As per the worldwide `cost of living` survey by Economist Intelligence Unit (EIU), Mumbai, in the western Indian state of Maharashtra, is the second least expensive city globally, while New Delhi is ranked fourth.
Karachi in Pakistan has been named as the cheapest destination globally, while Zurich in Switzerland is the most expensive place across the world, as per the survey.
Inflationary pressures have figured among the key concerns facing the government as well as the public in India for many months now, although the rate of inflation has declined a bit in recent past.
The country`s headline inflation fell to 6.55 per cent in January 2012. It had stood at 7.47 per cent in December 2011. Despite the drop in inflation in January, Indian Finance Minister Pranab Mukherjee had said the rate of price rise is "still not at acceptable level" and hoped for further dip.
Headline inflation was near double digit for most of 2010 and 2011. The apex bank hiked key policy rates 13 times, totalling 350 basis points between March 2010 and October 2011, to tame inflation.
In the EIU survey, three of the four cheapest locations globally - Karachi, Mumbai, Tehran and New Delhi - are from the Indian subcontinent. "India has been such a target of labour outsourcing, relocation and FDI over the last decade," EIU said.
"With cheap labour and land costs making India and Pakistan incredibly attractive to those bargain hungry visitors or investors willing to brave some of the security risks that accompany such low prices, especially in Pakistan," it added.
All the four cheapest cities have retained their positions from the previous year`s list. However, Zurich has toppled Tokyo as the world`s most expensive city, although both of them have become relatively expensive in the past one year.
"Both Japan and Switzerland have seen strong currency movements over the last few years which have made them relatively more expensive," EIU said.
After Karachi, Mumbai, Tehran and New Delhi, the report has named Muscat, Dhaka, Algiers, Kathmandu, Panama City and Jeddah among the least expensive cities.
In the list of ten most expensive cities, Zurich and Tokyo are followed by Geneva, Osaka Kobe, Oslo, Paris, Sydney, Melbourne, Singapore and Frankfurt.
The survey compared over 400 individual prices across 160 products and services. They include food, drink, clothing, household supplies and personal care items, home rents, transport, utility bills, private schools, domestic help and recreational costs. .
The main reason behind low cost of living in the Middle Eastern cities was the use of price controls and the pegging of currencies to the US dollar, the report said.
This year`s list interestingly features cities from the Asia Pacific region (including Australasia) in the ten most expensive cities, while on the other hand, three of the four cheapest locations hail from the Indian subcontinent.
"Although Asian hubs are making their presence felt at the top of the cost of living stakes, another kind of Asian hub is making its presence felt at the bottom, EIU said.
Singapore`s presence in the top ten most expensive cities highlights a shift away from Western Europe towards Asian hubs, the report said.
"Cities from the Asia Pacific region (including Australasia) now make up half the ten most expensive," EIU said adding Western Europe still accounts for 24 of the most expensive cities in the top 50, with 14 hailing from Asia.
Interestingly, despite Eurozone weaknesses German and French cities are still relatively expensive with Paris and Frankfurt holding firm in the ten most expensive. Besides, Oslo, which was considered the world`s most expensive city only a few years ago also sits towards the top of the ranking.