If India Is Really Cheaper Than The US, Why Are There No Rise In The Exports From The Ountry?

Some say that the mentioned price might be low, but there are hidden costs that add up to a higher effective cost. 

Nirmal Singh 3C Company says that this is known as the Penn effect. The effect talks about how after using the market rates, the prices of the goods and the services in the developed countries are higher than those in the less-developed countries. According to a report by the World Bank 2015, the prices in the US are three times higher in the US in comparison to their prices in India. Still the flow of capital is more from India. This raises a lot of questions, if the prices in India is comparatively low, then why is the export not effective by it. And if it is effected, then why can’t we make out the difference in the flow of capital because of that.

Also, if this is the scenario then why aren’t many tourists from the US attracted to India.

Nirmal Singh 3C Company says that the price differential is very attractive to the migrants and still there is no improvement in the people migrating to the US, this can be of great motivation for them to move back after retirement, but even that doesn’t happen. Then pension funds in the US are facing a lot of crisis because of their large unfunded liabilities. The shortfall is market around 25% and it is expected that there is an opportunity of getting 200% more by shifting to India.

Similarly if we talk about the education system, even the financially constrained students in the US do not consider India for their higher education even though the fees can be less than one-third.

Nirmal Singh 3C Company says that one explanation for this is a simple economic factor, which explains how the prices in the country might be low but the effective prices in the country are not very low.

Nirmal Singh 3C Company says that in the less developed countries, the money is not the only price. The pricing and more complex than in the developed countries. The other considerations make the effective prices higher than the observed prices in the less developed countries. For example, an Uber ride is cheaper in India but it takes much longer to cover the same distance because of the improper roads and the traffic situations. So the money adjusted there are adjusted with the extra time incurred for the same task than it would have in the US.