There is a small ritual that plays out at most Indian dinner tables when the conversation turns to the economy. Someone quotes the nominal GDP per capita — a little under $2,700 — and a discomfort settles over the room. Then someone else offers the corrective: in PPP terms it's nearer $11,700. The room relaxes. Someone mentions that a haircut here costs what a coffee costs in London. Conversation moves on to cricket.
I have sat through that ritual more times than I can count, and I have come to think it is one of the more comforting untruths we tell ourselves — not a lie, since both numbers are correct, but a sleight of hand in which we choose the story that flatters us.
PPP was never meant to be a balm. It answers a narrow question: how much can a given income buy inside the country where it is earned? By that yardstick, an autorickshaw ride in Chennai or a plate of idlis at a Udupi restaurant will always look absurdly cheap next to their equivalents in Zurich, because they are priced in Indian wages and consumed entirely within India's borders. None of that is fiction.
The trouble starts the moment an Indian family looks up from the dosa and wants something the world, not the neighbourhood, has to sell them. A laptop. A semester abroad. A cardiac stent made in Minnesota. At that point the comforting PPP number quietly leaves the room, because Lenovo and Boeing do not accept payment in purchasing-power-adjusted rupees. They want dollars, at the going rate — closer to $2,700 a year than $11,700.
I think of an old colleague, an engineer with two decades of solid experience, who once did the arithmetic on sending his daughter to a decent state university in America. By any local measure he was comfortably middle class — the kind of household PPP statistics are designed to flatter. But tuition abroad was priced in the other economy entirely, the one where his rupee bought exactly what a currency converter said and not a paisa more. He didn't complain that India was poor. He simply adjusted his ambitions to what his income, translated honestly into dollars, could reach. Multiply him by several hundred million households making the same silent adjustment, and you have a more honest picture of where the country stands than any PPP table offers.
This isn't an argument against PPP. Economists need it, particularly in an economy where a great many transactions — a haircut, a maid's wage, a bus fare — never cross a border at all. These are non-tradables, priced by local conditions, and it is precisely because India remains a low-wage economy that they stay cheap. The affordability we celebrate and the poverty we'd rather not dwell on are two readings of the same fact.
What we haven't reckoned with is that this affordability has a shelf life on aspiration. It works beautifully right up to the point where middle-class life wants to touch the global economy — a foreign degree, a decent camera, a retirement fund not hostage to the rupee. At that boundary, the far less flattering nominal figure reasserts itself as the only one that matters. Every economy that made the leap from poor to rich — South Korea within a working lifetime — did so not by making imported goods cheap for its citizens, but by making its citizens rich enough in hard currency to afford them at world prices.
Which is the more useful question for India to ask, not at the finance ministry but at the dinner table where this argument usually gets settled in the corrective's favour: not "how much can a hundred rupees buy here," which we already answer too well for our own comfort, but "how many dollars can an Indian actually earn." That number is unglamorous and considerably harder to move than a statistical adjustment.
The dosa, for what it's worth, should stay cheap. There's no case for making ordinary Indian life expensive in the name of national pride. The case is for making sure the people eating it can also buy the laptop, or send the child abroad, without financial vertigo — not because these things got cheaper, but because they got richer. Until then, I'd treat any dinner-table cheer over the $11,700 PPP number the way I treat a currency's forward premium — real enough as a number, but not something you can actually spend.