The allure of earning in U.S. dollars often creates a false sense of financial security—especially among global professionals and expatriates. But as Chartered Accountant Nitin Kaushik points out, true wealth is not about nominal income—it’s about what you retain after accounting for inflation, taxation, and currency depreciation.
The Illusion of Stronger Earnings
Consider this: you earn $1,000. With average U.S. inflation hovering around 5% in recent years, the purchasing power of that amount drops to roughly $950 within a year. Convert that into Indian rupees, and the impact of currency depreciation becomes apparent—the INR typically loses 4–5% of its value against the USD annually. What you gain in dollar terms can quietly erode in real terms.
Rising Income, Shrinking Gains
Some may argue that Indian salaries are rising faster. While that trend held true in the past, Kaushik emphasizes that it’s no longer a dependable pattern. “How many of you are still receiving 10% annual raises?” he asks. Even if you are among the few, rising tax burdens—both direct and indirect—continue to eat into those gains.
The result? A slow, silent squeeze on savings. India’s savings-to-GDP ratio has dropped to its lowest point in 50 years, despite a growing workforce. More people are earning, but fewer are retaining wealth.
A Deeper Economic Undercurrent
Over the past decade, the U.S. dollar itself has lost around 35% of its value due to inflation. Meanwhile, the Indian rupee has faced a consistent annual depreciation of 3–5%. The causes are multifaceted: higher interest rate differentials, a persistently strong dollar, India’s trade and current account deficits, and foreign capital outflows—all putting downward pressure on the rupee.
The Real-World Impact
Consumers are already feeling the pinch. Imported goods are more expensive. Travel abroad is no longer as affordable. And for Indian investors, maintaining real returns that outpace inflation and currency depreciation is becoming increasingly difficult.
Kaushik’s message is clear and cautionary: income alone does not define wealth. What truly matters is net retention. “Are you genuinely building wealth,” he asks, “or merely running harder on the same treadmill?”
In a global economy filled with hidden costs and silent deductions, the difference between financial comfort and financial freedom lies not in how much you earn—but in how much you keep.
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