Expatriate Cost of Living in India For February 2009
If an expatriate relocates from one location in the world to another one, any difference in the cost of living the expatriate experiences is proportional to the shift in the number of their earnings. The principle behind this is that the move to a higher price of living area is best coupled with a proportionally greater salary to have an equal amount of buying power and reverse. If an ex-pat is fortunate enough to relocate to a cheaper cost of living, with no decrease in their income, their purchasing power will increase proportionally to the reduction of the expenses of living.
India remains a viable option for expatriates looking to move to India to enjoy an improvement in buying power. The main cities of India have an inexpensive cost of living, which is a boon for foreigners. Bangalore is home to an index of cost-of-living (comprised of the prices for specific quantities of the same products as well as service) that is 64.6 (New York is 100) as well as being the 38th-cheapest city in the world to live in, out of 276 locations across the globe. Comparatively, Hyderabad is ranked at 68.8, ranking 55th. Calcutta is ranked 56th; Calcutta has an index of 69.3 which is ranked 56th. Chennai scores 70.7 as well. It is 65th. New Delhi is ranked 71.4, as well as being ranked 70th. Mumbai is ranked 70th. Mumbai has the highest index, 76. It is was ranked as the 105th most affordable place worldwide for ex-pats to live.
The cost of living is just one aspect. In determining the amount to pay for an ex-pat, the hardships they’re likely to face are also a factor to take into account. A person who is going to a place that is experiencing less trouble is unlikely to require a lot of incentive. To encourage an expatriate to relocate to a more difficult country, in comparison to the one they’re accustomed to, they need motivation in the shape of an amount of compensation for the hardship they will likely endure. The issue of trouble is among the primary differences between the salaries of expatriates and the local market salary levels. It is a general rule that expatriates are always going to cost employers more than hiring a local employee.
As for the degree of difficulties expatriates may encounter when they move to India and evaluate it globally, India is currently ranked as a place that suffers the most, with an increase of 40% in salary for those who are in hardship. The degree of difficulty is a matter of personal preference, just as the cost of living is a factor. A person who is an expatriate and moving to an area similar to India is likely to have less difficulty than someone who is moving from a nation that is totally different.
The global variables that are used to establish the relative ranking of hardship around the world comprise differences in:
Economic conditions like poor service and poverty.
Situations of political life, such as tolerance of different opinions, lifestyles, and conformity to norms of culture.
Religious conditions, such as the prevalence of religion and tolerance for other faiths.
Public Service requirements like administration, provision, and access to electricity, water sanitation, work permits, and more.
Conditions that are climatic, such as extreme cold or hot temperatures.
Security conditions like personal security as well as the risk of violence in public.
Conditions of health, for example, health standards and the risk of outbreaks caused by viruses.
Educational conditions like the state’s education standards, costs as well as mother-tongue instruction. School closeness to home.
Conditions for transportation, such as accessibility to public transportation security, efficiency, and safety.
Calculation of Expatriate Salary
What do the costs of living and the hardship variations really mean? Let’s take an example of an expatriate who moves from New York to Bangalore. For the purpose of hardship, they’d be eligible for a hardship allowance (40 percent for Bangalore with 10% available in New York). The price of life in Bangalore is 35.4 percent less than in New York, given the Bangalore cost of living index of 64.6 as compared to New York’s index of 100. A $100,000 salary for New York adjusted for the negative charge of living as well as the positive hardship premium will amount to 4,086,450 (INR).
Salaries in New York X Cost of living cost X Hardship premium The Exchange Rate equals Salary paid in India.
$100,000 X 0.646 0.46 1.30 * 48.6598 is 4,086,450 (INR)
If the salary, however, was not adjusted downwards to reflect less price of living (usual practice in multinational companies) in addition to the hardship benefit included in the salary, it would mean that the Bangalore salary would be 6,325,774 (INR), which means that the foreigner would benefit from the advantages of a 35.4 percent lower cost of living, and an additional 35% hardship payment and consequently, could enjoy a much better standard of living in India. At the time of writing, in early last year, this kind of arrangement was reasonable. But in the current global depressed economy, this is not as likely.
In determining how much to pay for an Expatriate in India, It is essential to consider the difference in cost of living and the hardships that are imposed on them.