JOIN USIn a Worldwide Cost of Living Survey, India's financial capital Mumbai has been ranked third cheapest place to live, while national capital New Delhi is fifth.
The annual survey, conducted by international research firm Economist Intelligence Unit, claims to rank as many as 134 major places across the world on the basis of costs of various items ranging from food to transport to toiletries.
In this year's ranking of costliest cities of the world, Mumbai has been placed at 131st position, up a place from 132nd a year ago, while New Delhi has remained at 129th.
The only two places found to be cheaper than Mumbai are Tunis in Tunisia and Karachi in Pakistan. Tehran in Iran has been ranked as cheaper than New Delhi at 130th position.
Japan's Tokyo has been ranked as the costliest place in the world, followed by Oslo (Norway), Japan's Osaka Kobe, Paris (France) and Zurich (Switzerland) in the top five.
Others in the top-ten include Sydney, Melbourne, Frankfurt, Geneva and Singapore.
The Indian cities' ranking among five cheapest has come as a surprise, as soaring prices have been a matter of grave concern for common man as also policymakers in the country.
Only yesterday, the Finance Minister Pranab Mukherjee said there was inflationary pressure in the economy, although inflation in the food segment has declined marginally.
He also said that the overall inflation figure for the month of June could see some upward movement, from 9.06 per cent recorded in May.
The 10 cheapest cities in the world have a strong presence in the Indian subcontinent and the Middle East and North Africa.
"Despite the rise of India as a growing emerging-market economy, the low cost of living in cities continues to reflect the fact that the subcontinent remains a comparatively cheap place to live and work," the survey said.
Karachi in Pakistan is the cheapest location surveyed, with a cost of living level at less than one-half of that of New York and one-third of that of Tokyo, the report said.
Karachi is joined in the bottom ten by Dhaka (Bangladesh) and the Indian cities of Mumbai and New Delhi.
Cities in the Middle East and North Africa make up most of the rest of the cheapest locations.
Algiers (Algeria), Tehran (Iran) Tunis (Tunisia) and Jeddah (Saudi Arabia) all feature in the bottom 10.
"The low cost of living in these locations is driven by a mix of weakened currencies, low levels of development and, in some cases, price controls and subsidies on staple goods," the survey said.
The two remaining cheapest cities in the world include Manila (Philippines) and Panama City (Panama).
Colombo (Sri Lanka), is the only other city surveyed on the Indian subcontinent, that is one of the 20 cheapest cities and was ranked at the 114th place in the survey.