Friedman has just authored a
new book on globalisation titled, The World is Flat:
A Brief History of the Twenty-first Century.
In
an article in the The New York Times Sunday Magazine,
he writes, 'Only 30 years ago, if you had a choice of being
born a B student in Boston or a genius in Bangalore or Beijing,
you probably would have chosen Boston, because a genius in
Beijing or Bangalore could not really take advantage of his
or her talent.'
Now,
he argues, anyone with smarts, access to Google and a
cheap wireless laptop can join the innovation fray. 'When
the world is flat, you can innovate without having to emigrate.'
With all due respect to Friedman -- a brilliant writer with
a mostly credible theory -- emigration will continue.
Despite
anecdotal evidence exchanged at cocktail parties about young
people who would rather stay back in India than go abroad,
the fact remains that every Indian who enrols at Penn State
or Sheffield University is a potential immigrant.
The
Japanese or Koreans are not. The odd Westerner will make India
his/ her home, often citing the warmth received from the Indian
people.
The
majority of middle class Indians, given a chance, will make
the West their home, despite the cold reception. Suketu Mehta,
in his scintillating book, Maximum City, analyses
the situation as only an Indian can.
'Every
summer, waves of Indians living overseas come back or send
back little pictures: of their son in front of the new
52-inch TV; their daughter sitting on the hood of the new
mini van; the wife in the open-plan kitchen... the whole family
laughing together in the small backyard pool, their 'bungalow'
in the background.'
These
pictures plant little time bombs in the minds of siblings
left behind, he writes. 'They hold the pictures and look around
their two-room flat in Mahim and, suddenly, the new sofa and
2-in-1 Akai stereo look cheap and shabby in comparison.'
Hope
floats
In
the 1980s and 1990s, the IITs were associated with 'brain
drain'. Now, reports of dollar salaries of IIM graduates hit
the headlines. But the real story lies elsewhere.
These
handful of graduates studying in near world class institutions
will be in demand whether in India or abroad. There will
be some initial heartburn -- bhala usko mujhse better
paying job kaise mila -- but in the medium to long
term, things usually even out.
And
staying on in India -- where your company values you
enough to put down a Rs 50-lakh deposit for a house in Napean
Sea Road -- is a very smart option. The real appeal of
'foreign' lies for those who graduate from the second and
third rung institutes. Job mil jayega but not one
with fast enough growth or large enough goodies.
Going
abroad, for them, is the only means of achieving quick and
easy economic salvation. So, at great personal risk, they beg,
borrow and pay their way into not-so-well known universities.
And then fight for a job to recover the several lakhs
'invested'.
By
and large, the strategy seems to work. And dollar dreams will
continue to pound in India's head.
-
By Rashmi Bansal is a graduate of IIM Ahmedabad and founder-editor
of the popular youth magazine JAM (www.jammag.com).[Originally
published in Rediff.com]
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