• ChrislyBear@lemmy.world
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    1 year ago

    Purchasing power refers to how much goods you can buy with your currency. As you can imagine you can buy less with 100$ in the US than in India, where everything is cheaper. If you take purchasing power into account you convert everything into a “standard amount of stuff”. And using a conversion based on “the same stuff” you’ll get a different currency conversion factor.

    India achieves their goal still very economically, but it’s not 75mil, it’s 255mil. The equivalent amount of stuff that costs INR 6.15billion if you buy it in India costs USD 255million if you buy it in the US.