Purchasing Power Parity

A concept which I want to throw out is value added PPP e.g. Wheat cost might converge across geographies due to subsidies but the price of derived end product such as bread would diverge. This is a hypothesis, when I get time, I will work on statistical rigor and 'p' values. For now there are shortcuts which the mind takes and enables lucidity of prose. I am prone to jumps of thought, but let me give a structure, PPP would primarily be food, shelter, transport and entertainment (alcohol included in entertainment!). Moving on to transport, something dear to me are the railways and I still remember the siren sound of Black Diamond express which would transport us from Barauni on the banks of Ganga at Mokama to Howrah. Taking a leap, so much so for convergence, the cost of things in India is still cheap, even compared to China. The transportation cost of India would be cheaper than China and one-fifth of that in the US. In case of Metro the ratio would be more skewed. The point I want to make is that Governments should invest in massive infrastructure and subsidize power so that the output is competitive in price. It could sound anti-competitive but giving free power to farmers and not charging taxes actually keeps India free of hunger. I will revisit this argument as I personally have swung across both sides of the argument, but just see the impact of Hoover Dam or Panama Canal from a cost structure perspective.